An Economic Theory of Democracy: The Process of Becoming Informed

by Anthony Downs

Reaction against economic theory: Information is attainable only at a cost. Ratioanl decison-makers acquire only a limited amount of information before making choices and all reporting is biased because the reporter must select only some of extant facts to pass on to his audience, therefore, a rational citizen keeps properly well-informed by exposinh himself to a particular set of information sources has chosen for the purpose.

The Role of Information in Decision-Making:

To be rational, a man must know what his goals are, the alternative ways of reaching them, and the probable consequences of choosing each alternative. Rationally deciding how to vote goes as follows: gather all relevant information to each issue for which political decisions have been made, select information that will be used in voting, for each issue, analyze the facts selected to arrive at specific factual conclusions about possible alternative policies, appraising the consequences of every likely policy in light of relevant goals, coordinating these appraisals of each issue into a net evaluation of each party in the election, making a voting decision based on comparing the evaluation, actually voting. Voters delegate these steps to someone other than the voter: time is a scarce resource to be used for assimilating data. The fewer costs the voter performs himself, the fewer costs he bears directly and it allows him to make use of economies of scale and the expert knowledge of specialists.

The Process of Becoming Informed:

From among many sources of information, he must select only a few to tap. The object of his choice is creation of a system of information acquisition which provides him with data that are both chosen by means of selection principles in accord with his own and comprehensive enough to enable him to make the decisions he faces. A rational person makes selections that provide versions of events that closely approximate the versions they would formulate themselves were they expert. A man's selection principles are rational if application of them provides him with information that is useful for making decisions which will bring about the state he most prefers: no one suits all men. Necessarily hypothetical and subject to great error.

The Quantity of Information It Is Rational To Acquire:

Some people acquire information as an end itself. An information seeker invests resources into procuring data until the margin return from information equals its marginal cost. At that point, he makes a decision. The disparity between real behavior and the procedures in the model to appear striking since few people behave in the manner described, but assumes these are implicit assumptions even if casual observation fails to confirm it.

The Need For Focusing Attention:

Any differences between the way one party would run the government and the differences between the way the other would is relevant, including trivial ones in administering obscure agencies. It is not possible to know which ones are revelant with knowing what all of them are. The cost of discovering the latter is prohibitive to the average voter. Voters need a device to know how to avoid the staggering difficulty of comprehending everything the government does and everything its opponents would have done differently. Areas of decision where opposition parties contest the policies of the incumbents; areas of decision in which the presently governing party changed the government's method of reacting to or handling a situation; areas of decision in which the situations to which the government must react are markedly different from those extant under preceding governments. If voters focus on these three areas, they will be rational.

Characterisitcs of a Rational Information System:

Every rational citizen constructs for his political usage a system of information acquisition that consists of a limited number of information sources, a part of whose data output he selects to use in political decision-making. He must rely on a rather crude process of trial and error to construct this system. The data reporters are identifiable with his own yet also broad enough to report anything of significance in differential areas. It provides him with enough information about each issue for his decisions, given his desire to invest in information. It possesses sufficient internal plurality so that its parts can be used as checks upon each other's accuracy and deviation. Creating this system absorbs scarce resources, the cost of which must be balanced against the returns from the information obtained.

Summary:

Decision-making is a process which consumes time and other scare resources; hence economy must be practiced in determining how many resources shall be employed in it. The prinicples of selection they employ depend upon the end for which information is a means, but some principles are inherant inevery report; so all information is biased. Information used by one citizen is gathered, transmitted, and analyzed by others: if the user is to know what his information really means in terms of decision-making, he must be sure others have the same principles of selection. Each citizen decides how much information to acquire by utilizing the basic marginal cost-return principle of economics: marginal return from information is computed by weighing the importance of making a right instead of a wrong decision, to his value is applied the probablility that the bit of information being considered will be useful in making this decision. Much of this is a transferable cost, but the time for assimilation is a nontransferable one. The decision-maker continues to acquire information until the marginal return equals the marginal cost.