Irrationality & the benefits debate

Alex Andreou says the debate about benefit cuts has been so bad that it represents the "End of Reason." Many good judges agree. But what is the source of the irrationality?

Let's start from Hopi's point that the distinction between shirkers and strivers is a "false divide." He's right. Official figures show that, in Q3, 871,000 people lost their jobs. That's 3% of all employees. This is not so much thanks to the recession as to the fact that even in normal times, job destruction is high; over 50,000 jobs were destroyed each week between 1997 and 2005.

This means there's a significant risk that "strivers" will become benefit claimants themselves. So why are so many hostile to claimants? People who pay home contents insurance don't regard insurance claimants as scroungers (though some are!).And if, say, Aviva were to announce that it will cut its payouts to insurance claimants, its customers would be aggrieved. So what's different about the insurance system that is the welfare state?

In theory, the hostility could be rational. If people are risk-tolerant, they might judge that the adverse effects (in good economic times) of unemployment benefits on work incentives outweigh the gains from better risk-pooling.

But this runs into several problems. High demand for poor-value insurance products such as PPI and extended warranties, and low stock market participation, suggest that people aren't risk-tolerant and so should favour higher unemployment protection. The benefit cuts apply to tax credits as well as out-of-work benefits and so have ambiguous effects upon work incentives. And OECD data show that the UK's out-of-work - even including child and housing benefit - are quite mean by international standards, suggesting that work incentives here are already quite sharp.

This leaves us with other possibilities. One is that people have a powerful instinctive norm of reciprocity, and so want to punish "scroungers" who violate that norm, even if doing so hurts themselves. Perhaps, then, we tolerate low welfare benefits - even though they offer us less protection - as a price worth paying to enforce this social norm.

But this runs into the problem that, at a time of mass unemployment, the idea that people should look for work is actually harmful to "strivers". In this context, the norm of reciprocity is an atavistic anachronism.

Perhaps, though, something even less rational is happening. Maybe hostility to benefit claimants is founded upon a mix of ignorance about the true levels of benefits, and cognitive biases, such as the optimism and self-serving biases, which lead people to under-estimate their chance of losing their job, and so undervalue the worth of out-of-work benefits.

Perhaps, then, Alex is right, and support for benefit cuts is irrational. What he doesn't say, though, is that this raises (more) doubts about the value of democracy. From the point of view of winning votes, a reasonable (though in my view mistaken) concern to improve work incentives has as much weight as sheer ignorance and irrationality.

It's sometimes said that "democracy is two wolves and a sheep deciding what to have for dinner." What we have here, though, is sheep thinking they are wolves.

Comments

[Luis Enrique]

yes it's weird that hostility towards the unemployed seems to rise during times when they are the least to blame for their plight. I suppose when times are tough people get more selfish.

btw, I like this cartoon about shirking

http://www.telegraph.co.uk/news/matt/?cartoon=9788840&cc=9776658

[TM]

"What we have here, though, is sheep thinking they are wolves."

I think this sheds light on much of how democracy works.

My favourite statement that explains why American politics is so favourable toward the wealthy is that no American, however destitute, self-identifies as being 'poor'; instead all Americans see themselves as soon-to-be millionaires running through a tough patch...

[gastro george]

Too much self-esteem ...

[chris]

@ Luis - thanks. I should have referred to Ben Friedman's book, the Moral Consequences of Economic Growth. He shows that downturns tend to make folk meaner, more selfish & more racist.

[Brian]

Waah...the usual psychological over-analysis. Neo-liberal laissez-faire dogma originated by mainstream economists, promulgated by right-wing politicians (and parroted by opposition parties in a bid to get power), and repeated credulously by media agin and again has created a narrative in the public mind. The power of propaganda in shaping opinion - it works.

[David]

To continue over-analysing (analysis: the sigh of the impotent), or rather mix things together. Maybe people support benefit cuts now because there is a greater need for benefits. People are adverse to need. Need brings us closer together, 'neo-liberalism' promotes the individual. Individualism is phobic of need. Which also leads to an envy of help. If we are not being helped (say, in our competitive and indifferent workplace), why should others be helped?

[David]

Meant to say 'averse to need,' but 'People are adverse to need' seems oddly meaningful.

[fake]

Many who claim job-seekers also claim housing benefit and other benefits such as council tax aid.

I think it dishonest to claim people are ignorant about the levels of benefits, and then link to an article that looks at them in isolation, falsely claiming only 3% goes to those in unemployment by only looking at job-seekers.

Maybe it's 3% maybe it's 30%, might want to find out what it is before claiming hostility is based on ignorance.

(And yes I see the irony in that just because they may be right, but don't know it, they are still basing opinions on ignorance).

