The Theory of Democracy #1: Why Voter Apathy and Special Interest Groups are Inevitable

I recently stumbled on the Wikipedia page on Public Choice Theory and found the discussion fascinating. Basically, economists come up with models for democracy, apply economic theories (or game theory) to those models, and come up with interesting theorems to make predictions about how a democracy will evolve.

So, we end up with theorems that answers questions like this:

Why is there widespread apathy in a democracy?

Each voter is faced with a tiny probability that his vote will change the result of the elections, whereas gathering the relevant information necessary for a well-informed voting decision requires substantial time and effort. Therefore, the rational decision for each voter is to be generally ignorant of politics and perhaps even abstain from voting. Rational choice theorists claim that this explains the gross ignorance of most citizens in modern democracies as well as low voter turnout.

By the way, this is called Rational Ignorance which can be found in a number of different areas, not just elections.

How come special interests / minorities are given so much importance by the political parties?

Basically, whenever a government favors a special interest group in some way, it usually results in a sub-optimal allocation of resources. i.e. favors for special interests usually are not something that the majority in the democracy really want. So why does this happen in all democracies?

The reason is that the few people of the special interest group benefit hugely from the favor, and hence they have a huge incentive to fight hard to get that favor, whereas the cost is spread out over the whole populace and each individual is only slightly affected. Hence, there is not enough incentive for the general populace to put in a lot of effort to fight the special interest.

Here is a full example:

Although a majority of the voters want “good government”, there are many special interest groups that have strong incentives for lobbying the government to implement specific policies that would benefit them, potentially at the expense of the general public. For example, lobbying by the sugar manufacturers might result in an inefficient subsidy for the production of sugar, either direct or by protectionist measures. The costs of such inefficient policies are dispersed over all citizens, and therefore unnoticeable to each individual. On the other hand, the benefits are shared by the sugar manufacturers, who also have a strong incentive to continue the policy by further lobbying. Due to rational ignorance, the vast majority of voters will be unaware of the lobbying going on; in fact, even if voters become be aware of special-interest lobbying efforts, this will simply result in creation of policies which are even more complex, and harder for the general public to understand. And, even if the public were able to understand the policy proposals, they would find it impractical to engage in collective action in order to defend their diffuse interest. Therefore, theorists expect that numerous special interests will be able to successfully lobby for various inefficient policies.

For this and more fascinating insights on the economics of constitutional democracy, read the full wikipedia page on Public Choice

From Poverty to Power: Rise of Somaliland challenges conventional wisdom

Oxfam Blogs has an extremely interesting article that compares the rise of Somaliland vs. the fall of its neighbor Somalia, and points out how this completely upends conventional wisdom regarding foreign aid and other aspects of building a country.

Here are some excerpts:

The peace process was almost entirely locally funded, due to Somaliland’s unrecognized status (so no bilateral aid or loans were available). That produced a strong sense of local ownership (literally). In the words of one minister, when asked by Phillips about aid ‘Aid is not what we desire because [then] they decide for us what we need’.

And, in some aspects of country-building, there was no pretense at “democracy” or fairness, ideas that would have been imposed by outside in case of foreign aid. For example, consider this:

The second president used private loans to demobilise about 5,000 militia fighters. He offered stability (and tax breaks) to the business elite in exchange for funding demobilisation and the nascent state institutions. This was effective but certainly not inclusive – the elite came mainly from the President’s own clan. But according to Phillips, Somalilanders generally still see it as a legitimate process – that’s what leaders do.

And the most revealing aspect, for me, was the approach to education. Elite education available to only a few was found to be more important than universal elementary education:

The paper highlights the critical political importance of elite secondary schools in forging leadership. Available to a relatively small group of often privileged Somalilanders, this is in stark contrast to the donor emphasis on universal primary education. In particular, many of Phillips’ interviews led to the Sheekh Secondary School, set up by Richard Darlington, who fought in WWII as the commander of the Somaliland Protectorate contingent. Sheekh took only 50 kids a year and trained them in leadership, critical thought and standard (Darlington borrowed from the curriculum of his old school, Harrow). Sheekh provided 3 out of 4 presidents, plus any number of vice presidents, cabinet members etc. And no it isn’t a weird Somaliland version of Eton and Harrow (I asked) – it stressed student intake from all clans, especially from the more marginalized ones.

Read the full article – it’s quite short, and must read if this is an area of interest for you.

Source: @makarand_s

The connection between nutrition and social status

Did you know that younger daughters-in-law in rural India have shorter children on an average? And that there is a perfectly good explanation for it?

A very interesting article in the The Hindu points to new evidence that the unequal social status of women plays a significant role in the fact that they’re undernourished.

Apparently, India has “inexplicably” high levels of under-nutrition.

For its per capita income, India has stubbornly higher than expected levels of stunting and under-weight among children and adults — the so-called “Asian enigma”

and

there has been a growing acknowledgement, including by Dr. Sen himself, that food consumption alone does not explain the scale of India’s under-nutrition.

The explanation is this:

A growing body of evidence is also now showing that the low social status of women — something difficult to capture statistically — could be a big part of the explanation. A new working paper by economists Diane Coffey, a PhD candidate at the Office of Population Research at Princeton University; Reetika Khera of the Indian Institute of Technology-Delhi; and Mr. Spears has shown that the younger daughters-in-law in a rural joint family have shorter children on average.

While this is no longer the typical Indian family, it provides a rare econometric measure of “social status.” Sure enough, the younger daughters-in-law “report having less say in a range of household decisions; they spend less time outside the home on a normal day than [the older] daughters-in-law; and, they have lower body mass index [BMI] scores than their [older] counterparts,” the researchers find, using official National Family Health Survey data.

This is a serious concern.

Recent research by Angus Deaton, Professor of Economics at Princeton University and the Woodrow Wilson School of Public and International affairs and leading global expert on poverty and nutrition in the developing world, has shown that Indian women’s nutrition is undeniably not improving at the same pace as men’s. Mr. Deaton has found that Indian men’s heights are growing at nearly three times the rates of women and the gap is widening

Read the full article