The Problem with Group Decisions

Westerners, for the last few centuries, have asserted that democracy is the best form of government. Comparatively, democracies have greatly exceeded any other current form of government in terms of human prosperity and flourishing. Although, that can be directly attributed to the economic freedom of those societies, rather than any other factor.

However, empirical results compared to existing forms of governance do not imply that democracy is the ideal way to run a society. There have been many past attempts to theorize about the ideal society. None of them, to my knowledge, examined why democracy is comparatively good, and what its flaws are.

The reason is that each choice made by an individual communicates valuable information to the rest of society. This information, in aggregate, improves resource allocation, and improves the lives of everyone within a society. Democracy, as a side effect of voting, tends to give the majority of people access to actions they would most likely make.

“The best government is that which governs least”

People should take this to heart as it has a real impact on the gross production of society.

However, I am not so radical as to believe no organization is required within society. Indeed, we have no examples of an a-governmental society doing anything meaningful. It need not take a vivid imagination to understand that such an anarchic situation quickly devolves into bodies of people who monopolize violence.

Under the assumption that government is necessary, it makes sense to examine the flaws in our current forms of democracy and possibly revise it. The primary flaw that is often cited is that the majority of people really have no business making decisions that could impact everyone else. Simple voting does not actually aggregate the best information available, but simply enacts laws based on the opinions of the majority. The best decisions tend to be made by outliers.

There is the obvious problem with democracy, is that all desired votes cannot be called. If so, we’d all be voting continuously and nothing practical would be done. There has to be a filter placed on what things can even be called to a vote. But how do you fairly decide what can be voted on?

Aggregating yes/no votes over a large body of people destroys useful information about what would most benefit society. Minority opinions are essentially discarded, along with the information which led them to hold those opinions. We assume that the majority has the “right viewpoint,” but contrarians often are left laughing last.

Aside from destroying information, the majority for any given vote may be made of different cohorts of the population. This can lead to a situation where majority group preferences can contradict each other. This problem is called the Condorcet paradox. 

Finally, for most voters, the cost of the time required to participate in voting actually outweighs any expected benefit to them. This is documented as the Downs paradox.

In short, democracy gives citizens the illusion of control --  something libertarians are very familiar with. It keeps society largely complacent by diverting their attention to mechanisms which largely have no impact. This is a Good Thing™ as it obviates violent upheavals which do not benefit anyone. Stability is often preferable to an angry mob.

However, there are ways to consider the opinions of everyone in an efficient way. These mechanisms require the use of numerical values which can be summed and averaged. No particular person's opinion is discarded, even outliers -- although the validity of their opinion may not be able to be appropriately weighted. An example of this might be: “How much money should the government spend on maintaining a military?”

The answer to such a question is not a binary yes/no, and significantly more information can be retained.

Maybe the best form of government is for the citizens to simply decide on a tax rate, and where to allocate funds? The economic incentives may possibly cause everything else to fall out appropriately.

The society which can most efficiently aggregate and make use of the collective knowledge of its citizens will easily outcompete and outperform anything else. We should look for better ways to make informed group decisions.