Sunday, August 30, 2009

I have always wondered why Indian voters send some people, grossly inefficient with little or no political experience, to the Parliament. This is especially the case with the offspring of popular politicians who have nothing but a surname tailing them. A possible reason surprisingly spurted while reading the obit of the no-longer ‘Liberal Lion’, Ted Kennedy. Entering his 30s in 1962, Ted became the senator from the academically famed state of Massachusetts — as the President’s kid brother.

Hardly was he welcomed in the senate and expectations were pretty low as well. But forty years later, he is arguably one of the best senators that US has seen in some time.

For the kids, women, the old and the downtrodden could hear their voice heard in Washington, in a mellow but persistent tone. Ted’s zeal to “get something done” did make him give up on Presidential ambitions and dedicate his life to public service. This shift is said to have been caused by his one-night mistake of “failing to report the fatal 1969 accident, in which he drove off the bridge at Chappaquiddick, leaving a young woman to drown in the car”. Redemption reconciled his life with an august aura.

So how do voters reinvest their faith in erring politicians like Ted? Because some are prone to bask in “self-fulfilling prophecies”. These prophecies propel voters to elevate even no-brainer politicians to positions of influence. And why do they do this? Maybe, because of what is called the “Pygmalion Effect”. Named after a myth where a Cypriot sculptor, Pygmalion sculpts a lady statue and that too after getting disenchanted with women. Pygmalion begins to be bowled over by the beauty of this statue so much that he begins to treat it as life-filled. Seeing the sculptor’s agony, Venus instills life into the statue.

Much like this myth, the voters too elect some people — political statues devoid of any experience, expecting that they will do great. And the elected do well some times, provided they give considerable value to a voter’s expectation. Fine, this explains first-time election. But what about re-elections?

Murderers and convicts seem to be triumphantly winning. My guess is that voters suffer from “asymmetry of information,” a concept for which the Noble Prize in Economics was awarded in 2001. One party exploits the lack of knowledge of the other party, to create an information asymmetry. This asymmetry can lead to:

1. Adverse selection – Immoral behavior that takes advantage of asymmetric information before a transaction. For example, a person who is not in optimal health may be more inclined to purchase life insurance than someone who feels fine.

2. Moral Hazard – Immoral behavior that takes advantage of asymmetric information after a transaction. For example, if someone has fire insurance they may be more likely to commit arson to reap the benefits of the insurance.

Voters are also prone to be both these problems. A voter, not in optimal health of having the right information, can buy the contestant’s theory pretty easily. Say, the false information about how well an employment program is benefiting everyone. Even a listening voter may feel the one beside may have benefited. This too is asymmetry of information among voters. This is about adverse selection.

Then, moral hazard is the “prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.” Typical voters, if from the rural-side are often subdued and if residing in cities, are often insulated from the larger risk their voting entails. This greater insulation from their actions’ risks results in a moral hazard.

In either case, the point is to make more information available and convert it into meaningful knowledge, by public intellectuals, for the greater good of the society. One way to do this, but now fast disappearing, is street plays – an inexpensive mode of passing on information effectively and vividly. Hardly is there any hazard in this.

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