[David]

Sorry, another thought: it's not just about not receiving help, it's also about not giving it. If the fruits of you labour seem to offer no help to anyone (maybe profits but not help), you will resent the idea that some people need help because your work leaves you feeling unable to participate in such an exchange. You feel cold and stiff and you rationalise (depersonalise) this into a skewed sense of justice. This rationalisation also stops you becoming too conscious of your desire to be helpful. That desire is not compatible with the environment you live in, so rather than change the environment, you change the desire. It's hardly news that capitalism jeopardises kindness - maybe this benefits thing shows us how estranged from our desires (our desire to be kind) capitalism can make us.

[Jim]

"Maybe hostility to benefit claimants is founded upon a mix of ignorance about the true levels of benefits"

More likely hostility to benefits is based on the close personal knowledge of exactly what other people in their social circle (family members, friends of friends etc) do get in benefits, and comparing those sums with their after tax pay packets. And wondering why they are going to work 5 days a week to end up with little more at the end of the month than someone who sat on their arse for the same period.

[Luke]

Jim, maybe you could tell us which of your friends or family are swinging the lead, as you suggest that we all have friends or family who are doing so? How about giving us names?

[Luis Enrique]

How does the full bundle of benefits compare to a low wage after tax?

[gastro george]

Zoe Williams in today's Graun thinks not very well:

"Of those surveyed, 79% thought a family with two school-age children would be better off on benefits than if one parent got a minimum-wage job – in fact, with one parent in work, that hypothetical family would be £138 better off a week."

[FromArseToElbow]

Brian is right. We're over-intellectualising the issue.

When you speak to people who believe the country is awash with benefit cheats, you invariably find that their evidence is either third-party anecdotal bollocks that evaporates on query (hey, Jim!) or it's what they read in the papers.

We're reluctant to admit the power of propaganda precisely because we are a democracy. Believing lies is the sort of stupidity you expect from people in a totalitarian regime. Surely we're better than that? Apparently not.

[Keith]

"We're reluctant to admit the power of propaganda precisely because we are a democracy. Believing lies is the sort of stupidity you expect from people in a totalitarian regime. Surely we're better than that? Apparently not."

That comment implies that we are not in fact a democracy as a Democracy requires a "well informed public opinion" as Bagehot said. There is a reason newspapers owned by extremely rich men are always full of unrepresentative stories about Benefit shirkers on the fiddle. Its a class agenda; the Right always demonises the NHS and the idea of social security for a reason.

On the other hand to join the rest of you in not wanting to be too clever about it two other facts are relevant 1) When you examine in detail public opinion it seems that a very large proportion of the public every where are extremely ignorant of facts covering a wide area of important topics regardless of the political system. Lots of people seem to just not take in information very well and exhibit poor reasoning skills. Which casts doubt on both the case for Democracy and liberal economics, as they depend on the idea of a well informed and rational ideal person as a representative agent.

2) if you read comments on the Daily Mail website by the punters it is clear a lot of people who read the Paper are just Jealous and vindictive people who are shocked by the idea of disabled people going on a foreign holiday rather then dying of hunger and neglect as they obviously should.

Just as we would like to think people are capable of understanding facts and logic we prefer to think people are mostly caring and Empathic. But actually there are a lot of shits who read a paper that reinforces their hate towards other people enjoying them selves. It may be that such people are also quite poor and feel upset with their station in life; but I am not convinced that excuses them.

[FromArseToElbow]

@Keith, that we tend to have narrow horizons and are prey to irrationality are not arguments against democracy, though they are implicitly used by some to justify representative democracy - i.e. letting our betters decide as we cannot trust ourselves. One can plausibly argue that the practice of direct democracy broadens horizons and advances rationality, disempowering both the political class and media proprietors, which is presumably why they are both so averse to it.

Commenters on the DM site are atypical of the population at large because they are self-selecting. Most people who believe the propaganda about scroungers are neither vindictive nor jealous, just misinformed and fearful. When you discuss the facts with them (rather than just haranguing them for being dolts, tempting though that is), they usually modify their views and reveal their innate sympathy.

As Chris notes re Ben Friedman, periods of economic stress make people more fearful and thus more prone to believe tales of "the enemy within", which is why there also tends to be a compensating upsurge in counter-propaganda. What has been noticeable this time round is the (to date) lack of such a movement, unless you count the merciful end of Shameless on TV. Where is our Boys From The Blackstuff, our Grapes Of Wrath? Instead we get the sentimental caricature of The Royle Family.

[Staberinde]

Or perhaps there's another explanation?

In a democracy where the electorate is ageing, the two biggest areas of expenditure - pensions and health - are off the table for cuts. Moreover, welfare aimed at the elderly is similarly taboo.

Therefore, the only major area for cuts must be welfare for working age people. And the only way to sell it is to create a group who are less deserving of welfare - middle income households receiving child benefit, for example. Or the long term unemployed, who 'obviously' aren't trying hard enough or lowering their expectations enough to get work.

As you point out, much of this thinking has flaws, but surely it's also the result of prioritising the interests of pensions (aka Baby Boomers, the richest, most advantaged generation in history) above everyone else? That appears to be the choice our ageing electorate has decided to make.

