Rational Ignorance: A Double-Edged Sword
Rational ignorance is a concept that was coined by the economist Anthony Downs in his treatise An Economic Theory of Democracy. It refers to cases in which a person decides to act without having all the information that they could collate about a decision they must make. This is because the cost of acquiring that knowledge is higher than the benefit it generates.
Rational ignorance is said to be a double-edged sword. That’s because, on the one hand, it often actually saves unnecessary time and effort. Because sometimes it isn’t possible or convenient to want to know absolutely everything or to delve too deeply before taking some form of action.
However, on the other hand, there are also cases in which rational ignorance has a high cost, even if it’s not directly perceived. In fact, there are situations when avoiding education and knowledge reduces feelings of well-being. The problem is that it isn’t viewed in that way because the consequences aren’t clearly detectable.
” The first step towards knowledge is to know that we are ignorant.”
-Richard Cecil-
Useful rational ignorance
There are many examples we could use to illustrate the concept of rational ignorance. For example, the buyer decision process. Let’s take the case of when someone wants to buy some shoes. They can choose several ways to do this and make their final decision.
The hardest way is to find out everything they need about the different types of shoes, the brands, materials, manufacture, etc. However, this is an extremely complicated procedure. In fact, if they intend to follow this path, they have to collect all the information, spending weeks, or even months on the task. Nevertheless, in the end, they’ll probably acquire the most suitable shoes.
However the question is, taking into account the cost of a pair of shoes and their lifespan, is it worth investing so much time and effort in making this decision? Under normal conditions, the answer would be no. In this case, rational ignorance is a good option. In other words, the decision only requires some basic information, or perhaps a consultation with other consumers. There’s certainly no real need to delve into the world of footwear.
The flip side
There are also examples that illustrate the other side of rational ignorance. Let’s go back to the buyer decision process, but this time let’s think about food.
In this area, a person can act by minimizing the time and knowledge allocated to their purchase. However, diet is closely related to long-term health. In turn, health and life are indissoluble concepts.
Therefore, a person can choose to eat what they find to be available, without acquiring any more information about it and being guided by only some basic information.
The problem here is that, in the long run, this could prove to be an extremely costly decision. For instance, if they only buy processed products, because they can be prepared faster, they may be compromising their health. Therefore, in this sense, their decision is wrong. In fact, in this specific case, the cost of ignoring may be greater than the time and effort that would be spent on getting to know more information.
Rational ignorance at the collective level
Economists have applied the concept of rational ignorance, especially on the social level. They’ve also applied it at the political level. Almost all the studies in this regard focus on voter behavior. Since a single vote, in most cases, doesn’t determine the outcome of an election, the average voter often underestimates its importance.
At the same time, learning about and understanding the proposals of the different candidates is an exercise that many people feel to be excessive. It involves focusing their attention, for a considerable time, on complex matters. It also means making a contrast between the different proposals and deciding on the one that best meets their expectations and interests.
However, what a single voter gets in return is perceived as ‘next to nothing’. Indeed, they tend to feel that their vote isn’t that important. For this reason, they consider that the effort they must make to acquire the relevant knowledge is extremely high, compared to what they finally obtain from the exercise. Therefore, the vast majority of voters choose not to inform themselves. Or at least, if they do vote, they do so on the basis of minimal information.
It’s been concluded that rational ignorance at the collective level can be useful in economic terms. However, it can be extremely costly in social terms. As in the food example, there’s a price to be paid in the long run and it’s often a high one.
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- Pérez, A. R., & Comeig, I. R. (1998). Efecto de la información asimétrica sobre el riesgo y el comportamiento de las sociedades de garantía recíproca: un análisis empírico. Revista Española de Financiación y Contabilidad, 469-497.