Rational ignorance, redux

I’m preparing for the start of the new semester & picked up Mancur Olson’s The Rise and Decline of Nations, his follow up to The Logic of Collective Action. It has a wonderful clarity of explanation. For instance, explaining why it can be that tax systems are usually progressive, while their loopholes are usually regressive:

“Since the probability that a typical voter will change the outcome of an election is vanishingly small, the typical citizen is usually ‘rationally ignorant’ about public affairs. … Just as lobbies provide collective goods to special interest groups, so their effectiveness is explained by the imperfect knowledge of citizens, and this in turn is mainly due to the fact that information and calculation about effective goods is also a collective good.”

People know they pay income tax and so the headline figures need to be progressive, but few pay attention to the detail, and special interest groups (such as the well off and their professional advisers) can craft the details to suit themselves.

The book has chapters on trade, development and macro policies. Less relevant to me but equally enjoyable to read. For instance, he was on to the role of institutions in development some time before it became so prominent (and indeed helped make it prominent): “In the many countries that have failed to grow as far or as fast as the leaders, there are quite enough stupidities, rigidities and instabilities to explain the lack of success.”

I always find myself heading down rabbit holes at this stage of preparation: so much interesting stuff, old and new, to read.

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One thought on “Rational ignorance, redux

  1. A difficulty is that you are concerned with economists, financiers, politicians, philosophers et al. But all too often events etc. are driven by others, notably the Generals and the Admirals, who, let us say, may lack interest in these fields. Once on a General Staff, I recall that the conversations that Monty had with my lot were rather different in tone and content than the later seminars etc. at LSE .

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