This article forms part of an ongoing series looking at economic issues as Australia heads into the Federal Election. More coverage can be found on the Election 2013 page of ESSA’s website.
The application of economic principles to election voting is a relatively simple process. A completely rational individual would simply vote for the political party that would best enhance their personal utility. If everyone did this, in theory at least, the party whose vision and policies best represented the country would win at an election. However, there are a number of factors that restrict this rational voting process from ultimately taking place in many circumstances. These can be seen as analogous to sources of market failure for the purpose of this analysis.
Firstly, individuals generally find it difficult to determine which party would best represent their interests without spending lots of time – a scarce resource – researching policies. A large proportion of the electorate is not willing to invest time in keeping up with current affairs and political developments, so the chance of mistakenly not voting for the party that would maximise individual utility is relatively high.
Secondly, misinformation and occasional deceit from political parties (think ‘core’ versus ‘non-core’ promises) can make it extremely difficult for voters to actually determine the party whose policies will best facilitate their optimal level of utility. This is essentially an illustration of information asymmetry taking place in the voting process.
Engrained ideology – often correlating with family political influences – is yet another factor. Those who are definitively to either the ‘left’ or the ‘right’ of the political spectrum will naturally have a tendency to be unwilling to even consider changing their vote from election to election, irrespective of party policies potentially profoundly affecting their interests.
Lastly, conviction altruists consistently attempt to vote for the party they determine to be ‘best’ for the entire nation as a whole and ostensibly disregard who would most benefit them as individuals. Ironically, however, by taking this approach they are far from guaranteed in choosing whom to vote for ‘correctly’. This is because of the inherent subjectiveness in determining which party’s policies are most appropriate for the country as a whole, operating in close association with the aforementioned factors.
In this election, like all elections, there are a number of sections of public policy that contain stark divisions between the major parties. These differences should be used by the rational voter to determine who would best enhance their personal utility.
Areas of policy division include: infrastructure (urban rail versus roads), broadband (fast but expensive, in contrast to cheaper yet slower), environment (emissions trading against ‘direct action’), education (six years of increased funding as opposed to four), social welfare (keeping the School Kids Bonus and Low Income Superannuation Contribution, versus an enhanced Paid Parental Leave scheme), taxation (keeping the mining tax, in contrast to lowering the company tax rate by 1.5% while concurrently imposing a levy of the same amount on those businesses with taxable income of greater than $5 million) and asylum seekers and border protection (increased humanitarian intake versus temporary protection visas and ‘turning back the boats’).
The economy, industrial relations and health all offer small but largely insignificant policy differences that are hard to quantify in terms of an individual’s welfare. It is worth noting that there is greater downside risk relating to the funding of election promises (costings) with the Coalition, because Labor’s incumbency necessarily allows for far greater fiscal transparency.
According to most, Tony Abbott is destined to be Australia’s 28th prime minister from Sunday. While betting markets are historically rarely wrong in predicting election outcomes, opinion polling is substantially less accurate. Indeed, opinion polling has had such a profound effect on the Australian political domain in recent years. The only poll that ultimately counts, however, is that of an official election.
A factor that undermines the accuracy of opinion polling is that elections are determined based on the number of seats won. That is, because of differences across states and individual seats, it is possible for a party to win an election with 49% of the two-party-preferred vote. As a result, perhaps it should not come as a surprise that election campaign strategy can get as detailed as how many cars voters have and where exactly in their electorate they reside.
For these reasons, depending on your electorate, your vote is worth a lot. Even if you are not located in a marginal or ‘in play’ seat by the way, the senate contest is sure to be very tight in almost every state for the sixth position up for grabs. Whatever you choose to do with your vote, avoid at all costs reasoning that one vote is insignificant in the grand scheme of things. It may be a cliché but if everyone had that approach…
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