September 21, 2023 

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AGGREGATE DEMAND DETERMINANT: A ceteris paribus factor that affects aggregate demand, but which is assumed constant when the aggregate demand curve is constructed. Changes in any of the aggregate demand determinants cause the aggregate demand curve to shift. While a wide variety of specific ceteris paribus factors can cause the aggregate demand curve to shift, it's usually most convenient to group them into the four, broad expenditure categories -- consumption, investment, government purchases, and net exports. The reason is that changes in these expenditures are the direct cause of shifts in the aggregate demand curve. If any determinant affects aggregate demand it MUST affect one of these four expenditures.

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The decision NOT to become informed about a topic (such as what a political candidate wants to do) because the cost of acquiring the information is more than the expected benefit. The rational decision to remain ignorant about a subject is a straightforward application of utility maximization and along with the related notion of rational abstention, is a source of voter apathy and government inefficiency.
Rational ignorance is the utility-maximizing decision to remain uninformed, or ignorant, about a particular topic. Like other utility-maximizing decision, it is based on a comparison of the benefits obtained from the action with the opportunity costs of the action. If the benefits outweigh the costs, then the action is undertaken (information is acquired). If the costs fall short of the benefits, then the action is not undertake (information is not acquired).

Acquiring information is comparable to the production of any good. Information provides benefits, it provides satisfaction. Knowing how to fix a leaky faucet, where to go for the best chocolate mousse, or which candidate agrees with your personal political views is beneficial information.

However, the production of information requires scarce resources (labor, capital, land, and even entrepreneurship). These resources have opportunity costs; they could be used for other valuable activities.

People compare the benefits of acquiring information with the costs. If the costs exceed the benefits, then there is no effort to obtain the information. People rationally choose to remain ignorant.

For example, you probably don't know the number of eyelets in the shoes worn by Horst Duncastein, a citizen of Northwest Queoldiola and a person you have never met nor will ever meet. The cost of obtaining this tidbit of information (most likely) far exceeds the benefits generated.

The choice of rational ignorance is quite important in the political arena. Potential voters (as people) commonly choose to remain ignorant about politicians, their political views, and the programs they propose. It's often "not worth the effort" to find out.

However, if voters choose not to know, then politicians need not include their preferences when undertaking government actions, which is a recipe for inefficiency.

Utility Maximizers

Voters are human beings who make choices that maximize utility. In the same way consumers (people) seek to maximize utility when making purchases and workers (also people) seek to maximize utility when making employment decisions, prospective voters (people once again) seek to maximize utility when acquiring information about candidates and issues.

Note that utility maximization is simply the process of choosing among options that provide the highest possible level of satisfaction. This satisfaction can result from consuming goods (eating a Hot Fudge Bananarama Ice Cream Sundae) or from other activities (enjoying a multi-hued sky as the sun sets below the horizon). It can also result from engaging in the political arena (basking in the glow of civic responsibility).

However, because choices have consequences, utility maximization is really all about weighing benefits and costs. Choices are based on comparing the benefits generated with the opportunity costs foregone. The decision to consume a Hot Bananarama Ice Cream Sundae is based on a comparison of the satisfaction obtained with the satisfaction foregone by NOT consuming other goods that were NOT purchased with the income used for the sundae. The decision to enjoy a sunset is based on a comparison of the satisfaction obtained with the satisfaction foregone by NOT spending time pursuing other activities.

As utility maximizers, people (consumers, workers, voters) rationally choose those activities that generate the most satisfaction, that provide the greatest benefits over costs. The choice to acquire information is no different from any other utility-maximizing decision.

Benefits and Costs of Information

Let's take a closer look at the assorted benefits and costs related to the acquisition of information.
  • Benefits: The benefit-side of this decision includes a number of benefits. First, is the enjoyment of "just" knowing something, satisfaction of an innate curiosity need. Second, from a more practical perspective, is any use to which the information can be put. While information about production techniques or corporate profitability are obviously important, in the political arena, an understanding of how specific policies or candidate views might affect you personally are obviously potentially beneficial.

  • Cost: The cost-side of this decision includes most of the standard "cost" items of any production activity. Labor, capital, land, and entrepreneurship, each with alternative uses, are employed in the acquisition of information. In the political arena, such cost is primarily the time an effort of reading campaign literature and news stores, speaking with candidates, and perhaps discussing issues with others.

Rational Abstention

A concept closely related to rational ignorance is rational abstention. Rational abstention is the decision NOT to do something (such as vote in an election) because the cost of taking the action is more than the expected benefit.

The act of political participation, including voting in an election, is also like the consumption of any good. People rationally compare the benefits of political participation with the costs. If the costs exceed the benefits, then there is no effort to participate, including voting. People rationally choose to abstain from political participation. People rationally choose not to vote.

However, if people choose not to vote, then politicians need not include their preferences when undertaking government actions, which is a recipe for inefficiency.

Voter Apathy

The combination of rational ignorance and rational abstention results in what is commonly termed voter apathy. People choose not to know about, or participate in, the political process. When people follow the path of voter apathy, then politicians can take actions that do not reflect the preferences of ALL of society, which once again is bound to generate an inefficient allocation of resources. While voter apathy is definitely a problem for a democratic society, it's also just the thing you would expect from rational choice and utility maximization.

The problem with voter apathy is that political leaders do not necessarily nor need to know or account for the preferences of every member of society.

With markets, preferences are indicated by the prices buyers are willing to pay. Resources are allocated to the production of goods with the highest prices and thus which provide the most satisfaction. That's a recipe for efficiency.

However, with voter apathy, preferences are not necessarily known. Politicians do not know the best way to allocate resources. They do not know which goods provide the most satisfaction. That's a recipe for inefficiency.

Other Sources of Government Failure

Rational ignorance, together with rational abstention and the resulting voter apathy, are not the only source of government failures. Three other noted sources are politicians, interest groups, and bureaucracies.
  • Politicians: These are members of society who seek elected offices. Problems and inefficiencies arise because politicians, like all human beings, seek to maximize their own utility. This pursuit can and does conflict with doing what's best for the economy.

  • Interest Groups: While some people have little or no involvement in the political process, others have a great deal of involvement. These people, who also seek to maximize utility, have more to gain or lose from particular government actions and are thus motivated to act accordingly, usually by forming special interest groups.

  • Bureaucracies: Government policies are usually implemented by complex organizations. Those who work in these bureaucracies are also, you guessed it, utility maximizers. Their pursuit of utility can and does conflict with the efficient implementation of government policies.


Recommended Citation:

RATIONAL IGNORANCE, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2023. [Accessed: September 21, 2023].

Check Out These Related Terms...

     | public choice | rational abstention | government failures | voting rules | voting problems | political entrepreneurs | principal-agent problem | special interest groups | government bureaucracies |

Or For A Little Background...

     | market failures | government functions | public finance | efficiency | public sector | private sector | utility maximization | market efficiency | fifth rule of imperfection | seven economic rules | political game |

And For Further Study...

     | median voter principle | logrolling | voting paradox | capture theory of regulation | rent seeking | Tiebout hypothesis | public choice politics |

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