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