Managing Dissonance in the Iron Triangle
Cognitive Dissonance Explains Certain Economic Behaviors
OCTOBER 01, 1996 by J. R. CLARK
Economists have recently found the psychological theory of cognitive dissonance useful as a means of explaining certain economic behaviors and rationalizing a variety of public policies. Developed by Leon Festinger in 1957, the theory provides a framework for analyzing the psychological discomfort that may occur after a choice has been made and alternatives are forgone.
A 1983 article by George Akerlof and William Dickens in the American Economic Review applied the theory to a model of individual choice among workers in hazardous industries. They argued that workers would first accept hazardous jobs lured by relatively higher wages, and later, because of dissonance, force themselves to believe that their jobs were not hazardous, and therefore, they would not buy available safety equipment. Akerlof and Dickens concluded that safety legislation is needed to restore Pareto optimality since the workers have an incorrect assessment of the marginal rate of substitution between safety equipment and money income. They also used the same argument to justify Social Security legislation and to argue against Gordon Tullock’s position that higher penalties serve to deter crime. All three of their arguments identified cognitive dissonance as a source of potential market failure and suggested public-sector action to alter the behavioral outcomes. However, they failed to notice that public-sector choices are also subject to cognitive dissonance whether they relate to safety, social, criminal, or any other type of legislation. Most importantly, they failed to notice that cognitive dissonance can be manipulated in the legislative process to the self-interest of public-sector agents, and the public sector becomes a market surrogate where dissonance is exchanged like any other commodity.
Dissonance and Individual Choice
Dissonance is the discomfort created when the outcome of individuals’ choices is not consistent with their pre-choice beliefs. The dissonance, however, occurs only after decisions are made; the act of choosing, therefore, creates dissonance. For example, an individual may consider the costs and benefits of smoking cigarettes and decide to smoke. After experiencing respiratory discomfort, bearing the social stigma placed on smokers, and frequently viewing the surgeon general’s warnings, an individual may reformulate his preferences and decide not to smoke. This earlier choice, which was made in the context of the choice-influencing costs, was changed when the smoker incurred the choice-influenced costs similar to those postulated by James Buchanan in 1969. Dissonance that results from decision-making can be reduced by: (1) revoking the decision, (2) increasing the attractiveness of the chosen alternative, (3) decreasing the attractiveness of the unchosen alternative, and/or (4) establishing more similarity between the alternatives.
Involuntary information in society may also create dissonance. New information to which an individual is involuntarily exposed may conflict with his current opinions or attitudes, and thus cause psychological discomfort. Individuals may be involuntarily exposed to information, accidentally or forcibly, through broadcast or print media, as when a smoker first reads the surgeon general’s warnings. Dissonance caused by involuntary exposure to information can be reduced by intentionally misperceiving or avoiding it or changing one’s opinion after being exposed.
Festinger asserts that dissonance is also created in most social settings. Specifically, he argues that disagreement with other individuals, or groups of individuals (i.e., lack of social support), tends to create dissonance. Dissonance caused by lack of social support can be reduced by changing one’s opinion to agree with the disagreeing persons, persuading the disagreeing parties to change their opinions, or disparaging the disagreeing persons.
Dissonance in the Iron Triangle
Dissonance theory can be applied to choice-influenced costs that result from decision-making under uncertainty. The psychological costs of choice are not easily quantifiable and change with human interpretations after the choice is made. They are also heavily influenced by exposure to information, peer pressure, and social support. With such psychological attributes, dissonance becomes a valuable tool for rent seeking in the iron triangle of legislators, bureaucrats, and special interest groups.
Legislators, bureaucrats, and special interest groups frequently attempt to influence the voting public’s preferences through dissonance management by orchestrating information that is supportive of their goals and programs. Their success in getting programs through the congressional authorization and appropriation process depends, in part, on how efficiently dissonance can be managed. Therefore, managing dissonance becomes the stock and trade of public officials whose job is to choose in the public interest, special interest groups whose mission is to influence the votes of these officials, and bureaucrats who stand to increase their power, influence, and resource base in the process.
Environmental issues provide an example of dissonance which arises from choice, uncertainty, and involuntary exposure to information, as well as showing how dissonance is managed by public sector agents to their own advantage. All three basic sources of dissonance come into play here. Choices are made, and costs are borne. The voting public is exposed to both voluntary and involuntary information, and interest groups support or oppose each other.
