The 2020 presidential election cycle has begun, and, as predicted, the Dem field is crowded. There is a whole slew, a passel, a plethora, a scad, a bevy… well, there’s a bunch. God, I hope Handsome Joe doesn’t foist a third presidential run upon us. With his record of sexual harassment, Anita Hill, mass incarceration, I don’t know if the country could take it. Speaking of God, if there were one, he wouldn’t inflict us with two more years of Bernie Bros and worse. But, we are in the stupidest of all possible worlds, now, so I suppose it was inevitable.
The talk on the Dem side is who can beat the Ol’ Pussy Grabber? That’s understandable considering the debacle of the last two years. During the 2016 election, twice I used Tversky and Kahneman’s Prospect Theory to talk about the election. First, on 26 May 2016, in How Obama Created Trump, I explain how the success of Obama’s presidency led us to be risk seeking with the election of the next president. It wasn’t so much a prediction as it was an explanation of why it was possible. Then, on 9 June 2016, I posted the Cost of Quitting for Bernie Sanders. It was my first viral post! I explained how loss aversion was preventing Sanders from quitting the race… and it explains why the Bernie Bros are still bickering over 2016. Christ! That damn election is dead and gone. Let’s MOVE ON!
If Obama’s calm, cool, collected handling of the Great Recession set us up for taking a risk on the Ol’ Pussy Grabber, then, the Ol’ Pussy Grabbers chaotic, confused, cray-cray must be setting us up for sure thing. As I wrote in the Obama post, people buy earthquake insurance AFTER the earthquake. And, dear god, has the Ol’ Pussy Grabber been an earthquake during an exploding volcano during a hurricane. And, if anyone ever felt like they needed insurance to protect against the losses incurred by an unnatural disaster, it is now.
PROSPECT THEORY is an approach to decision-making in which people consider subjective changes instead of ultimate changes when making decisions. It means that when you make a choice, you’re not thinking necessarily about the big picture, end of the road, goal reached. You’re thinking about the next thing. If its financial, which many of these studies use monetary gambles as a proxy for decisions, you’re looking at your wallet, not your financial portfolio.
Tversky and Kahneman were particularly interested in what they called risky choices. That is a choice that is made in which the outcome is unknowable. You know, like how a presidency will turn out. The only thing people can do when faced with a big decision that has multiple possible outcomes is consider the probability of each outcome occurring and make their decision based on that. Only they don’t.
Instead people rely one a rule of thumb: avoid risk, unless it is to avoid a loss. Avoiding risk is known as risk aversion, and the opposite is risk seeking. The classic example is contained in the exotic disease vignette:
Imagine that the UN is preparing for an outbreak of an unusual Antarctic disease (OK, I changed it from Asian disease), which is expected to kill 600 people in a small community in Appalachia (I changed it from Africa). They have developed two alternative programs to combat the disease. Assume that the exact scientific estimate of the consequences of the program are as follows:Tversky and Kahneman (1981)
One group of participants are given these two programs to choose from: PROGRAM A: 200 people will be saved. PROGRAM B: There is a 1/3 probability that 600 people will be saved, and a 2/3 probability that no one will be saved.
The other group of participants are given these two programs to choose from: PROGRAM A: 400 people will die. PROGRAM B: There is a 1/3 probability that no one will die, and a 2/3 probability that 600 people will die.
What in tarnation? my favorite drunk uncle, Uncle Ignatius, slurs. That don’t make no sense no way no how! These things is easy! Let ’em all die! And then has himself a good laugh that only hisself understands. Meanwhile, back in reality the rest of us generally answer like this:
|Group 1||Group 2|
|Program A||72 %||22 %|
|Program B||28 %||78 %|
If you examine the four choices, you pretty quickly realize that they are all the same, just worded a little differently. Both program A’s result in the same outcomes: in the first one 200 people are saved (and 400 die) and in the second one 400 people die (and 200 are saved). See? They’re the same! And in the program B’s there is a 1/3 probability that everyone will be saved (no one dies) & 2/3 probability that no one will be saved (everyone dies); and in the other one, a 1/3 probability that no one dies (everyone will be saved) & 2/3 probability that everyone will die (no one will be saved).
This question has been asked of numerous people, and it always turns out roughly like this. It doesn’t matter if the participants are trained, licensed, practicing physicians, or college students, or mall rats. You can even ask the same person both questions (just minutes apart), and it still comes out this way. In fact, when you show those people that the programs are the same, they insist that their choices are still “correct,” or morally defensible.
The reason for this is the use of the words “save” and “die.” Kahneman and cognitive psychologists call that a frame and the framing effect. The first number in the programs become an anchor against which all other numbers are judged.
So, when someone sees the first set of program, saving 200 people sounds pretty good. Who could be against saving people, am I right? The heuristic stated above holds true, people aver the risk of 2/3rds probability that everyone will die.
When they encounter the second set of programs, 400 people dying sounds really really bad. But, when they look at the second one, a 1/3rd probability that no one will die seems like a better bet even though it is coupled with a 2/3rds probability that everyone dies. The second half of the rule is also followed, accept the risk if it is to avoid a loss.
