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The wisdom of the crowd
published: Sunday | August 19, 2007
Cedric Wilson, Contributor
Democracy is arguably mankind's greatest political invention. It embraces the notion that government should be 'of the people' while emphasising the importance of the individual in the process. Indeed, it is that paradox that renders it both sublime and banal.
Over the last month, Jamaicans have seen democracy in its sundry manifestations. On nomination day, People's National Party (PNP) candidate Glenville Shaw, a man who is long past the zenith of his youth, in a sudden burst of athletic exuberance, attempted to hop on to a moving pickup truck and ended up with a fractured leg. Then, last week Sunday, during a Jamaica Labour Party (JLP) mass meeting at Sam Sharpe Square, overzealous party supporters seething with suspicion sent a couple workers from the media fleeing. Indeed, democracy can generate ferocious fanaticism and incredible folly.
Does democracy make a difference?
But that is not the full story. The two main parties unveiled their manifestos, albeit much too late. And during prime time for three nights last week, Jamaicans assembled around their television sets to watch the top gladiators from the JLP and PNP wrestle in a national debate.
Certainly, the presentation of contending positions, competing ideas and contrasting plans is democracy at its best. Yet, the question is: Does democracy really make a difference? Does it actually guarantee that the right persons are selected to run the affairs of country?
There is a perspective that democracy yields good results because of the 'wisdom of crowds'. While it accepts that in making decisions information is often incomplete and the understanding of the future limited, it still holds that the process of adding the views of all the contributors takes care of these inadequacies. In fact, all contributors to the process do not all have to be intelligent or rational, for that matter, to make it to work.
Implicit in the whole business of holding elections and the casting of the ballot is the magic of aggregation. Democracy contains a mechanism which results in the cancelling out of extremes. In other words, some people make mistakes because they are dumb, and at the other end of the spectrum another set makes mistakes because they are too smart for their own good. Consequently, when everything is added together, the errors of fools are cancelled out by the excesses of the super intelligent, leaving a decision that is reasonable and rational. The U.S. game show Who Wants to be a Millionaire? is often held up as an example of the 'wisdom of crowds'. When the studio audience is asked to vote for the answer, 91 per cent of the times they are correct. By this logic, come August 27, when all the votes of the hard-core Labourites, the unrepentant Comrades and the vacillating electorate, are counted, it will most likely be the correct answer to the Jamaican situation.
But not so fast! When the audience of Who Wants to be a Millionaire? is asked about facts and trivia pertaining to pop culture or recent history, they tend to get it right. However, they generally fail on more technical questions. Ask the audience something about Elvis Presley - they will know it; but ask them about the moons orbiting Neptune, and invariably they will come up short.
In this respect, there are some economists who are not exactly enthusiastic about the 'wisdom of crowds.' For them, when it comes to economic issues - rationality is myth among voters. The electorate has deep-rooted biases that prevent them from appreciating the dynamics of the markets. It makes them inclined to denounce the free flow of goods and labour across borders and deprives them of insights into the trade-off between stability and growth in the budget process. Consequently, the same electorate who wants better service from the water company will denounce its profitability as 'price gouging'. The same voter who wants to see double-digit growth in the economy will see perversity in the government when inflation is high, not realising that they are connected.
It is these biases and shortcomings that interrupt wisdom and remove the magic from aggregation. Therefore, politicians manipulate voters' irrationality by making promises, which in the end, lead to less than desirable economic outcomes. And later, the dissatisfied masses turn against them and vote them out of office.
Issues of credibility
However, in all honesty, elections are often much broader than economics. And while economics is an undoubtedly important aspect of the decision-making process, it is not the final arbiter of the correctness of the outcome. There are issues of credibility and governance, equity and social justice, vision and national pride that inform the voter. As such, to judge the rationality solely on economic criteria, is like building an edifice on too shallow a foundation.
So, with seven days plus one before the election, what are th
The JLP has presented a plan that is strong on governance and excessively optimistic on economics. On the other hand, the PNP, struggling under the weight of 18 years in office, has a more realistic economic outlook but is not exactly convincing that it is capable of effectively tackling the thorny issue of governance.
The polls have narrowed the difference between the opposing camps and both parties are almost dead even. It is anybody's guess as to who will be conceding defeat on the night of August 27. But will the crowd be wise? And if not, how will the people know? And who among the teeming masses will have the right to judge?
