Trident: how to vote

Parliament is voting on whether to renew Trident. And they are, of course, doing it the wrong way.
It should be done by a demand-revealing referendum.
Here's how. Trident will cost about £450 per voter - £20bn. So, we should ask each voter: what is the benefit to you of Trident? For concreteness, imagine there are just three voters: Alice, Simon and Julian. Column two in our table shows the (imaginary) answers they give.
Now, for two of them, Trident's cost exceeds its benefit. So a simple majority decision would not renew Trident.
However, the aggregate net benefit is positive, because the net gains to Julian exceed the losses to Simon and Alice.  This alone shows that majority rule is inconsistent with potential Pareto efficiency. The solution to this is to levy an extra tax on Julian, equal to the net losses to Alice and Simon. If Julian were to pay £100, he'd still be better off with Trident.
Now, the beauty of this system is that it forces people to debate honestly and rationally.
Take Alice, for example. Let's say she were to exaggerate her net costs  of Trident, claiming the gross benefits were zero and net cost therefore £450. We then wouldn't renew Trident - because the £1350 cost exceeds the £1100 benefit. Alice would get her way. But she'd have to pay a tax of £200 - the net benefit the others would get, had she not voted.
So, she has an incentive to reveal the true strength of her feelings. If she overstates her opinion, she risks paying a tax, and if she understates it, she risks not getting her way. The same, of course, is true for everyone.
Now, you can no doubt pick holes, or suggest improvements, in this method. For me, though, it has the great benefits of being democratic (in the sense of involving everyone), of reconciling efficiency with democracy, and of compelling people to think properly about costs and benefits, rather than just being windbags.

Comments

[AJE]

Excellent example.

The common criticism of this approach is that it's susceptible to collusion, and I'd imagine parliamentary votes are likely to be collusive (i.e. repeated games, people know each other, whip systems, close contact etc).

However this just supports your implicit argument that demand-revealing voting should be accompanied with direct democracy, since dispersed voters will find it much harder to collude.

[sanbikinoriaon]

How about "some people are richer than others"? That seems a pretty big hole in your idea to me, meaning that the rich can much better afford these debates.

Secondly, on an issue such as Trident, I have absolutely no idea how much value I assign to renewing it - the calculations are simply too difficult for the average person.

[OneEyedMan]

To address Sanbikinoriaon's comment:

You obviously can't use this method to intact strict wealth transferring policies. If this method works, it only works on projects with pubic good like qualities.

If you wish to have a more uniform distribution of wealth in your society, you have to use other methods to even out people's incomes and then have referenda on stuff like this.

While this may have some incentive to reveal your preferences honestly under some circumstances, you do not have incentive to do so if you have any idea what other people will bid on such a project. Since in reality we actually do have ideas of valuations, and that to build coalitions to make policy we'd have to have advertising campaigns saying, "as a middle class person you'd benefit $500 so be sure you write that down on your ballot", this is a very real problem.

[Matthew]

I always did find this confusing in Varian's textbook, partly (IIRC, which I might not) because there was a numerical error in it.

If there are more than three participants, ie 40 million, how does it work? Surely no single person will be pivotal then?

[luis_enrique]

so if I understand this correctly (I don't suppose I do) then the rich can buy what they want (Julian says trident is worth £100,000 to me, and trumping everyone else), but they have to compensate those who don't want it (supposing the poor if the rich and poor want different things) meaning that the poor get made a bit better off? but how much? Unless Alice and Simon claim a gigantic negative benefit from trident, they're still only getting £50 (which is all they deserve if they are being honest because that's all the loss they experience from trident - this isn't supposed to be a redistribution mechanism)

I just wonder what political economy models would predict of this, once they get to work on who has an incentive to claim what.

Chris it would be good if you could write more about how this system isn't just a matter of the rich buying power - I don't understand it well enough to judge, but if it isn't then that needs explaining

[dearieme]

You'd be happy to see this used for everything? Immigration, capital punishment.....?

[pseudonymous]

Can you recommend a book on this? I think few people are going to be persuaded by a handful of blogposts, but I might be persuaded by a book.

[Tom H]

It's clearly not the kind of pure demand-revealing referendum you're arguing for, but do you think that those Labour MPs who defied their party's whip - and, in particular, Labour MPs who resigned from paid Government jobs in order to defy their party's whip - are bearing a real cost for expressing their views on the grounds that (they believe) they would incur a greater cost by not expressing them?

At least, there's more at stake personally for MPs in the views they publicly express than there is for, say, me.

[dsquared]

[compelling people to think properly about costs and benefits]

this is no more acceptable than any other form of compulsion, which is the reason why this is a bad idea for any unit of government larger than a flatshare. I have no opinion about Trident and no particular plan for getting one, still less being able to translate it into a pound sterling figure. I would certainly not thank the man who compelled me to do so, on pain of having my "neutral" opinion mistaken for acquiescence in whatever scheme got proposed. When compared to the method of electing reasonably competent and trustworthy representatives and delegating to them, I frankly think that the overhead cost of these referenda leaves them dead in the gutter. In other words, if this is anti-managerialism I want my old job back.

[Paul Evans]

I've just spent a whole ten minutes composing a rebuttal to this idea for my own blog only to have the whole exercise ruined by DSquared agreeing with me.

Only joking Daniel

;-)

[jameshigham]

Your argument was doing fine until the 'Here's how' paragraph, Chris. After that it was based on a false premise. That's not how the realms defence is organized. How would the average person know the strategic implications of either Trident or Rodent systems?

[Laurent GUERBY]

Plutocracy = democracy ?

Interesting.

[AJE]

We can argue all day long about whether a decision based on willingness to pay is "just", but at least it provides an outcome!

[corneilius]

There is no 'realm' to defend, nor are there any 'enemies' to 'offend' it.

The whole thing's a chimera. A soap opera. A very deadly soap opera.

Stategic implications? Thats a load of abstract codswallop conditioned intellectuals swallow and spit in order to feel like they are 'intelligent', 'with it', 'educated'.....idiots!

Reading text books on 'International Relations' recently I came to the conclusion that the people who read, write and study this stuff and believe in it must be living on another planet ... somwhere in their rear effluent channels....

Had they ever read Howard Zinn, John Taylor Gatto, Alic Miller just to name a few they might well have vetured back into the light of day.

[edclarke]

Response to Pseudonymous, requesting cite of book on demand revealing.

I would recommend a 2000 book by Ed Clarke (myself) described at http://clarke.pair.com . The updated material in that book addresses many criticisms made before and after an earlier (1980) version of that book. There is also an extensive discussion of Bailey's work on demand revealing (see below).

Here is a direct link to the publisher's page for the Clarke book which has a browse the book feature.
http://www.iuniverse.com/bookstore/book_detail.asp?isbn=0-595-08930-5

I would also recommend a 2001 posthumous book by Martin Bailey (edited by T. N. Tideman), titled -- Constitution for a Future Country. That book largely inspired the Clarke update.

See http://martinbailey.pair.com and the publisher's page at
http://www.palgrave.com/products/catalogue.aspx?is=0333719093

[Pseudonymous]

Thanks, edclarke

[Miguel Madeira]

"So, she has an incentive to reveal the true strength of her feelings. If she overstates her opinion, she risks paying a tax, and if she understates it, she risks not getting her way. The same, of course, is true for everyone."

In a vote with 30 million voters (instead of only 3), I think that is a strong incentive for each individual voter understate his/her opinion - the benefit of not paying a tax is much stronger than risk of "not getting her way" (because the revelead preferences of each individual voter have almost no effect on the final decision)