Jan 16, 2021 By: yunews
, Mel Harris Chair in Insurance and Risk and chair of the finance department at , has co-authored 鈥溾 for American Economic Review 110 (2020) with Dr. Parikshit Ghosh (Delhi School of Economics, University of Delhi, India) and Dr. Jaideep Roy (Department of Economics, University of Bath, UK).
Here is a summary of the paper from Dr. Chakraborty:
In a complex, modern world, voters are unsure about what kind of policies will best serve their interest. Is climate change anthropogenic, will high carbon taxes mitigate it and will such taxes carry a high economic cost? Will GMO crops increase farm yields and lower food prices or do they pose significant health and environmental risks? What is the best way out of a recession 鈥 austerity or stimulus?
Voters are dependent on an array of experts to learn the answer to such questions. However, if such experts also have agendas of their own, on account of economic class, professional allegiance, funding source or ideology, their messaging could be crafted not only to inform but also to manipulate the politicians and the public, distorting policies to serve their own interests. Voters, in response, are likely to be skeptical of what they hear from experts. They may elect leaders who disregard expert opinion, leading to poorly informed public policy that hurts everyone.
This tension underlies the ongoing debate between technocrats and populists. Technocrats argue that parties seeking electoral success often choose policies that are not responsible, that pay inadequate attention to objective scientific truths. Populists argue that the party system has been taken hostage by the expert elite, resulting in policies that are not responsive to the interests of the average voter. The paper employs a game theoretic framework to analyze the tension between responsible and responsive policy making, between arguments for technocracy and those that favor populism.
The main conclusion of the paper is that the party system should be expected to perform surprisingly well when experts can influence electoral competition and policy outcomes because of their knowledge and expertise. Because a party may pander to the expert鈥檚 policy preferences in order to ensure electoral success, experts should be quite informative. This has a beneficial effect on public policy.
But because electoral success ultimately depends on the will of the majority, pandering to experts should be mitigated by populist pressures to serve the interest of the average voter. This means policies cannot be too distorted away from what serves the wider public interest. Parties may seek electoral success by serving either the experts鈥 interest or the people鈥檚 interest. But, unless the expert class is extremely biased from the perspective of the average voter, party competition should result in an efficient compromise between responsible policy making and responsive policy making. However, if experts are perceived to be too biased, the outcome can be even worse than a world where there is no scientific knowledge and expertise available at all.