Cedric Wilson is an economics consultant who specialises in market regulations. Send your comments to: conoswil@hotmail.com.
published: Sunday | August 19, 2007
Cedric Wilson, Contributor
Democracy is arguably mankind's greatest political invention. It embraces the notion that government should be 'of the people' while emphasising the importance of the individual in the process. Indeed, it is that paradox that renders it both sublime and banal.
Over the last month, Jamaicans have seen democracy in its sundry manifestations. On nomination day, People's National Party (PNP) candidate Glenville Shaw, a man who is long past the zenith of his youth, in a sudden burst of athletic exuberance, attempted to hop on to a moving pickup truck and ended up with a fractured leg. Then, last week Sunday, during a Jamaica Labour Party (JLP) mass meeting at Sam Sharpe Square, overzealous party supporters seething with suspicion sent a couple workers from the media fleeing. Indeed, democracy can generate ferocious fanaticism and incredible folly.
Does democracy make a difference?
But that is not the full story. The two main parties unveiled their manifestos, albeit much too late. And during prime time for three nights last week, Jamaicans assembled around their television sets to watch the top gladiators from the JLP and PNP wrestle in a national debate.
Certainly, the presentation of contending positions, competing ideas and contrasting plans is democracy at its best. Yet, the question is: Does democracy really make a difference? Does it actually guarantee that the right persons are selected to run the affairs of country?
There is a perspective that democracy yields good results because of the 'wisdom of crowds'. While it accepts that in making decisions information is often incomplete and the understanding of the future limited, it still holds that the process of adding the views of all the contributors takes care of these inadequacies. In fact, all contributors to the process do not all have to be intelligent or rational, for that matter, to make it to work.
Implicit in the whole business of holding elections and the casting of the ballot is the magic of aggregation. Democracy contains a mechanism which results in the cancelling out of extremes. In other words, some people make mistakes because they are dumb, and at the other end of the spectrum another set makes mistakes because they are too smart for their own good. Consequently, when everything is added together, the errors of fools are cancelled out by the excesses of the super intelligent, leaving a decision that is reasonable and rational. The U.S. game show Who Wants to be a Millionaire? is often held up as an example of the 'wisdom of crowds'. When the studio audience is asked to vote for the answer, 91 per cent of the times they are correct. By this logic, come August 27, when all the votes of the hard-core Labourites, the unrepentant Comrades and the vacillating electorate, are counted, it will most likely be the correct answer to the Jamaican situation.
But not so fast! When the audience of Who Wants to be a Millionaire? is asked about facts and trivia pertaining to pop culture or recent history, they tend to get it right. However, they generally fail on more technical questions. Ask the audience something about Elvis Presley - they will know it; but ask them about the moons orbiting Neptune, and invariably they will come up short.
In this respect, there are some economists who are not exactly enthusiastic about the 'wisdom of crowds.' For them, when it comes to economic issues - rationality is myth among voters. The electorate has deep-rooted biases that prevent them from appreciating the dynamics of the markets. It makes them inclined to denounce the free flow of goods and labour across borders and deprives them of insights into the trade-off between stability and growth in the budget process. Consequently, the same electorate who wants better service from the water company will denounce its profitability as 'price gouging'. The same voter who wants to see double-digit growth in the economy will see perversity in the government when inflation is high, not realising that they are connected.
It is these biases and shortcomings that interrupt wisdom and remove the magic from aggregation. Therefore, politicians manipulate voters' irrationality by making promises, which in the end, lead to less than desirable economic outcomes. And later, the dissatisfied masses turn against them and vote them out of office.
Issues of credibility
However, in all honesty, elections are often much broader than economics. And while economics is an undoubtedly important aspect of the decision-making process, it is not the final arbiter of the correctness of the outcome. There are issues of credibility and governance, equity and social justice, vision and national pride that inform the voter. As such, to judge the rationality solely on economic criteria, is like building an edifice on too shallow a foundation.
So, with seven days plus one before the election, what are th
The JLP has presented a plan that is strong on governance and excessively optimistic on economics. On the other hand, the PNP, struggling under the weight of 18 years in office, has a more realistic economic outlook but is not exactly convincing that it is capable of effectively tackling the thorny issue of governance.
The polls have narrowed the difference between the opposing camps and both parties are almost dead even. It is anybody's guess as to who will be conceding defeat on the night of August 27. But will the crowd be wise? And if not, how will the people know? And who among the teeming masses will have the right to judge?
Cedric Wilson is an economics consultant who specialises in market regulations. Send your comments to: conoswil@hotmail.com.