In new research, Cyril Hédoin and Alexandre Chirat use the rational-choice theory of economist Anthony Downs to explain how populism rationally arises to challenge established institutions of liberal democracy.
Coming from the right as well as from the left of the political spectrum, populist movements are rising across Western countries. In some countries, they have won elections (Hungary, Italy, United Kingdom, United States). In others, even if they have until now failed to win national elections, their audience and their political prowess are significantly increasing (France, Germany, the Netherlands). There is no widely agreed definition of what populism exactly is, but most conceptions converge toward a mix of a worldview and style of political leadership. Though far from being homogenous across movements, the populist worldview has affinities with nationalism, illiberalism, anti-pluralism, and anti-intellectualism. The political style is generally characterized by a political leader who claims to represent the true will of the people and whose rhetoric assumes to protect the interests of the people and nation against those of corrupt elites. In the 21st century, this political style has been exemplified by politicians such as Jair Bolsonaro, Hugo Chavez, or Donald Trump. While the correspondence between the worldview and the political style is not perfect, it nonetheless gives a reasonable picture of what most people have in mind when they talk about populism.
A widespread view, especially in some academic and other intellectual circles, is that the rise of populism expresses a form of voter irrationality. It might be tempting to argue that citizens voting for populists are irrational, as the policies promulgated by populists could rely on false or misconceived views, particularly about economic matters, whose implementation as policy would ultimately hurt most voters. While populist policies can be discussed and criticized on this basis, it would be a mistake to equate populism with political irrationality. On the contrary, it is quite feasible to explain the recent rise of populism in contemporary liberal democracies as the result of rational choices made by democratic actors. From this perspective, we argue for the relevance of an economic theorization of populism based on the work of the economist Anthony Downs, who famously developed an economic analysis of democracy more than 60 years ago.
Downs is best known for his book An Economic Theory of Democracy, published in 1957. He develops in this book a rational-choice analysis of the behavior of political actors in a democratic context defined as competition between political parties for votes. The basic assumption is that political parties and voters rationally act based on what they perceive to be in their interests. For the former, that consists in choosing a political platform that is likely to attract the most votes so as to win elections. For voters, it means generally casting a vote in favor of the candidate or party whose policies are likely to maximize their “individual utility”—though voters can also have broader motivations. The assumption that political actors are rational is that decision-making follows from a calculation of the costs and benefits of each possible decision and that the actor opts for the one that maximizes what they can expect to gain compared to what it costs.
Populism and the Supply Side of Politics
Political parties are the main actors on the supply side of politics (they sell a policy platform that voters buy). In the simplest configuration where two parties compete to attract a majority of votes, Downs argues that they are rationally led to converge toward similar platforms corresponding to the preferences of the median voter, i.e., on a left-right axis, the voter whose preferences are exactly in the middle of the distribution of voters’ preferences. This median voter theorem only holds however in the very specific case where (i) two parties are in competition, (ii) voters cannot choose to abstain, (iii) information is perfect, and (iv) voters’ preferences are “single-peaked” (i.e., each voting outcome can be linearly ordered and there is a most-preferred outcome). If one of these conditions is not verified, many other different patterns on the supply side are possible.
On the simplest, unidimensional, representation of the political space in terms of a left-right axis, populist parties will tend to be located at both extremes. Their recent electoral success indicates that the conditions in which the platforms of Downs’ theoretical parties converge on the median voter are not occurring in reality. Indeed, it appears that populism has risen in a democratic context characterized by polarization of voters’ preferences and low voter turnout. Part of the success of populist parties can be accounted for by their ability to attract voters who were not previously participating in elections.
In addition, uncertainty is also crucial to understanding populist politics in a democratic context. Though this is often forgotten, Downs actually spends most of his book discussing political decision-making under uncertainty, i.e., imperfect information. Uncertainty affects both political parties and voters. Parties ignore the exact distribution of voters’ preferences. Voters have an imperfect knowledge of the parties’ current and past proposals but also are uncertain about their future decisions in the case that they take office. Because of uncertainty, information providers (e.g. political parties, lobbies and news media) have a decisive role in democracy. They provide both candidates and voters with additional information and knowledge. That is why Downs emphasizes the role of ideology, which all political parties useas informational cues, that is to say a shortcut past costly classic information acquisition processes such as intensive individual research, to simplify voters’ decision-making. An ideology is a worldview, a “verbal image of the good society” that helps voters to form expectations about parties’ actions but also to compare parties. In this respect, populist politics can be related to the weakening of classic information providers, in particular scientific experts and mainstream press. The multiplication of alternative sources of information has increased the echo of populist themes, and in some cases has even fed types of misinformation that mostly favor right-wing populist parties in Europe and North America.
