A few months ago all the business papers and TV channels were intensely covering Twitter’s CEO search. Twitter is a simple company of 3,900 employees, it’s financial and operational information is public, and its CEO has a single mission: increase share price. Surely an educated person watching CNBC can easily predict the effect of each CEO candidate on Twitter’s share price and make a gajillion dollars! And yet, no one does.
The American government is unfathomably complex, employs 22 million citizens and impacts 300 million others, the president is judged by a thousand different measures and knows thousands of things the public doesn’t. Thinking that I can predict which candidate is objectively better for America when I can’t begin to do the same for Twitter is simply delusional.
The reason you can’t make a killing on the stock market over Twitter’s CEO is because everyone else has the same information that you do. An unfathomably complex institution is exactly what we expect would make it easy to get an information advantage, and this is the case in my opinion: only a few hours’ investment is necessary to get a leg up on virtually all voters for a given issue.
The reason this doesn’t let voters pile up huge amounts of utility is because you only get one chance every 4-6 years to add your information for a given office, and it requires a separate evaluation to even determine what the payoff is. By contrast, the stock market is effectively real-time and very clear about payoffs.
I’m inclined to agree with you—the Twitter comparison doesn’t make sense.
I think he half has a point when saying you can’t tell which party will do a better job, inasmuch as there is an information asymmetry between government and opposition. In the UK anyway, opposition parties don’t have access to the civil service who understand the detailed workings of government and have internal information, which means that opposition policies are somewhat speculative, and may have to be modified (or not) when they get into government. Particularly so on matters of national security, where it’s almost impossible for a voter to assess whether a government policy (based on secret information) is better/worse than an opposition policy (based only on public information). (Aside from your personal preferences about these policies—e.g. if you have an absolute moral opposition to nuclear weapons, or something.)
But that doesn’t apply to all policies, and in any case, the expected benefit of voting is so huge that you only need a minimal amount of information about which party is better (on some objective measure like GDP, or relative to your preferences). E.g. it’s fine to be only 1% confident.
It’s interesting that you chose Brexit as the best example of a tight vote on a single issue with clear and massive advantage to one side—the best possible case for voting. And yet, even with Brexit it’s easy to make the case for discounting the apparent impact of voting.
$3 trillion gained by remaining in the EU.
$3 trillion gained to whom? A lot of people who voted “Leave” would probably agree that Brexit will lower GDP, but they clearly think that the benefits of leaving (in social cohesion, security, whatever) are greater than the GDP hit. You could say that they’re voting selfishly and that the lost GDP accrues to all Europeans and the narrow benefits only to them, but that’s a problematic argument—why didn’t the Europeans selflessly vote to safeguard the interests of rural Britons? As you noted, even pure altruism often (and unfortunately) stops at a nation’s borders.
The half of Britain who voted to leave think that the benefits of leaving to them, and thus to half of Britain, is greater than $3 trillion. If we could sum up actual utils accrued to people, rather than dollars accrued to some national accounts, how certain can you be that the number is even positive given that half the nation disagrees with you?
Many ‘Remainers’ who wish to stay in the EU want a second referendum on the matter; recently, hundreds of thousands of them marched through London to call for one.
So even in the cleanest possible case of a single-issue referendum, the decision that was voted on is yet to be implemented. And when you vote for candidates with a whole list of proposals, the chance that electing the candidate will get the actual proposal implemented is much lower still.
My argument is that doing the math on voting makes it look a lot worse than you’d naively assume, not that the math comes out against voting in every possible case. But this also means that just because the math may barely favor voting on Brexit it doesn’t mean that it will for other, dirtier cases.
If I understand you right, you’re saying that if Remain were to happen then Leavers would incur a large actual loss (relative to the Leave scenario), because they reckon the benefits of leaving in terms of social cohesion, security etc. will not occur.
Perhaps those aren’t the best examples, as arguably those are matters of fact, so Leavers could find out they were wrong if it turns out there is no loss in social cohesion & security by remaining; so they wouldn’t necessarily lose utils. A better example might be national self-determination, which a Leave supporter would value come what may, and a Remain supporter might put little value on. That is, Leavers aren’t merely predicting that leaving the EU would make things better for the UK, they are expressing a (non-falsifiable) preference for being out of the EU.
I haven’t thought of that, and that could be so—or perhaps more likely it’s a mixture of prediction and preference. In which case Leavers would only get some negative utils, still leaving tens of thousands of $ per extra Remain voter. (And still plenty enough to justify voting even after major shrinkage by the uncertainty that policies will turn out/be implemented as expected.)
Complicated by the fact that if Remain happens, Leave supporters would always feel things would have been better if Leave had happened, even if their predictions were unknowingly false, because they never get to try out & compare both scenarios. I.e. Leavers will never be satisfied if the UK remains, and Remainers will never be satisfied if the UK leaves, regardless of how the other possible world would have been. (Maybe that’s your main point here.) But I reckon that dissatisfaction is small compared with the economic harm caused by leaving (if the median GDP predictions are true).
