Can I Have Some Politics With My Investment Incentives?

On Sunday, The New York Times unveiled the first of a three part "investigation" of investment incentives in the United States. The story has generated a lot of media chatter, and caught my attention because I actual study investment incentives, albeit within the context of developing non-democratic regimes. I plan to write a series of posts directly engaging with the Times reporting, and I want to start with a short post laying a critical framework.

The report finds that states and local governments in the U.S. provide, on average, a combined $80 billion in investment incentives each year. The author, Louise Story, frames the issue as a tradeoff between incentives and broad-based government spending; investment incentives amount to a transfer from workers to businesses. Today, the second part in the series focused on Texas's incentive program (it's the biggest in the country), and blames its excess on the close relationship between a tax incentive consultant G. Brint Bryan and basically every elected official in the state of Texas. Tomorrow's installment will focus on incentives for the entertainment industry.

As someone who studies this stuff, I'm glad it's receiving national attention. The New York Times released a database cateloging the investment incentives, which I along with many others will be glad to use for our own research purposes. Yet, there are some real weaknesses with Story's analysis. And, while she mentions economists who have concluded incentives are inefficient, she never once sources good work in political science about the political motivations for providing incentive packages.

The closest Story gets to a political explanation for incentive programs comes when she mentions academic research that concludes incentives are inefficient:

One, [economist]  in Minnesota, used mathematical proofs and game theory to show that competition between states did not increase overall economic value. Several other economists have since called the practice a zero-sum game. 

Okay, let's unpack that a bit. Incentives inherently are inefficient because, best case, they induce a company to invest in a location that it otherwise wouldn't because doing so without the incentive doesn't make financial sense. If investing made financial sense, a government shouldn't need to offer an incentive in the first place. But, of course, the investor-government relationship doesn't exist in a vacuum. States and localities (not to mention other countries) are all trying to entice companies to invest within its borders. So, capital has leverage because it is mobile and governments will engage in competition with one another for the investment, ratcheting up the value of incentive packages. Story takes this as evidence that incentives are bad and should be curtailed. As a political scientist, the inefficient outcome is the starting point because it is puzzling: Why do governments offer incentives when they are inefficient? Story's answer seems to be "because tax consultants have corrupted the halls of power." This is an incredibly unsatisfying answer. Why did the tax consultants get so much political power in the first place? Why can't politicians just freeze them out?

Indeed, there is actually a decent amount of work in political science devoted to understanding incentive programs and policies toward foreign investment. Nate Jensen has a really neat working paper along with several other authors in which they use experimental data to show that U.S. voters reward governors who offer firms incentive packages and punish those who don't. Sonal Pandya finds workers, and in particular skilled workers, are more inclined to support efforts to attract foreign investment. At a global level, the lack of an institution governing investment policies is routinely pointed to as the source for recurring prisoners' dilemma-type dynamics. Politicians provide incentives because the localities with which they are competing for investment provide them and because their constituents reward them for doing so. You don't need a story about corruption to understand the dynamics perpetuating incentive programs.

I mention this because I don't think the corruption meme is helpful. What drives the high value of investment incentives in the US is fiscal federalism. If the Federal government had authority over taxation and investment incentives, states wouldn't be able to use the tax code to compete against each other. This is a distinction that is lost in the New York Times report. Story finds it bizarre that, amid a national discussion about austerity and government debt there hasn't been a sustained discussion about investment incentives. Well, investment incentives happen at the state and local level, so it's unsurprising that dicussions about the national budget don't normally veer off in this direction. Moreover, investment incentives, for the most part, do not generate budgetary outlays - a point Story obscures in her reporting. Of the $80 billion in incentives offered each year, $70 billion are in the form of income and sales tax exemptions or reductions. Sure, this $70 billion can be considered lost revenue, but it doesn't amount to spending and it is also difficult to determine exactly how much tax incentives cost because firms often argue that they would not make an investment without the incentive. When governments do provide incentives that require budgetary outlays, mostly in the form of loans, a national discussion often ensues (remember Solyndra?). 

In all that, I have hardly touched the global conditions that affect policies toward investment. I'll discuss that further in a follow-up post.

