Why we vote

It’s difficult to understand why people vote, let alone why they vote the way they vote.

No individual can reasonably expect her vote to determine or even influence the outcome of an election. In America, the chance of a one-vote victory margin that would determine the 2008 presidential election was about 1 in 10 million in some swing states, and 1 in a billion in places like California or Texas.

As Sam Dumitriu notes, this might still make voting worthwhile if you’re an altruist and you expect one candidate to make the world better than the other by more than a few billion dollars. But most people don’t think like this, and that has led some people to assume that voting is “expressive” – people do it to signal their allegiance to a particular tribe or team, not because they think the party they are voting for is best for themselves or the country.

Truthfully telling people you have voted certainly does seem to be a reason for voting, although the study the Freakonomics guys cite is from Switzerland, where I’ve heard they’re much more concerned with neighbourliness and civic duty than, thankfully, we are in England.

But does expressive voting determine how we vote? If it tells us anything it must mean that people are supporting parties or policies that, on some level, they believe to be counterproductive. Certainly if many (or any) people who are planning to vote Labour secretly believe that the Tories are actually best for the country, this would be a mark in favour of the expressive view of things.

In The Myth of the Rational Voter, Bryan Caplan argues that this is unlikely – people rarely feel good about voting for policies or parties that they think are bad. Group loyalty may well be a factor in determining how people decide what’s good to vote for, but surely it rarely trumps what people think is good.

In fact, barely half of each party’s voters during the current UK election say they’re proud to vote for their party. That obviously includes ‘expressive’ voters and people who like their party because they think it’s the best one on its non-identidy merits.

Another problem with this view is that it also assumes that people realise that their votes don’t matter, but when polled people vastly overestimate the power of a single vote – the median American estimates that “there is a 1 in 1000 chance that their vote could change the outcome of a Presidential election” – the reality is between one in 10 million and one in a billion, remember. Yougov finds that “the less likely you are to think your vote will actually matter, the more likely you are to vote.” (I’m guessing this is because you’re more highly educated.)

That supports the idea that people vote for reasons of civic duty primarily, and for some people because they think their vote will affect the outcome of the election. For many people, no doubt, it’s both.

All of this may help us to understand why people vote the way they vote: is it mostly self-interestedly, as many public choice economist believe, or altruistically, as most political scientists believe? I will try to answer that in my next post.

The progressive’s immigration dilemma

The freedom and wellbeing of all human beings should be important to us, regardless of their race or nationality. Because migration allows very poor people to dramatically improve their lives, often increasing their income by an order of magnitude, we should have a strong preference for more liberal migration laws in the developed world, particularly laws that favour low-skilled workers from the poorest countries.

The progressive’s dilemma is usually seen as being the fact that higher levels of immigration seem to make voters support redistributive domestic policies less. People are less happy to share with people who aren’t much like them. David Goodhart discusses this here. But this is a two-way street: the more redistributive your state, the more sceptical voters are of (at least low-skilled) immigration – this polling seems to reinforce that.

This might be aggravated in cases where immigrants don’t do much or even have a negative effect on the wages of low-skilled native workers. Not only are these guys competing with you for welfare, they’re driving down your wages too – even if theirs are rising by five hundred percent, yours falling by five percent still hurts.

But that isn’t usually what actually happens: immigrants to the UK generally don’t drive down native wages, even for low-skilled workers in the medium-to-long-run, and in Denmark they actually seem to have had a significant positive effect on low-skilled workers’ long-term earnings. In the US, there is a big positive link between immigration and native productivity (which eventually translates into higher wages). In the UK that link is also positive but is very small, almost zero.

However, in France, immigrants do seem to hurt work outcomes for natives – both in terms of jobs and, for short-term contract workers, wages.

What explains the difference? The authors of the Danish study say Denmark’s flexible labour market is what allowed the market to absorb immigrants to make everyone better off, and the author of the French study says the rigidity of France’s wage structure is what makes immigration harm natives. Incidentally, the UK, where immigrants have a fairly neutral impact on natives, is roughly halfway between those two countries in terms of labour market flexibility (according to the Heritage Foundation’s Index of Economic Freedom).

This trend seems to hold across Europe: the more rigid a labour market, the worse immigration is for native workers. That must be a factor in considering the costs and benefits of any given labour market regulation.

Poor people’s lives are made enormously better off by moving from poor countries to rich countries. Thanks to remittances, migrants also may have a significant positive impact on their home countries. For any progressive who wants to improve human welfare, facilitating more immigration from poor to rich countries should be an overriding priority.

