Cost of Rational Ignorance Post-2)

Over half of Americans don’t bother themselves about politics. A research conducted by Pew Research Center in 2010 found that only 46% of Americans new what party have majority in the house of representative. About 39% believed that the national defense as the largest spending item in national budget, and just 14% new what the current inflation rate was. National defense happens to be not the largest item in the federal spending.

Economist Anthony Downs argues that it is rational to be ignorant about politics, because active voting itself is irrational. Active voting is irrational because voters pay more for voting than benefits they receive from it. Voting is costly according; voters need to read newspapers, watch news and read books or do all in order to be well informed voters. Time is limited and voters need to sacrifice other things to make time to acquire information to be well informed voters and the demand is high that compete with other important things. To make this clearer, voters just need to account for the time spent in acquiring this information using their hourly rate, it gets expensive; thus, the cost of being an informed voter is relatively high. Benefits on the other hand, not much. The hope is Government do better job, this happens not too often and can be explained by the approval rate of law makers.

One being well informed doesn’t mean the politicians do good job. This has to do with the probability of being a game changer and the probability of one vote changing the outcome is close to zero. The simple reason for people to be not well informed is the incentives they face; cost is high and benefit is low. Most people will stop buying an item that priced high unless one dealing with a monopoly or it is somehow mandatory. Professor Benjamin agrees with this assumption and explains that the incentive of voters to be rational about politics. He stated that if a policy enacted that takes a penny from everyone and gives ten thousand dollar to one person, no one will bother to be informed about it but the person who received it. Even though there is an individual who is well informed, there is not much to do about it since one has almost zero probability to change the outcome and interestingly, the politicians know that. This can be easily observed by the behavior that the politicians show when you request to speak with him or her and a representative of a big organization like AARP. An individuals may not be able to book an appointment with a chairman of a committee in Capitol Hill while a representative of AARP would book it without delay.

Politicians also know how powerful people are when the form unity. There are very few corn farmers in the Midwest if you compare them with the American taxpayers. Those farmers are well informed about politics, well organized and well equipped. They only care about their corn subsidy, they are united and they lobby congress furiously and keep eye on those lawmaker who are not in line with their interests. Those farmers of course are rational voters like other voters. They weigh the costs and benefits involved and act accordingly. Unlike other voters, the corn farmers have incentive to vote, because they get more from voting than it cost them. They able to secure subsidy at the expense of other rational voters who don’t vote, because doing so they acquire more cost than gain.

If an entrepreneur needs a subsidy his or her marginal cost is greater than its marginal revenue from the products and services involved. It also means that resources are not utilized at economically efficient means. Another way of saying this is there is someone who is more efficient in producing sugar than those farmers who spent millions of dollars in fighting for subsidies. That is also means there is alternative means to use the resources better than producing corn. According to economic analysis, the economic loss from this subsidies is enormous. First, subsides prevent sugar from importing which could push prices lower. Second, it retard innovations because it limits competition. With competition, self-interested economic actors find ways to be efficient which uncover new means of production and pushes prices down which allow comparative advantage that enhance trade which means higher standard of living.