When legislators, bureaucrats, and special interests address an environmental issue, they actively engage in both quelling dissonance in regard to the choices they support and fomenting dissonance regarding the choices of their opponents. The groups who support a specific environmental bill coalesce to point out damages to the environment caused by the lack of such regulation in the past and the potential for future harm in the absence of their proposed legislation. They trade in the fear of the unknown by fomenting voter dissonance or anxiety over prior environmental choices. In effect, they attempt to scare up some votes by popularizing terms like the China Syndrome or Nuclear Winter. At the same time, they offer public-sector action as the solution to the problem and reassure voters regarding the costs and benefits of their proposed legislation. They may also attempt to quell a voter’s dissonance regarding the failures of past government efforts by criticizing deviant government agencies. In this way, the public sector manages dissonance as a commodity, and therefore, each of the components of the iron triangle should be examined individually.
Legislators: Public-choice theorists have argued that voters are rationally ignorant when confronted with choices among bundles of political goods which may include the choice among public officials. (Tullock, 1967; Downs, 1957) In addition, voters have fewer options among which to choose in public- as opposed to private-sector decisions, and dissonance management by coalitions builds upon these factors. For example, less than half of the American electorate can correctly identify their Congressman, much less know where he or she stands on various government-spending issues. Typically, the voter relies on information that is freely supplied by others (candidates, political parties, news media, friends, and interest groups). Information provided by candidates is designed to manage voter dissonance in the candidate’s favor. A political campaign is designed to quell dissonance among the candidates’ supporters and foment dissonance among the opposition. Political muckraking is nothing more than an attempt to provide information to voters which will discredit and reduce the attractiveness of political opponents.
Discrediting an opponent can also be viewed as an attempt to expose information that would not have been searched for by potential supporters. Such involuntary information within a society may create dissonance. New involuntary information may be dissonant with an individual’s preconceived opinions. Festinger makes two points that are relevant to the involuntary information argument. If a person voicing disagreement is seen as expert or very knowledgeable on such matters, the dissonance between knowledge of his contrary opinion and one’s own opinion will be greater. Candidates who seek the endorsement of such authorities in a particular field are, in effect, attempting to quell dissonance among their own supporters and foment dissonance among their opposition on the issues which the endorser possesses expertise. Festinger’s contention that dissonance is directly related to the credibility of one’s opponent is also consistent with economists’ perception that votes and political power are not distributed symmetrically across the field of candidates and the voting public. Thus, it is not surprising to see anti-nuclear interests featuring media star and physicist Carl Sagan in congressional testimony against the Reagan administration’s star wars defense initiative.
The second point that Festinger makes is that:
Another variable which clearly will affect the importance of the cognitive elements, and hence the magnitude of the dissonance, is the attractiveness of the person voicing the disagreement or of the group within which it is voiced. It is plausible to assume that the dissonance between one’s own opinion and knowledge of a contrary opinion voiced by some other person is greater if the other person is . . . attractive.
This is similar to Galbraith’s concept of conventional wisdom and may explain why movie and television personalities have become spokespersons for political candidates and causes. Examples include appearances by Arnold Schwarzenegger in support of the Bush election campaign and actress Olivia Dukakis in support of the Michael Dukakis campaign. While they may have very little technical credibility in terms of knowledge or understanding of the issues, they are in some sense attractive to the voting public and can quell and foment dissonance.
Collective decision-making involves creating simple majority consensus or, in effect, reducing disagreement. Festinger asserts that the magnitude of dissonance which results from disagreement is a function of, among other things, the number of agreeing and disagreeing individuals. One way to increase the number in agreement on a given issue is by logrolling. The you vote for my bill and I will vote for yours approach alters legislative conflict in favor of both bills and reduces the number of disagreeing parties. It also assures that those receiving benefits will not oppose others receiving benefits. (Will, 1982)
Dissonance can also be reduced by increasing the reward or punishment employed to induce the behavior. As the gains from trade among agreeing and non-agreeing parties increase, dissonance will decrease. For example, a constitutional amendment requiring a balanced federal budget is politically unacceptable to legislators primarily because it would reduce the systems of political bribes the Congress, special interests, and bureaucrats may exchange to achieve their own agendas. If more dollars for defense required that fewer dollars be spent for social programs, the benefits of a coalition of legislators, bureaucrats, and special interests would be significantly reduced, and dissonance within the coalitions would increase. In brief, coalitions manage public- and private-sector dissonance to their advantage, and in doing so, minimize their own dissonance.
