Behavioral economics explains why people vote against their own interests.
Since the Reagan years, sociologists, political experts and media types have wondered why so many people vote contrary to their economic interests? Such behavior is irrational, a preference for lies over fact, fake news over real news.
Aside from a new disciplinary tension known as “behavioral economics,” economics assumes that people act rationally by maximizing their satisfaction, by voting in a way that serves their economic interests. Behavioral economics was born from the work of Richard Thaler, Nobel Prize winner in economics in 1987.
The reality, however, is different. Behavioral economics suggests that individuals are often influenced by biases that lead them to make irrational decisions. People buy things they never use, make investment decisions following the herd, act with overconfidence in making key economic decisions, and allow sunk costs to affect current decisions – the error of sunk costs. Marketing and advertising reinforce this irrationality, playing on people’s prejudices.
Presidents Reagan, Bush, and Trump have all promoted policies to reduce the government’s social safety net while promoting deep tax cuts for the rich. The latter is known as the “trickle-down economy,” a fairy tale still propagated by Republicans to justify the tax cuts and jobs law of 2017.
How do Republicans promote globalization and free trade, tax cuts for the rich, deregulation and reduction of the federal social safety net while opposing the increase in the minimum wage, the climate change mitigation, policies that benefit low-income workers? How do Republicans convince these voters that Republicans best represent their interests?
Psychologists define prejudice as an inherent inclination for or against an idea, object, group, or individual. While economists study biases in the context of irrational economic decisions by consumers and investors, biases permeate society through differences in socioeconomic status, race, ethnicity, and educational background. In the United States, there is a significant schism between social classes in terms of wealth, education, occupation and social networks.
Globalization and technological advancement have conferred significant benefits on the US economy. Unfortunately, the benefits and costs are not evenly distributed. For those who did not benefit, structural change due to globalization and technological change has reduced real incomes and eliminated many better-paying working-class jobs, exacerbating the schism between the traditional elites and the less educated and the less qualified, fueling their alienation.
Sadly, prejudice is pervasive in America. When effectively exploited for political ends, it can merge racial prejudice, Christian and traditional family values, contempt for urban elites, nationalism, fear of immigrants, and mistrust of science and government. It is a Republican base that feels left behind, frightened by the inevitability of change and seeking to blame itself.
In recent years, Republicans have been adept at cultivating prejudice and demonizing their opponents, a skill that resonates with people of lower economic status. This has allowed Republicans to distract voters from their other policies that run counter to the interests of those dislocated by structural economic changes as well as those who fear losing the last vestiges of superiority and white privileges. Deftly, Republicans recognize and exploit class distinctions and the power of prejudice better than Democrats, allowing Republicans to develop a base that ignores their own socio-economic interests when they go to the polls.
The 1995 film “The US President” provided insight into an effective Republican strategy in using prejudice to win elections. Responding to his opponent’s attacks, President Andrew Shepherd told a press conference that his opponent Bob Rumson was wrong: âBob’s problem is not that he doesn’t get it, the problem with Bob is that he can’t sell it. ”
Shepherd goes on to say, âWhatever your particular problem is, I promise you; Bob Rumson is not at all interested in solving it. He is interested in two things and only two things. Scare yourself off and tell you who is to blame for it.
Unfortunately, Shepherd was wrong. Republicans do a great job of selling it and that’s how the exploitation of prejudice wins elections.
James “Cid” Seidelman is Distinguished Professor of Economics and Former Dean of Westminster College.
John P. Watkins is Professor of Economics at Westminster College.