On Rationality and Information

So, which is it?

No matter how desirable the proposed changes or how apparently uncontroversial, it takes very little to frighten an electorate. People are easily persuaded that they won’t be able to understand the technicalities. When in doubt, they vote for the status quo.

This is the historian Ross McKibbin writing in the London Review of Books about constitutional referendum in Australia, in the context of an article about the Liberal Democrats many failures in the coalition Government, including electoral reform.

I noticed the chaps over at Development Impact have recently had a couple of occasions recently to ask the $100 dollar bill question – if a reform is so good for a person or business, why wasn’t it done before we came and did a study and pilot of it? McKibbin touches on the answer. It’s not simple risk aversion; it’s a profound uncertainty among many people as to the level of their own technical understanding of issues, especially complex issues, one which is massively increased when two distinct sources of authority are campaigning in opposite directions. Imperfect knowledge of one’s own imperfect knowledge, to get Rumsfeldian.

It’s not unusual for an economist or hard-scientist to end an argument with clever people from other fields with a sentence that begins with the words ‘studies/experiments have demonstrated that …’ and ends with ‘of course, with a p-value of 0.01’, despite not being all that much more certain of their ground than their discussant. A rational decision depends not only on rationality and information, but on ability to process information and the range and vehemence of contrasting opinions. This is something we should bear in mind when we engage in our arguments on development policies; we often present extreme versions of our views in a ‘haggling’ approach to compromise. This might actually make decision making much harder than starting from a softer representation of what we know, doubts and all.

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