By the way, I’m not convinced voting is rational (hence I have never voted in my life), and believed that it wasn’t, until the altruism calculation occurred to me a year or so ago. My current suspicion is about the validity of multiplying a very small probability by a very large benefit to get a justification; but I haven’t yet read/thought of a strong argument against this.
(PS Ah, you’re Jacob F—good to meet you! I enjoy your blog.)
This part from Putanumonit does not make sense:
The reason you can’t make a killing on the stock market over Twitter’s CEO is because everyone else has the same information that you do. An unfathomably complex institution is exactly what we expect would make it easy to get an information advantage, and this is the case in my opinion: only a few hours’ investment is necessary to get a leg up on virtually all voters for a given issue.
The reason this doesn’t let voters pile up huge amounts of utility is because you only get one chance every 4-6 years to add your information for a given office, and it requires a separate evaluation to even determine what the payoff is. By contrast, the stock market is effectively real-time and very clear about payoffs.
This is a bad foundation for a modesty argument.
I’m inclined to agree with you—the Twitter comparison doesn’t make sense.
I think he half has a point when saying you can’t tell which party will do a better job, inasmuch as there is an information asymmetry between government and opposition. In the UK anyway, opposition parties don’t have access to the civil service who understand the detailed workings of government and have internal information, which means that opposition policies are somewhat speculative, and may have to be modified (or not) when they get into government. Particularly so on matters of national security, where it’s almost impossible for a voter to assess whether a government policy (based on secret information) is better/worse than an opposition policy (based only on public information). (Aside from your personal preferences about these policies—e.g. if you have an absolute moral opposition to nuclear weapons, or something.)
But that doesn’t apply to all policies, and in any case, the expected benefit of voting is so huge that you only need a minimal amount of information about which party is better (on some objective measure like GDP, or relative to your preferences). E.g. it’s fine to be only 1% confident.
It’s interesting that you chose Brexit as the best example of a tight vote on a single issue with clear and massive advantage to one side—the best possible case for voting. And yet, even with Brexit it’s easy to make the case for discounting the apparent impact of voting.
$3 trillion gained to whom? A lot of people who voted “Leave” would probably agree that Brexit will lower GDP, but they clearly think that the benefits of leaving (in social cohesion, security, whatever) are greater than the GDP hit. You could say that they’re voting selfishly and that the lost GDP accrues to all Europeans and the narrow benefits only to them, but that’s a problematic argument—why didn’t the Europeans selflessly vote to safeguard the interests of rural Britons? As you noted, even pure altruism often (and unfortunately) stops at a nation’s borders.
The half of Britain who voted to leave think that the benefits of leaving to them, and thus to half of Britain, is greater than $3 trillion. If we could sum up actual utils accrued to people, rather than dollars accrued to some national accounts, how certain can you be that the number is even positive given that half the nation disagrees with you?
So even in the cleanest possible case of a single-issue referendum, the decision that was voted on is yet to be implemented. And when you vote for candidates with a whole list of proposals, the chance that electing the candidate will get the actual proposal implemented is much lower still.
My argument is that doing the math on voting makes it look a lot worse than you’d naively assume, not that the math comes out against voting in every possible case. But this also means that just because the math may barely favor voting on Brexit it doesn’t mean that it will for other, dirtier cases.
[Response substantially edited:]
If I understand you right, you’re saying that if Remain were to happen then Leavers would incur a large actual loss (relative to the Leave scenario), because they reckon the benefits of leaving in terms of social cohesion, security etc. will not occur.
Perhaps those aren’t the best examples, as arguably those are matters of fact, so Leavers could find out they were wrong if it turns out there is no loss in social cohesion & security by remaining; so they wouldn’t necessarily lose utils. A better example might be national self-determination, which a Leave supporter would value come what may, and a Remain supporter might put little value on. That is, Leavers aren’t merely predicting that leaving the EU would make things better for the UK, they are expressing a (non-falsifiable) preference for being out of the EU.
I haven’t thought of that, and that could be so—or perhaps more likely it’s a mixture of prediction and preference. In which case Leavers would only get some negative utils, still leaving tens of thousands of $ per extra Remain voter. (And still plenty enough to justify voting even after major shrinkage by the uncertainty that policies will turn out/be implemented as expected.)
Complicated by the fact that if Remain happens, Leave supporters would always feel things would have been better if Leave had happened, even if their predictions were unknowingly false, because they never get to try out & compare both scenarios. I.e. Leavers will never be satisfied if the UK remains, and Remainers will never be satisfied if the UK leaves, regardless of how the other possible world would have been. (Maybe that’s your main point here.) But I reckon that dissatisfaction is small compared with the economic harm caused by leaving (if the median GDP predictions are true).
By the way, I’m not convinced voting is rational (hence I have never voted in my life), and believed that it wasn’t, until the altruism calculation occurred to me a year or so ago. My current suspicion is about the validity of multiplying a very small probability by a very large benefit to get a justification; but I haven’t yet read/thought of a strong argument against this.
(PS Ah, you’re Jacob F—good to meet you! I enjoy your blog.)