 

Changes

Look for a few changes around here as we move toward the new year. First, we are recruiting new contributors. Robert Galantucci has agreed to join us as an occasional contributor. Rob is a graduate student in political science at UNC with interests in US trade politics. Prior to returning to school, Rob was a practicing attorney with a specialty in trade law. Welcome aboard, Rob!

We are actively recruiting contributors, so look for more new voices soon.

Also, many of you may not have heard, Will has found a job and will be leaving UNC for better pay. Congratulations, Will! I will let him provide details. In the short run, this means he may be likely to dissertate more and blog a bit less. This may have long term implications for us too, but these remain uncertain.

UNC Everywhere

Right at the middle of the budget negotiations:

“There’s a standoff, and the staff hasn’t gotten anywhere. Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And [the House Republicans] keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

Rob Nabors received his M.A. in political science from UNC before going to work in D.C. at the Office for Management and Budget. He was also the co-author of Thomas' most-cited paper (per Google Scholar).

Is There An Asian RMB Bloc?

Michael Pettis says "no". But that doesn't mean the RMB doesn't matter. It does. Just not so much for the US or EU or the broader currency reserve and exchange system. It matters more for China's competitors in global export markets.

Read the whole thing. I'm looking forward to Pettis' forthcoming book as much as any scheduled for next year.

Potential US-EU Trade Deal Inverts Typical Trade Politics

Standard stories of trade politics often begin with reference to Olson's logic of collective action, which argues that small groups with common interests may be able to effectively mobilize politically, thus influencing policy in ways which benefits them at the expense of the majority. Trade generates diffuse benefits for large numbers of consumers but concentrated costs for smaller numbers of (comparatively disadvantaged) producers. Consumers will find it more difficult to overcome collective problems and mobilize politically than affected producers. Therefore, the logic of collective action expects trade policy to be protectionist absent two conditions:

1. A countervailing small group of comparatively advantaged producers that is able mobilize politically in favor of open trade, at least for their goods/services.

2. An international negotiating process that allows states to reciprocal concessions: you liberalize your comparatively disadvantaged markets and I'll liberalize mine.

But the trade deal that the US-EU are negotiating inverts this dynamic. According to the NY Times, because trade between the US and EU is already relatively liberalized, the benefits and costs of further liberalization are diffuse:

Tariffs on goods traded between the United States and the European Union are already low, averaging less than 3 percent. But companies that do substantial amounts of trans-Atlantic business say that even a relatively small increase in the volume of trade could deliver major economic benefits. 

“The reason we care about this is because these base line numbers are so huge,” said Karan Bhatia, a former deputy U.S. trade representative who is now vice president for global government affairs at General Electric in Washington. “This could be the biggest, most valuable free-trade agreement by far, even if it produces only a marginal increase in trade.”

As a result, the normal political dynamic does not exist, and all of the major parties seem to be in support:

There does not seem to be any broad-based political opposition to an E.U.-U.S. trade agreement, as there was to Nafta.

Indeed, the political push seems to be for more liberalization rather than less:

Last week, a coalition of food and agricultural groups led by the National Pork Producers Council in the United States wrote to Mr. Kirk, expressing concern that a free-trade agreement might leave them out.

The council complained that in the past, Europe had blocked imports of genetically modified corn and soy products and objected to American companies’ use of product descriptions like “Parmesan” cheese. In Europe, that label is reserved for cheese that comes from the Parmigiano-Reggiano region of Italy.

Presumably Italian cheese producers would be opposed to this, but because the margins are so low they may not be willing to pay the high costs necessary to build a broad enough coalition which would be able to meaningfully impact the bargaining process. And, in fact, it seems as if no such coalition has yet formed:

“I haven’t heard anyone say it doesn’t make sense,” said Peter Beyer, a member of the German Parliament from Ms. Merkel’s party, the Christian Democrats, and a major advocate of an agreement.  

That could always change as details from the plan emerge. Technical details can matter quite a lot in these negotiations, particularly if the negotiators start harmonizing technical standards on goods like pharmaceuticals. But because the underlying dynamic is different -- diffuse benefits and costs rather than diffuse benefits but concentrated costs -- this negotiation may go more smoothly than other trade deals.

