Evidence Suggests That Voter Errors are Systematically Biased
In his excellent book The Myth of the Rational Voter, economist Bryan Caplan shows that voters tend to have systematically biased views on economic issues, which leads democratic systems to select policies that give them the opposite of what they actually want. Farm subsidies are a perfect example. Agricultural commodities come as close as we can get to the neoclassical model of perfect competition, and yet farm subsidies are every bit as popular in non-farm as in farm states. Votes are very, very noisy signals but prices, on the other hand, convey information very clearly. Caplan argues that deciding things through elections rather than through markets means that we are more likely to make mistakes. Therefore, we should limit the range of things that are decided politically and increase the range of things that are decided through market channels.
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To follow-up on my previous comment: We know that markets and votes yield different results. But we cannot say with certainty which of the results is the "correct" one, because we cannot know for sure what people really want. In fact, it is more likely that votes are correct and markets are biased, because people give more thought to their voting decisions than to their grocery shopping. When buying food, people don't consider all the factors they care about. When voting for farm subsidies, they consider more factors than when they go shopping. There are numerous debates in the media and civil society about voting. There are much fewer debates about shopping. Voters, as uninformed as they may be, are certainly more informed than shoppers.
So we should react to the difference between democracy and markets by joining the side of democracy, extending the range of things that are decided democratically and reducing the range of things that are decided through market channels.
I have read Dr. Caplan's book, and his evidence does not support his conclusions. Evidence suggests that voter choices are different from consumer choices - but which of these are the "errors" is a matter of perspective.
What Dr. Caplan has actually discovered is that there is a significant and consistent difference between the way people vote and the way they behave in the market. For example, in the market they would prefer cheaper food, but in voting they support farm subsidies, which make food more expensive.
Dr. Caplan chose to call this "voter bias." He assumed - for no particular reason - that markets are the measure of what people "really want." So if they vote in ways that go against their market behavior, they are "making a mistake." But who is he - or who are you - to decide which is the mistake and which is the correct choice when people behave inconsistently? Perhaps votes truly reflect people's wishes, and the markets are the ones that are biased and prone to mistakes.