An Economic Theory of Democracy

"Downs comes up with a great way to describe our information lives. He notes that we each have four information demands: as consumers, as workers, as audience members, and as voters. As consumers, we’re in search of products. As workers or producers we’re in search of information that helps us do our job. As audience members, we like to be entertained. And as voters, we’re in search of information that helps us choose among candidates. “When de Tocqueville wrote Democracy in America he commented on the proliferation of newspapers in the United States.” Downs points out that the first three markets work relatively well, because if you don’t seek out the information, you don’t get the benefit. So if you want to find a movie you’ll go to Metacritic or IMDb. But the rationale of getting individual benefit from searching out information breaks down for the voter demand. In particular, he says, even if you care a lot about which candidate wins, even if more information might help you choose the better candidate from your perspective, the statistical probability that your vote will determine the outcome of the election is so small that viewed from an investment perspective, the cost of becoming informed about politics swamps the likely benefits to the individual from seeking out information to cast an informed vote. Most people sit back and free ride, letting someone else read about local school boards or global warming mitigation. He gives that phenomenon a name. He calls it ‘rational ignorance.’ It’s rational from an individual perspective, but not from society’s perspective. What it does is set up a big gap between what people want to know as audience members and what they need to know as citizens. Downs’s theory of ‘rational ignorance’ explains why stories that are important to society might never get told. In All the News that’s Fit to Sell , one of the things I explain is that there is a market for public affairs information because of the three Ds – duty, diversion and drama. People feel they have a duty to become informed. For some people, C-SPAN is as interesting as ESPN. And for some people, human-interest political stories, political scandal, and horserace coverage also give them some substantive information. Those four information demands are consistent across time, but how they are met is affected by technology. When Downs was writing, those information demands were often bundled in the form of a newspaper that would give you entertaining information, listings that would help you find a movie and who was running for the local school board. Sometimes, as an entertainment reader, through serendipity, you’d also get exposed to political information. The biggest change since Downs is the arrival of the internet, which broke the bundle and made it much easier to find information about those first three demands. It lowered the fixed costs of getting into the business of meeting somebody’s information demands about sports or giving them an entertaining story about an upcoming movie. So, since Downs, the first three roles you have – as a consumer, a worker and a couch potato – this could be the best of all times. But in your life as a voter, unbundling has meant that stories about local politics, which were once subsidized by other news, are much harder to tell. In particular, if you look at local newspapers, they once had classified advertising, which generated forty per cent of their revenue. That’s gone away and so the biggest change since Downs wrote is the increasing pressure on how you would satisfy the voter demand. In All the News That’s Fit to Sell I show that media bias, and the perception of media bias, is a little bit like product differentiation. If you look at the political press in the United States through about 1860, the press was often subsidized by political parties because of rational ignorance. The market was not generating optimal political coverage. The parties had an interest in generating that information so they subsidized the press, in part through post office appointments to sustain publishers. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . In the 1870s, you had the invention of the high-speed press, which was capable of printing thousands of copies per hour. The high cost of that press meant that it became more important for you to become a very large newspaper. The way you became a very large newspaper in a city was you took the word ‘Democrat’ or ‘Republican’ out of your title and you tried to offer a view of politics that was more objective. So I view objectivity as a commercial product, generated, in part, by the high fixed cost of running a newspaper. Fast forward to today’s internet age, the fixed cost of having a website is relatively small, so you can sustain providing opinion and information with a small audience. That allows you to go to extremes in your coverage."