Finally, this deal could invert trade politics in another way: by bringing other countries back to the WTO table to complete the Doha round. I wrote about the potential for that previously.

Shall We Continue in Sin, So That Grace May Abound? God Forbid.

I used to blog sometimes about how many things we call "public goods" really aren't. People label things they like "public goods" because it eliminates opposition of the public provision of these goods. So folks call all sorts of things "public goods" which are not public goods: education, health care, etc. Actual public goods, which are both non-excludable and non-rival in consumption, are pretty rare. I stopped harping on this because I thought I'd made my point and nobody else seemed to care.

But now I see Mike Munger twisting himself into knots over whether roads are public goods, so I'd like to revisit the topic. Munger's conclusion is that roads are public goods, kind of, sometimes. But not other times. He reaches this conclusion by comparing the marginal cost of use under different scenarios: if the addition of the marginal car has a zero (or near zero) impact on the cost of the using the road then it is a public good; otherwise it is not.

This is mistaken in the same way that it is mistaken to say that the "Tragedy of the Commons" is a story about externalities (or public goods). A public good is not defined by comparing the cost of additional units of consumption at various margins. For true public goods the marginal cost of additional unit of consumption is negligible at all margins. That is the definition of a public good: increasing consumption does not reduce the amount of consumption available to others. When we compare costs at varying margins all we're doing is talking about relative levels of scarcity. Public goods are not, cannot, be sensitive to scarcity.

To understand where this logic ends consider that under Munger's definition -- public goods are good, and less-used roads are the most public goody of all roads -- we should build a bunch of roads (and bridges) to nowhere. Almost no one will use them, so the marginal cost of an additional vehicle will be the closest to zero that it can possibly be. Let's start building!

This is the sort of absurdity for which Saul of Tarsus admonished the early church in Romans 6: if God's grace is good, and grace is only extended to cover sins, then should we sin as much as possible in order to maximize grace? Of couse not. Similarly, we should not build roads which will not be used.

Roads are excludable: to use them you must possess a motor vehicle as well as an assortment of licenses and insurance contracts which permit you to operate that motor vehicle on that road. You and your vehicle must also physically be in the place where the road is. Roads are also rivalrous in consumption: the more people use them the fewer additional people can use them without congestion. Roads are therefore not public goods. Ever.

It does not necessarily follow that there should be no public provision of roads. Just because something is not a public good does not mean that there is no reason for public provision of it. There may be a case which can be made on consequentialist grounds that collective action (via taxation) to provide a non-public good is justifiable. I believe that many roads will pass this sort of cost-benefit test. But this case needs to be made on its own merits.

And if we make that case on its merits, we will likely come to the opposite conclusion of Munger: scarcely-used roads in rural areas are the ones which should be tolled/taxed. Why? Because the case for public funding of roads is not that they are public goods, but that they increase efficiency by reducing transaction/transportation costs. They function like a utility in an environment where a monopolistic market structure is likely to be more efficient than a competitive market structure so long as the monopolist is not a profit-maximizer (i.e., where the monopolist's producer surplus is redistributed to consumers, i.e. where the monopolist is a government -- subject to an electorate -- rather than a firm). Those efficiency gains will be highest when and where the roads are used the most, and lowest when and where the roads are used the least. Public subsidization should be highest where there is the most potential for efficiency gains. This occurs in the busiest areas.

If we see lots of congestion on some roads that is a signal that we should build more roads there. Not to make roads more like public goods (by reducing the cost of the marginal unit of consumption), but to try to reap the social gains from whatever economic activities are causing the congestion. If we cannot build more roads (because there is no empty land, say) then we should build some other transportation network, like bike paths or subways, to allow people to engage in productive activity more easily. The positive spillover effects from such investments are more likely to pass a cost-benefit test than in a rural area.

I'm not opposed to congestion pricing in general, but we need to recognize congestion pricing for what it is: a tax on productivity. People don't drive into Manhattan during rush hour because they enjoy it. They go through that nightmare to get to work, often in high-wage/high-productivity sectors of the economy. I'm not sure why we'd want to discourage that.