Risk Aversion and the 2020 Election
The way this applies to presidential elections is that if the first term ends well, then the president is re-elected. Think Obama in ’12 or Clinton in ’92 or Reagan in ’84 or, hell, even Nixon in ’72! People see the presidency as a gain and become risk averse.
But, if the first term ends badly, then the president is not re-elected. Think Poppy in ’88 or Carter in ’80. People see the presidency as a loss and become risk seeking.
I can’t say who will fit the bill, but I can say that the public will probably seek someone who seems like a “sure bet” as president. That means centerist with tried and true approaches to government. A Biden-type without the baggage.
The funny thing is that some of the policies that the Repubes are trying to call socialist and radical are widely accepted by the public as being normal: Medicare-for-all and social support programs. So, the election isn’t likely to turn on those kinds of scare tactics that worked for the Repubes in the past. It isn’t even likely to turn on the demagoguery of anti-brown rhetoric. It is too closely associated with the chaos of the Ol’ Pussy Grabber.
But, what it means is that people are going to look for someone who SEEMS stable, intelligent, well-mannered, and not a risk. White men fit this bill pretty well. But, in my view, Sanders will always seem like a risk. God, I hope Biden doesn’t run, but he, at least on the surface, is the perfect fit. Beto fits that bill, though. He fits it pretty well if his current coverage is to be believed. He seems like an every man. He seems impassioned. He seems smart and energetic and well-mannered.
What about Cory Booker? He benefits from having had Obama be president already and being light skinned like he is. It makes electing a black man as president seem like less of a risk. He’s a man. He’s a centerist. He is cheerful, kind, engaging, confident.
But what does it say about women and, especially women of color? Electing a black president doesn’t seem as much of a risk any more since we’ve already had one. But, a woman president is another question. Did Clinton lose in ’16 because electing a woman was seen as a risk? Or is ’16 too confounded by Russian meddling to be considered instructive? It is hard to say. The level of misogyny that it revealed cannot be ignored. Taking all of that into consideration, Warren seems like a confident, capable, steady energetic, well-mannered, intelligent person. She could fit the bill.
Harris, as much as I love her, and would like for her to be president, may be a bridge too far under these circumstances.
The ’20 election will be about buying insurance AFTER the earthquake happens and we’ve lost everything because we let the policy lapse. Who will seem like that insurance policy? Who will represent a return to the more sober and well healed politics of Clinton, W, and Obama? Like those were any thing but partisan brawls?
Categories: Behavior Economics, Loss Aversion, Risk
Reblogged this on cabbagesandkings524 and commented:
Calico Jack – Loss Aversion and risk aversion in 2020
So, if this model holds, much as many Democrats hunger for a ferocious fighter who can take Trump out behind the barn and dump whup-ass all over him and prove he’s a weak, phony, lying, jerk as well as a danger to national security, that’s not the winning ticket. Instead, they will opt for a return to normalcy with someone who can calmly go toe to toe with Trump, smile, and stare him down, and talk sense, driving Trump even more cray-cray. Of course, if the Appeals Court decides (either way) the Obama Care case soon, in time for it to be on the Supreme Court docket for next term, then a decision would be forthcoming no later than June of 2020. If the ACA is upheld, Trump and the GOP leadership are LOOSERS, having failed to deliver a key goal for the past ten years. If it is completely overturned without a replacement in hand that can pass both houses and get signed by Trump, then health care will be damn near the only issue (barring a major recession and massive layoffs). In that event, both parties will have to have actual plans in their platforms, with drafted legislation to back it up. Loss aversion will be intense.
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Yes, that is exactly what I’m saying. Presidential elections have always been about personality and “likeability” rather than policy proposals. The other thing that behavioral economics makes clear is that people are emotional decision makers. You know in an instant whether you like something or not. Your rational brain kicks in to rationalize your choice. It’s part of Trump’s racist appeal. People like him for his racism, but rationalize it with economic anxiety. Studies show — this is going to be tomorrow’s blog post — that when you choose something without rationalizing your choice whether it is a house, a car, or a poster, you like it better in six months than if you are asked to write out the pros and cons of your choice before making it. In part this is what makes Trump’s support so stubborn. People may have doubts about him but will rationalize and justify their choice in some sort of super cognitive dissonance feat.
And, if the Repubes are so foolish as to do away with the ACA without an immediately effective replacement, then they are in for a drubbing at the polls. The loss of the status quo will get people voting for Dems. I don’t think John Roberts will let that happen though. He’s voted for it twice before, so assuming that some coalition of states attorneys general will take up the mantle of defending the law and appeal it to the Supreme Court, I think it is safe there.
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I think you are right about Chief Justice Roberts. Whatever his personal policy preferences, he is, by most reports, deeply sensitive to the reputation of the Court as an independent institution and not happy about Trump’s repeated statements that the Court must, and will, do his bidding.
As for the GOP’s position on health care, the party has been largely united about what they don’t want (anything with the name Obama attached), but have not been able to come to any clear consensus on what they are for other than vague “market based” solutions and letting the “invisible hand” do its magic. That, in the case of medical care, is about as much a fantasy as that tax cuts pay for themselves.
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