[Luis Enrique]

gg, thanks for the number. Not sure what to make of it.

I suppose if I was dragging myself out of bed to suffer a boring badly paid job, paying my own rent etc. there would be some level of benefits (including housing benefit) at which I would start to resent beneficiaries, even if I didn't regard them as scroungers making no effort to find work. Even if benefit claimants are strivers, I'd start to feel there were getting better deal than me and wonder why I bother going to work.

I have no idea how large the differential would have to be before such thoughts would be reasonable. How does £138 per week look in this regard?

[e]

@ Luis EnriqueIt
£138, it’s not much is it. And let’s say you have to run a car to get to the MWJ you’ve perhaps been forced to take. For what it’s worth I’d never met a “striver” or a “shirker” who resented anyone other than their supposed betters who take the money and ignore the potholes in the systems they devise. Until recently that is.(Being as how I’m old and live on a council estate I’ve known many) Successful propaganda campaigns like this one, which has been running for decades, licence the thoughtless to scapegoat, and hasn’t it been successful!

[Blissex]

«there would be some level of benefits (including housing benefit) at which I would start to resent beneficiaries, even if I didn't regard them as scroungers making no effort to find work.»

But this point of view is based on a really fundamental mistake: that those benefits are not available to *you*.

That is that "strivers" and "shirkers" are immutable categories, where the "strivers" are always the same people, and only pay benefits but cannot get them, and the "shirkers" are always the same people and only get benefits but never pay for them.

That is why the Conservative propaganda always comes up with stories about "three generations of shirkers" and in a dog-whistle way plays up the tribal aspect, that there are decent people on benefits, mostly old white ladies, and there are bad people on benefits, mostly young colored (once it was irish) nasties.

And it is not a coincidence at all that where people do get stuck in "striver" or "shirker" roles for years it is because they either are "strivers" who live in the South/English (Tory) areas where costs are high and social insurance is largely inadequate to cover the cost of living, or they are "shirkers" who live in the North/Celtic (Labour) areas where jobs are difficult to get and when one has a job pay is much lower (and yet most people in those area get jobs whenever they can).

But the fact is that benefits are available to *everybody*.

You cannot then resent beneficiaries, irrespective of the level of benefits they get, because you could be one of them whenever you need.

Consider instead jobs in the City and other places that pay huge salaries heavily subsidized by taxes that are effectively reserved to Oxbridge graduates, where Oxbridge degrees are in effect largely hereditary.

Most of the population of the UK has essentially no chances whatsoever to get one of the plum jobs reserved largely for the scions of the wealthy, but they don't resent at all the enormous amounts of tax money spent on protecting those jobs, and don't resent at all the much lower taxes those fortunate largely hereditary "strivers" end up paying.

It is a great demonstration of the power of Conservative propaganda that voters don't resent at all nearly hereditary and really expensive subsidies for fantasy-finance "jobs" that they have no likely access to, but resent very modest social insurance to which they themselves have a right to.

[Blissex]

«if I was dragging myself out of bed to suffer a boring badly paid job, paying my own rent etc»

Put another way: if you think that you would be better off on benefits than be a "striver", then it is your right to get them. Just make sure you get sacked, and you too can enjoy the high life of the "shirker". Social insurance is available to everybody, it is not a privilege reserved to an hereditary elite.

Actually there is a point (other than working people vs. fantasy finance players) where "strivers" can legitimately resent "shirkers" because the latter are privileged: most taxes are paid by men and most benefits are paid to women.

This is because most men work many more years and die much sooner than women, and use social and health services a lot less than women, and women can use pregnancy and child-raising for sympathy, even if pregnancy and child-raising have been for decades activities that are explicitly chosen by women, very rarely involuntary accidents (which unemployment of men usually is). But women hold their voluntarily produced children hostage to get public sympathy and get away with it.

In other words, looking at the flow of money, most "strivers" are men and most "shirkers" are women (even before looking at the South/North divide), and in effect many of the most benefits available to women are not really available to men.

Also women are the single largest and most important voter constituency, because the outlive men and vote as a swing block on women's interest issues, while men tend to vote on party lines regardless, so all the benefits propaganda is really about rewarding "striving" women and punishing "shirking" men.

But it is politically incorrect to point that out, so the propaganda is always implicit about gender and class and regional issues, but it is pretty clear that the target is: men, trying to get by in the North, from poor backgrounds. In other words, traditional Labour voters.

[Blissex]

BTW the usual quote:

The Times, 2011-09-17, Janice Turner:
«The C2 women who voted Conservative last time did so because they, in low to middling-paid roles such as nurses, secretaries and carers, believed welfare had grown too generous, that benefits rewarded the do-nothings while they toiled. They hoped the Tories would crack down.»

Translation: there is a huge recession, fund tax cuts and better salaries for deserving (state sector, southern) employed "striving" women by throwing undeserving (private sector, northern) unemployed "shirking" men in the gutter.