In Which Daron Acemoglu and James Robinson Explain Why I Am Getting My PhD In Political Science

In our last post we noted how Lord Lawson of Blaby used our arguments in Why Nations Fail to bolster his claim that Britain should not be committing itself to spend 0.7% of GDP on development aid. In his speech he noted: 

A useful analysis, which I commend to the House, is to be found in a penetrating new study, Why Nations Fail, by a couple of economists, Acemoglu and Robinson…

A couple of economists? Actually, James Robinson likes to refer to himself as a “recovering economist”… 

Why? Because to paraphrase Bill Clinton’s famous adage: “It’s the politics, stupid” — at least when it comes to understanding economic development.

I wouldn't limit it to just economic development. I would argue that the same applies to almost every sub-branch of social life. This is why decided to pursue post-graduate study in political science rather than economics, which was my undergraduate major. Fine, whatever, that's what I did and why I did it. No one cares. But Acemoglu is one of the most prominent young(ish) economists in the game, winner of the 2005 John Bates Clark Medal. And he's saying that the academic discipline of economics isn't up to snuff.

That ain't nothing.

The quote above and more can be found here.

IPES

I'll be there. Say hello if you will be too.

The Story of This Election Is That There Is No Story

For about five minutes it was really fun to see everyone taking statistical modeling of political outcomes seriously. Well, ostensibly seriously. It was troubling that this was only done by the side whose preferred outcome was the one being forecast, but I had some hope that this might stick. Silly me. Immediately after the outcome became clear the same folks that were praising statistical models ten minutes prior discarded them in favor of ad hoc narrative.

This is unfortunate on a number of levels, not least because there is more at stake here than Nate Silver's reputation on Twitter. Silver was important because he was the closest that political science permeated the mainstream coverage of the election this cycle, and his case became both a bellwether and a rallying call. This in itself is unfortunate, since the consensus of various political science models of electoral outcomes had been predicting an Obama victory pretty consistently since last winter at the latest. So it's unsettling to see the lessons on offer being cast aside so soon. There are far more egregious examples than the one I'm about to present, but reformation begins at home. So I'll pick on my own home -- that being the IR blogosphere, in this case -- first.

Dan Nexon wrote:

But the 2012 election makes clear how far the GOP has strayed into the epistemological wilderness.

With respect, Dan, I just don't think this is true. What the 2012 election shows -- or, instead, what it reiterates -- is that incumbent presidents have a very large electoral advantage when the economy is growing. Almost every model that I've seen based on "fundamentals" -- even the generic-candidate ones, which zero out all the "binders full of women" and "Big Bird" and even "47%" and Super PACs... all of it -- showed Obama with a pretty high likelihood of winning. And I think those models likely dramatically understated the case, considering the depth of the trough the economy has been digging out of since Obama took office. The most similar historical precedent we have led to a presidential administration so popular that, absent mitigating factors like human mortality, it seemingly would have continued in perpetuity, thus necessitating a constitutional amendment which instituted presidential term limits. So there were very good reasons to think Obama was the strong favorite all along, no matter what the GOP did and even before they did it.

And that was in fact the case. Obama fluctuated in between 60-75% chance of victory for most of the past year, according to the best political science of which I'm aware. See this very simple one, which was so simple that even poli-sci sympathizer Ezra Klein doubted it despite commissioning it! It had Obama at 67% and incorporated no new information after June, and not much up until then. I know that a few models here and there deviated from that expectation, but they were often the models with the least amount of empirical support behind them.

As such, I think the story of this election is that there is no story. At least, there isn't a story if we're going to take political science seriously, other than we should take political science seriously. And the "we" in that sentence begins with political scientists. If our models expect Obama to win because the economy grew out of a deep recession, plus he had an incumbent advantage, then we should accept that as the best explanation for his victory until another story with better evidence comes along. Those factors have historically been very powerful forces in presidential elections. They remain very powerful. The only other possible takeaway that would be well backed up by prior theory would involve demographic dynamics, but even that isn't really needed. And if the GOP is in the "epistemological wilderness" then how the hell did they sweep the 2010 midterms? Are epistemological wildernesses created in two short years?

Maybe. This is not an analogous event in need of explanation. This is exactly what we should, and did, expect. So I'd go with the models until given a better reason to abandon them.