The Demand for Populism
This is not sufficient to explain the rise of populist politics, however. What is missing is an account of the evolution of the political demand. Even though populist parties can surely influence voters’ beliefs and preferences, other factors are at play. Here, though Downs’ rational choice analysis cannot pretend to fully explain the populist vote, it nonetheless indicates where we should look.
First, Downs’s framework points toward the factors that may account for a change in voters’ preferences. In his basic model, political parties choose their platforms based on the distribution of voters’ preferences. If this distribution changes, existing parties will modify their ideology (within some limits) or new parties promoting new ideologies will emerge. Empirical work by economists and political scientists has identified roughly two sets of causes that partly account for the evolution of voters’ preferences toward populism. The first set includes economic drivers. Globalization and the Great Recession lead to increases in socioeconomic distress, political distrust and territorial inequalities, as well as the stagnation of economic well-being for a significant part of the population in Western countries. The second set includes cultural drivers, conceived as a “cultural backlash,” that may vary from one country to the other but generally relate to increased immigration and the fragilization of traditional ways of life.
In addition to economic and cultural factors and the ways in which they interact, a second explanation for the demand for populist politics is that they reflect voters’ perceptions of these economic and cultural factors in a context of uncertainty. As previously mentioned, the crisis of trust that mainstream information providers are currently experiencing is a component of populist strategies on the supply side, but it is also an important factor on the demand side. According to Downs, voters in a democracy can choose to remain rationally ignorant, since their vote has virtually no marginal effect on the result of an election. Even if some information providers observe high journalistic standards, voters have few incentives to seek out accurate or balanced information. A corollary is that voters have no incentives to evaluate information providers based on the quality of information. Downs adds that the relationship between citizens and information providers largely has the characteristics of a principal-agent relationship. Consequently, to be informed at a lower cost, all voters choose information providers that are the most likely to share their ideology rather than report factual information. Without invoking the possible cognitive biases that may affect voters’ choices, uncertainty is enough to explain why voters may have mistaken or magnified perceptions about the economic and cultural factors that are feeding populist politics.
The Crisis of the Liberal Consensus
Finally, the demand for populist politics signals an upheaval of established political norms and expectations that in the West can be called the “liberal consensus.” In his article “The Public Interest: Its Meaning in a Democracy,” published in 1962, Downs reckons that citizens’ votes are not only based on personal interests but also reflect conceptions of the public interest. In a democracy, these conceptions will vary from one voter to another and will be partially captured by the ideologies promoted by political parties. However, Downs contends that most conceptions stay within the bounds of what he calls the “minimal consensus” that prevails in any stable and functioning democracy.
The minimal consensus, as it is characterized by Downs, consists of an agreement over basic rules of personal and political conduct. The recognition of individual rights like free speech counts as a case of the former, while an instance of rule of political conduct is an incumbent party voluntarily and peacefully leaving office after losing an election. The minimal consensus also includes an agreement (sensitive to historical specifics and conventions of a given society) over the features that public policies are required to have. Downs’s idea is that citizens’ views about the “good society” cannot be too polarized, otherwise democracy would be unstable. This minimal consensus thus largely corresponds to the rules and policies that have been followed and conducted in liberal democracies. While in principle any conception of the public interest can prevail and any policy can be implemented in a democracy as long as the majority agrees, the liberal consensus guarantees that political competition stays within certain bounds and follows certain rules. Populist politics is only possible in a context where the liberal consensus is weakened. Trump’s reluctance to peacefully concede his defeat in the 2020 elections provides a striking illustration. But this political behavior is made possible only because a significant number of voters are expressing preferences that are no longer confined to the liberal consensus.
What Downs’s economic theory of democracy teaches us is therefore that populist politics can rationally flourish in democracy as soon as political actors are no longer guided by rules of conduct that keep political competition within minimal liberal bounds. What remains to be seen (and on which Downs gives us no indication) is whether the resulting “illiberal democracy” can still remain democratic over the long run.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
