Question

How are rational ignorance, special interest groups, and economic inefficiency related?

Explain why political candidates—even those from different parties—seem to have very similar viewpoints on important political issues like Medicare, Social Security, and education spending.

Answer 1

RATIONAL IGNORANCE

Democracy is a form of government in which people have the power to pick their government representatives. However, in order for Democracy to rule efficiently, the people need political knowledge. Rational ignorance is the utility-maximizing decision to remain uninformed, or ignorant about a certain topic, because the cost of acquiring the information is more than the expected benefit.

Like other utility- maximizing decision, is based on the comparison of benefits and cost obtained. On one hand, the voter benefits form the political information by understanding how specific policies or candidate views might affect his / her personal life. On the other hand, it takes time and effort to obtain that information.

Another important concept is rational abstention. As the name tells us, is the decision not do something, because costs are grater that expected benefits.

However, if voters chose not to know and do not vote, people will decide inefficiently and politicians will not include all voter’s preferences when deciding about important political issues. These two concepts create inefficiencies in Democracy because:

1. people are choosing with imperfect information (they are not deciding optimally)
2. Not everyone is represented in government

The combination of rational ignorance and ration abstention results in voter apathy. This is when people choose not to know about and participate in the political process. In addition, another source of government failure are Interest groups. These people have great knowledge and involvement in the political proses. These people normally have strong interest about a certain topic and seek to maximize utility. They have more to gain or lose from government’s actions, are more motivated to pressure, and act according their interest.

When population acts like this, politicians can take action that do not reflect the preference of all, which derives in an inefficient allocation of resources. Maybe that is why political candidate's point of view are similar, because they try to reflect the active voter's political point of view, and active voter's share characteristics and beliefs that non active voter's might differ.