P.S. I agree with Nexon's general take on the desirability of the current GOP. (Although I am less sanguine than he about the Democrats, maybe.) But the best case evidence for that does not come from this presidential election. As someone at The Monkey Cage pointed out recently, the GOP has lost four lost Senate elections in the past two cycles -- Delaware ‘10, Indiana ‘12, Nevada ‘10, Missouri ‘12 -- which almost certainly would've gone to the GOP had the Tea Party not moved the GOP platform away from the median voter. Those four seats currently represent the difference between majority and minority in the Senate. So maybe Nexon's got something there, but this is also in line with the common models: if you move to the extreme, you will lose.

P.P.S. It is also not exactly regrettable for someone who identifies with the left generally, as I believe Nexon does. If the GOP wisens up in the ways that many are asking them to (including both me and Nexon) one by-product will likely be less Democratic success in future elections.

This touches on another habitual harangue of mine, which is that the Tea Party is the left's best friend right now but that the left is too myopic to realize it. The left still has no guiding ideology of its own that is capable of moving the median voter leftward. , The American voting public still skews center-right despite it all. The only thing giving the left a chance are extremists on the right pulling the GOP away from the middle. Without the extremists on the right, the Democratic Party might not have won a presidential election from 1976-2008. Think about it. Without Perot, perhaps Clinton doesn't win in 1992 (although some political science suggests that Perot hurt Clinton at least as much as HW Bush, and the fundamentals were weakly in Clinton's favor). Without Clinton in 1992 it is unlikely that a Democrat would have won in 1996. And... that's it until 2008.

[Ed. Light edits for clarity shortly after posting.]

On Voting

My attitude towards voting is simple: as an expressive act, a form of signaling, it is fine. For any other purpose which comes to mind it is not fine. It is at best ignorant and at worst an attempt at deceit for purposes of self-aggrandizement.

I put things so starkly because I would like to clear more room for folks to say "I voted because I like to vote" and have that be accepted as a valid reason with no need for further justification. I would also for there to be more space for folks to abstain without opprobrium. During this season these are priorities of mine for both normative and positive reasons. Normatively, because it drives me batty when people feel the need to claim that the simple act of voting -- cheap talk if there ever was such a thing* -- is Virtuous and Good and Efficacious, while abstaining is Derelict and Uncivil and Defeatist**. Such a sentiment is not purely expressive; it is moralism of questionable provenance (I'll get back to that), it is not uncommon, and this moralism is sometimes draped in the cloth of pseudo-science.

Which leads to the positive concern: I am a political scientist, and every theoretical model and empirical finding in political science of which I am aware suggests that voting for instrumental reasons has no justification under any reasonable assumptions about the state of the world. In fact, the logic of democracy means that if that were not the case then the democracy would be malfunctioning, likely in ways which would call the act of voting even further into question.

As such I am in agreement with Phil Arena. The whole post is worth reading, but a key point occurs when he goes after Andrew Gelman, a prominent political scientist who has argued that voting may indeed be rational in some, maybe even most, circumstances. Here's Gelman (with sics):

In swing states (or for close non-presidential elections), though, it’s a different story Aaron, Nate, and I have estimated the probability of your vote being decisive in a swing state as being in the range 1 in a million to 1 in 10 million. Low, but not zero, and Aaron, Noah, and I argue that it can be make sense to vote because of the social benefits that a voter might feel arise from his or her preferred candidate winning.

Here's Arena:

Your vote is not going to decide which candidate wins. It's not. As Levitt says, when it gets close, they go to the courts. You know what else is a fabulous indicator that it's a flat-out lie that every vote counts? The fact that media outlets will announce which candidate won each state before election officials are done counting the votes. Can you ask for more explicit evidence than that? They literally do not count all the votes before determining the winner, and yet people say that every vote counts. Are you kidding me? Or do you just not know that words have meanings? Even in those cases where it's really close, the final vote count is going to be contested, at least at the presidential level. At that point, the outcome depends upon whose definition of a valid vote prevails, not whether you, dear reader, cast a vote for your preferred candidate.

Which is correct. It is not, in my opinion, the best part of Phil's post -- that would be the part where he attacks the self-righteousness of voters who think that if they were the deciding vote the Whole Wide World would be much off -- but it is a valid rebuttal. To my knowledge no national election has ever come down to a single vote, and if it ever did it would be litigated for centuries.

