Posted by: Jeff | April 12, 2010

Revealing Americans’ Preferences

Reacting to that Economist/YouGov poll that showed an extraordinary disjoint between what government programs Americans are willing to cut, and what programs actually make up a significant portion of the budget, Megan McArdle defends the notion that Americans are fiscally conservative.

Saying “Americans are fiscal conservatives” is, by and large, simply a statement of how they rank relative to national or international political discourse–not a precise allocation of where they fall on the political curve. Faced with a choice between raising taxes and cutting spending, they generally seem to favor cutting spending, even when the taxes to fund the spending are very progressive.

Now, I quite agree that these polls show that this may be based on a misperception of where the money goes. On the other hand, they also misperceive how progressive the tax system is. If properly informed, and then asked questions, would they want taxes raised or spending cut? Given their knee jerk responses, I suspect that they might start to feel differently about Medicare and Social Security if they understood that the alternative was the equivalent of a 10% sales tax on every item. But that’s only a guess, and it might well be wrong.

So in some ideal universe where they are fully informed about the options, maybe they’re not fiscally conservative. On the other hand, maybe they are. But in this universe, where they are very poorly informed, their expressed preference is for spending cuts over tax increases.

I sympathize with McArdle’s instinct for pragmatism here, but I think this is incomplete. The whole purpose of imagining what Americans would prefer in an ideal universe where they were fully informed is to try and get at what their first-order philosophic preferences are, in reference to how they prioritize taxation vs. spending cuts, in this world.

The thought experiment of “this messy world vs. the ideal world” assumes those first-order preferences are the same in both worlds. It’s a way of controlling variables. People express their preferences in reaction to information, but if that information is bad then the expression gets muddled. So if the preferences Americans have were revealed as not fiscally conservative in the ideal world of good information, then that means they are not fiscally conservative period. Right now, in this world.

Now, this is all very hand-wavy. We don’t know the actual answer to this question, and it would exceedingly difficult, if not impossible, to find out. It’s a nice bit of mental gymnastics, but we’ll never know, so what’s the point? Also, McArdle may not be talking about something so dramatic as first-order philosophic preferences when she says she thinks Americans are fiscally conservative. But if we’re not talking about something that cuts that deep, then who cares anyway? It could easily change.

Either way, I think the point is this: When politicians see that stat saying 62 percent of Americans prefer spending cuts to tax increases, they should just ignore it. Because it’s meaningless. Politicians should not govern according to polls, because Americans are too ill-informed for what they say in polls to mean much. (Hell, up until the last few decades, politicians couldn’t govern according to polls because there were none to be had.)

I would argue that what should concern lawmakers are revealed preferences rather than stated ones. Because revealed preferences are what you get in reaction to how a particular policy actually affects someone’s actual day-to-day life on the ground. Stated preferences arise in reaction to whatever information, good or bad, people are gleaning from the political discourse. Which makes them far more mercurial, transitory, and in general far less useful. Stated preferences also tend to arise (as they did with health care reform) in reaction to policies that aren’t even in place yet, meaning we have a preference in response to an abstraction. Which isn’t very useful for the exact same reasons.

Revealed preferences surface in reaction to policies that are already in place. And the way we get at those preferences in our political system is through elections. Ergo, politicians should ignore polls, govern according to what they think is right,* then take their reward or their comeuppance in November. Elections are where accountability comes onto the system.

Incidentally, this is why McArdle’s freak-out over the passage of the health care reform bill (echoed by Joseph Bottum) was rather silly.

*I would add that I don’t think this means constituents should be ignored. It’s just that how politicians communicate with their constituents, and how they weigh what they hear, all falls under the heading of “doing what they think is right.” It should be up to each individual in question. The take-away here is that it would be very bad if we started establishing some political and cultural norms whereby all politicians are expected to be mere vessels for the enactment of moment-to-moment poll data preferences.

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