Not only does a big welfare state reduce the number of immigrants that are politically accepted, a heavily regulated labour market seems to be associated with immigrants having a worse impact on natives. Even policies that seem like they would be good for Britons might still do much more harm than good if they make Britons less willing to accept higher levels of immigration.

This is a serious dilemma for any progressive who wants all humans to live good lives, not just ones of the same race or nationality. It means that these political concerns alone may demand a low regulation, low redistribution state.

Let the Mediterranean refugees come to work in Britain

There probably is no solution to the current Mediterranean refugee crisis, but letting more refugees come to Europe as economic migrants may be a viable way of at least making some people better off.

Last week at the European Students for Liberty Conference in Berlin I listened to Martin Xuereb, Director of the Migrant Offshore Aid Station, describe the situation. He emphasised that ‘push’ factors beyond our control, like civil wars in Syria, Libya and Somalia, and poverty in general were far more important in driving people to come across the sea than ‘pull’ factors like rescue boats.

These people are desperate, he said, and the possibility that they might be found by a search-and-rescue team if their boat sinks isn’t likely the main thing on their minds. Though no doubt that is a factor.

Given that these push factors are so strong, I suspect there isn’t anything humane we could do to stop the boats. It’s unclear how strong a pull factor the search-and-rescue boats are, but I’d weigh the certainty of stopping at least some people from drowning very highly against the indeterminate number of people incentivised to come because of them.

As Left Outside says, many of these people partially economic migrants as well as being straightforward refugees. Most of the evidence says that economic migration is positive overall and does little or no harm to the wellbeing of even low-skilled native workers. But refugees may be different – since they are mostly being ‘pushed’, they may go to countries where there are no jobs. (Economists would call this an ‘exogenous’ shock, because it’s being driven by factors beyond labour market supply and demand.)

I’ve looked at two papers that study the impact of refugees, rather than normal economic migrants, on native wages and employment.

The first, by David Card, looks at the impact of a very large number of Cuban refugees to Miami after the Mariel Boatlift in 1980 – around 125,000, which led to a 20% increase in the number of Cuban workers in Miami and boosted the city’s workforce by 7%. Card notes that the data available here is extremely comprehensive and detailed, making this a very good case study to look at.

Most refugees stayed in Miami, and comparing Miami to other Floridian cities over the same period after the boatlift Card finds no effect on the wages or employment prospects of native low-skilled workers, including black or other Cuban workers.

To be fair, Miami may be an exceptional case, because it was used to a steady stream of Cuban immigration, though at a much smaller rate, and so had a significant amount of industry that could absorb new low-skilled labour, and language problems may have been less of an issue (though language difficulties might not be such a problem, at least for men).

The second study might get around some of those problems. Mette Foged and Giovanni Peri looked at refugee influxes from Yugoslavia, Somalia, Iraq and Afghanistan to Denmark between 1985 and 1998.

These refugees were distributed evenly across the country’s municipalities without any regard to labour market conditions. This counts as an ‘exogenous shock’, like the Miami case and like an new influx of refugees to the UK would.

Forty to fifty percent of these immigrants had only secondary school education or lower and “were in large part concentrated in manual-intensive occupations”. By allowing for a deeper division of labour, the “refugee-country immigrants spurred significant occupational mobility and increased specialisation into complex jobs, using more intensively analytical and communication skills and less intensively manual skills.” That meant that native workers who might otherwise have done low-skilled jobs were able to move into more specialised, productive, highly-paid work.

As with the Miami study, Denmark may have some factors that make it special. Its labour market is very flexible and competitive, so it is easier for workers to move between industries and easier in general for people to find jobs. But that’s generally true of the UK too.

In both of these studies, the result is clear that quite large influxes of refugees driven by ‘push’ factors still did not have negative effects on natives, and in Denmark’s case had significantly positive effects.

Clearly this is not comprehensive and clearly there are other factors to consider (such as crime and, at least in the Syrian case, terrorism). But it does suggest that allowing more refugees into Britain should not be harmful to native Britons’ job prospects or wages, and may be beneficial to them.

Creating something like a guest worker programme for Syrian or Somali refugees would not stop the boats, but letting more come legally and safely would free at least some people from the nightmarish civil wars that they are now risking their lives to escape.