Even still Arena is giving Gelman's argument more credit than it deserves. In fact, Gelman doesn't have an argument. He simply pretends as if there was a utility function out there such that it would make sense for people to vote at 1/10,000,000 odds (those are only the swing state voters, not the median or modal or otherwise typical voter). So far as I know no such utility function has ever been modeled or tested against peoples' actual subjective utilities, and Arena points out numerous analogous situations in which folks generally behave differently -- getting in a car crash, getting shot while on campus, etc. -- despite similar or better (worse?) odds. Is it possible that someone somewhere fits the bill? Sure, there are extreme outliers. But that's now what Gelman is driving at, even including the caveats. Over 100,000,000 million people will vote in this election. How many of them will have anything even close to 1/10,000,000 chance of being the decisive vote? 0.00001% of them, at most? That leaves the other 99.99999% in need of explanation, and quite frankly I find that a bit more interesting and important.

It gets still worse for Gelman. His entire argument is a political science version of Pascal's Wager. Pascal's Wager is exceptionally easy to dispute as a simple matter of logic and probability (see here for a few easy ways), so if we wanted to we could simply dismiss Gelman on grounds of absurdity and move on.

But it's even worse than that, because Pascal's Wager assumes that if you win the bet the reward is infinite. That was Pascal's entire justification for taking the gamble. It is also one of its logical flaws. Gelman doesn't go quite so far, mercifully, but as Arena usefully points out Gelman's view of voting "as equivalent to the purchase of a lottery ticket which, if it wins, corresponds to a huge donation to a charity" has a view of politics which is the antithesis of all actually existing political science theory (of which I'm aware). Political science models elections as something very different from charitable giving. As Arena puts it:

We have very good reason to believe that, no matter who wins, close to half of the population will suffer an enormous loss of subjective utility on election night. The very fact that so many people think that the outcome of the election matters is itself evidence that if your vote could determine the outcome of the election, it would not be at all like buying a lottery ticket to help the poor. No one, not no one, is going to feel devastated if a stranger randomly gives them money for no reason. Voting is much more akin to buying a lottery ticket in the hopes hiring a bunch of thieves to rob half of the country so that you can give the stuff they steal to the other half of the country.

Perhaps the reader will find the last line distasteful, but this is the rhetoric the right commonly uses to describe Obama, and it is the rhetoric the left commonly uses to describe Romney. It's the only way that elections could possibly matter. Gelman might be correct to repudiate his entire discipline, but it'll take more to convince me than he's given.

In any case, the point is that Gelman supposes -- like Pascal -- that there are no costs for being wrong. If you lose the Wager election you lose nothing, but if you win you have gained Eternity. Once again, this is absurd. If the gains of winning are so large, then the simple act of voting, if not matched by other efforts, is not rational at all. Either one canvasses with every spare moment, donates the max amount of money to campaigns, dedicates one's life to advocacy, and otherwise does everything in ones' power to achieve the desired result, or else one does nothing. If it's not worth incurring real costs then the lottery ticket for charity must not be worth so much after all. And if it isn't, then why does the act of voting, in and of itself, make sense? [Ed. I should have said that there may be some comparative static in which the combination of minimal effort + large reward is rational, but that Gelman hasn't found it. In any case the likelihood of finding such an equilibrium is, in my mind, made exceptionally unlikely by what follows.]

So Gelman contradicts political science theory. The median voter theorem might not be perfect in practice, but refinements to it have generally been marginal, not qualitative. They are attempts to uncover why the median voter theorem is somewhat less than perfect. (Search Google Scholar.) Indeed, the more perfect a democracy is, the more closely the median voter theorem will approximate reality. Achieving the will of the median voter is, after all, the entire point of democracy. This suggests that the better the democracy functions, the less valuable it will be to win an election, since the loser will be pretty close to the median voter anyway (in fact, arbitrarily as close as the winner). Which means that the expected value of voting for instrumental purposes -- which already approximates zero -- shrinks to even more closely approximate zero. At the limit it won't matter at all***.

