Cognitive Abilities and the Demand for Bad Policy

Rational choice theories posit that citizens accurately evaluate policy options. However, many policies—such as price controls and Pigouvian taxes—produce equilibrium effects that citizens may underestimate, potentially leading to support for detrimental policies or opposition to beneficial ones. This under-appreciation may be linked to cognitive abilities of citizens, raising fundamental research questions: Do cognitive abilities influence citizens’ preferences regarding policies, particularly untested reforms? If so, what mechanisms underlie this influence?

Furthermore, do citizens take into account how others citizens’ cognitive abilities impact their choices? In this study, we employ a theoretical framework and conduct an experiment involving a UK-representative sample to demonstrate that enhanced cognitive abilities can lead to improved policy preferences. We also highlight the significant role of beliefs about the cognitive abilities of other citizens: individuals with high cognitive skills may withhold support for bene-
ficial policies if they are skeptical about others’ ability to accurately assess positive effects. We substantiate these findings through a textual analysis of open-ended survey responses, where participants forecast the consequences of labor and immigration reforms, and provide further evidence from the UK Household Longitudinal Study linking cognitive abilities to political attitudes. These findings carry important policy implications: educational programs aimed at developing cognitive skills and interventions designed to enhance trust in others’ understanding could improve the quality of democratic decision-making.