One tax hike I’ll be hoping for in the Budget (and some cuts as well)

Back home in Ireland, it’s said that asking for directions will often get you the reply, “I wouldn’t start from here.” We might say the same thing about the UK’s tax code. Nobody drawing up a tax system for the country would create anything like what we have right now, and when it comes to reform – well, I wouldn’t start from here.

One example, which I talked about on the Today Programme this morning, is VAT. VAT is usually considered to be one of the least bad taxes around: in theory, it doesn’t discourage production, it isn’t very regressive, and it doesn’t distort the economy.

I say “in theory” because in practice the UK’s VAT system is a mess. It is riddled with exemptions (I am including zero-rated and reduced-rated goods in this) that distort people’s spending, which means that resources are being wasted, because people are buying relatively more of the untaxed goods and less of the taxed ones than they would be if the playing field was level.

The usual argument for these exemptions is that they are needed to reduce the burden on the poor. This is a powerful argument but it is wrong.

Many of the exempted items are unlikely to benefit the poor anyway – financial services, the construction of new dwellings, domestic passenger transport – but even for things like children’s clothes and food the argument is wrong. Although poor people spend a greater fraction of their budgets on exempted items like these, total spending on these goods rises with income, so most of the forgone revenue is actually from the rich.

The extra money raised could easily offset the extra cost to the poor by reducing income taxes on them (including national insurance contributions) or by raising the Universal Credit payment level. We could actually offset the extra cost to almost everyone, but except for people on low pay I think there are better taxes we could cut with the money left over.

The IFS estimated in 2010 that scrapping all VAT exemptions would raise an extra £26-28bn, based on 2010-11 numbers. Conservatively, rounding that up to £30bn to account for the larger economy, and spending half on boosting the incomes of the poor, we have £15bn left to play with. We’ve suggested scrapping capital gains tax to boost investment and using the rest to reduce the deficit.

In simplifying VAT we can make one important tax much less destructive without hurting the poor and use the money left over to cut taxes that are even worse.

Politically, this might not deliver good headlines, but if it was done at the start of the next Parliament the boost to people’s living standards by the next election could, improbably, make raising taxes on food and children’s clothes a real winner.

We might not want to start from here to get our sensible tax system, but this is one reform that could be a good step in the right direction.

Believe it or not, people actually like smoking and eating fatty food

Public information campaigns and nutritional labelling are good at informing people about what’s healthy and what isn’t, but don’t seem to have much impact on what they actually eat. That’s what a comprehensive review of 121 ‘healthy eating’ policies found, and I think it should make us rethink more heavy-handed policies to do with unhealthy food, tobacco and alcohol.

There are benefits as well as costs to every activity that public health groups want to discourage. We know there are benefits because people do them freely. But we know there are costs as well, like living a shorter and less healthy life.

The liberal view is that each person’s cost-benefit calculation is different, because they enjoy and dislike things differently. In this view there’s no case for stopping people from doing things unless they don’t actually have the information they need to make a judgement. We should want to make people’s lives better as they themselves understand ‘better’, not according to a single measure we’ve decided on, like lifespan.

So telling people that sugar makes them fatter may be a good policy, if they didn’t already know that. And policies that do that do seem to make people more informed. But what’s interesting is the impact they have on people’s diets – usually not much, and sometimes an unexpected one.

For example, a 2008 study found that people who used nutrition labels had big increases in fiber and iron intake, but no change to their total fat, saturated fat or cholesterol intake. The UK’s ‘five a day’ campaign about fruit and veg was very successful at getting people to think about eating more fruit and veg, but increased people’s intake by an average of 0.3 portions a day (which was not viewed as being a very good improvement). 44 studies of similar campaigns in the US and EU have shown about the same size effect.

To some people that might make it look like we need to do more. To me it looks as if people view the costs of changing their diet to something less enjoyable or convenient as being quite important, and are willing to forgo some level of health to avoid that.

Maybe this tells us something about cigarette regulation too – there is some evidence that smokers actually overestimate the risk of smoking and some that they underestimate it. If they do overestimate the risks, we’re ‘informing’ people so much that it’s become misleading.

It would be fair to respond to this that people have no real way of doing a proper cost-benefit analysis about eating sugary foods or smoking, but because the state can’t measure the benefits – that is, the pleasure – it is just as limited.

The fact that people do change their habits about iron and fibre, but not fats, suggests that they aren’t ignorant, they just don’t want to eat less fat! If that’s the case and we’re working to improve people’s lives on their terms, there is no case at all for more heavy-handed policies like taxes, ingredients restrictions and advertising bans.