All of this assumes that the president is omnipotent upon taking office. In reality, the expected value of one's vote being the decisive one collapses even more (if it can collapse further) by virtue of having to deal with constraints from two legislatures, the judiciary, the Constitution and other previous law, the electoral college system (or other voting rules, e.g. proportional representation schemes), and the shadow of future elections. So once we're talking about the odds of buying a lottery ticket not to win an election but to actually influence policy in a tangible way that benefits the majority, we must be in 1 in several billions odds at least. Still rational? At some point it must not be for essentially everyone. If not here, then where?

Moreover, Gelman's approach suggests that voters should not vote pragmatically, and should instead vote their conscience. After all, the chance that your vote is the deciding one which elects Romney is 1 in 10 million and with Gary Johnson it's maybe 1 in 100 million, but suppose a Johnson presidency is much more valuable to you than a Romney presidency: what's a few more decimal places among friends? Yet very few people do such a thing. They vote for a candidate that "has a chance of winning", a "viable candidate". As a rule they don't want to "waste their vote". This suggests to me that people are not voting their conscience, are not taking Pascal's Gelman's Wager. Something else must be going on.

I don't want to push the point too terribly far since revealed preference arguments are often troubled, but my best read of the situation is that people vote for candidates that they do not prefer ("lesser of two evils"), in a situation in which the probability that their vote is decisive is approximately zero, when even if it was decisive the gains would be slight and perhaps imperceptible on balance****, all for one reason: they like to be on the winning team. They like to "contribute" to the victory, because even if the "contribution" has no effect on the outcome they can feel as if it did. It's sports fandom, electoral politics -- not all politics -- is a game, and voters are the guy sitting at home watching it on television while wearing a rally cap*****.

I have no problem with that until the point that the fan voter wearing the jersey I Like Ike button insinuates that their partisanship is good for the country, or for me, or for charity, or for anything at all other than their subjective desire to feel like a winner. Because it's not. Any other assertion is either a delusion or a lie, as it is unsupported by logic, theory, or evidence. Scientists are supposed to do better, as Arena notes:

Personally, I think that anyone who really thinks that empowering their preferred party would make (most) everyone better off and (nearly) no one worse off should be disqualified from teaching political science, but maybe that's just me. At any rate, you're either profoundly insensitive to the well-being of approximately half of the population or so confident that you know what's best for them that you'd be willing to impose an outcome on them that they expressly oppose, which still means that you're insensitive to their short-term happiness. That may not make you stupid, but it doesn't say anything particularly flattering about you either.

If people wish to vote as a consumption good, they have as much of my support as they'd have if they chose to stay home and play Call of Duty on November 6th instead. The marginal effect on societal welfare is the same in either case. We would not accept as valid any argument from the gamer that (s)he has improved the lot of fellow (wo)men by pushing buttons; why accept as valid an argument from the voter that (s)he has improved the lot of fellow (wo)men by pushing levers in a voting booth?

And we would all be better off if we understood that politics is mostly not about elections.

*Don't think so? What do you think would happen to the number of voters if we charged a nominal fee -- say, $3 -- for the privilege of voting?

**The very worst are those who say "I don't care who you vote for, just vote." Why? If they don't care who I vote for then they must not care about the outcome of the election. And if they don't care about the outcome of the election then why are they voting? The statement practically contradicts itself, unless they just want to see people waste their time. In which case they are cleverer than I.

***And if it does matter -- if democracy is sufficiently imperfect that it could -- and if it could be corrected -- if greater participation pulled policy closer to the median voter -- on the utilitarian grounds that Gelman has proposed only voters that would pull the results back towards the median voter should vote.

****Or even worse. Suppose you voted for Obama in 2008 because you wanted a universal health care system, and you (against all odds) were the deciding vote. You get your health care plan, but probably not in any form which was ex ante recognizable or maybe even desirable. Meanwhile you lie awake at night thinking about the thousands dead from drone strikes, the continuation of the War on Drugs, the continuing expansion of executive prerogative, and a host of other downsides. Yes but it's better than McCain you think but is that really true? Even if it is how much consolation is it? I don't think I'd even want to be the deciding vote.

*****In other words, they are me when the Cardinals are in the playoffs. Not a pretty picture.