Special Interest Groups: Special interests have the ability to foment dissonance for the cause and quell dissonance for a price, justifying their own existence and seeking rents in the process. A special interest group is composed of individuals who hold similar positions on a given issue. The group can identify an issue, and through its media and political resources, foment dissonance to make it a major public issue. The group can then represent itself as the solution to the problem and thereby provide a means of quelling the voter dissonance which it fomented in the first place. For example, a special interest group, such as the save-the-elephants movement, first popularizes the issue with vivid media images of the slaughter of elephants coupled with proclamations that their extinction is imminent. Then they promote themselves as the solution to the problem by fighting for the right laws, as defined by themselves, to preserve the elephant. In the process, the movement solicits public support and funds which may serve to quell a portion of the dissonance held by those who are concerned with the problem. (Brady, 1991)
Supporters of special interest groups may also be trying to co-opt the sources of potential dissonance. For example, the Atlantic Richfield Foundation gives funds to the Sierra Club and The Wilderness Society, both of which lobby against oil exploration on federal lands. (Anderson, 1990) In addition, individuals may attempt to quell some of their personal dissonance by contributing to special interests. For example, some contributors to the American Lung Association are smokers. Their dissonance over the decision to smoke may, in part, be quelled by their contributions. The personal dissonance factor may well have been fomented by public information campaigns financed by the American Lung Association. As indicated in the now well-publicized report by James Bennett, only a small fraction of the American Lung Association’s budget is spent for research; the majority of it goes to media campaigns and political lobbying. Similar circumstances can be found with regard to the American Heart Association and the American Cancer Society. Such evidence lends credence to the contention that the public sector is a marketplace where dissonance is exchanged like any other commodity.
Bureaucrats: The third leg of the iron triangle actively manages dissonance in pursuit of self-interest. Bureaucrats can foment and quell dissonance to expand their own bureaus, or get rid of their opposition. When special interest groups and legislators focus public attention on an issue, there will invariably be a call for public-sector action of some type. Consequently, each new environmental issue that is identified and brought to public attention by a special interest group offers the potential for staff and budget expansion of the Environmental Protection Agency. For example, fears of a gradually warming planet have recently captured public attention and have become the subject of wolf-crying. A British documentary film, The Greenhouse Conspiracy, examined the four pillars that support global warming claims and suggested that such fears were unfounded. The film argued that the call for political action costing billions of dollars was a fraudulent case. However, the U.S. Public Broadcasting System (a government agency) refused to air the program despite the ease with which it aired After the Warming, a pseudo-documentary purporting to describe the world in 2050 after rising temperatures in oceans had resulted from global warming.
After individuals choose, their behavior is affected by the dissonance of their actions. This may cause them to alter future choices, reformulate their preferences and/or beliefs, or even call for public-sector actions. Dissonance can be managed by bureaucrats, legislators, and special interests to their own self-interest. Legislators can affect both elections and legislation by fomenting dissonance among supporters of their opponents and quelling dissonance among their own supporters. They do so by appeal to expertise, popular association, and exposure to involuntary information. Special interest groups can foment dissonance for the cause and quell dissonance for a price justifying their own existence and seeking rents in the process. They can popularize issues with their media resources and then promote themselves as the solution to the problem by fighting for the right laws, as they define them. Bureaucrats can manage dissonance to expand their bureaus and budgets, and overcome their opposition. All three entities of the public sector can coalesce to manage dissonance to their own self-interest. In effect, the public sector develops a market surrogate where dissonance is exchanged like any other commodity. 
Anderson, Terry. Free Market Environmentalism: The Only Option. PERC Reports, December, 1990. Vol. 8 #3.
Bennett, James T. Health Research Charities: Image and Reality. George Mason University Capital Research Center, 1990.
Brady, Gordon L. The Political Economy of Endangered Species Management: The Case of Elephants. Journal of Public Finance and Public Choice, 1991. Vol. 1. pp. 29-39.
Brady, Gordon L., Clark, J.R., and Davis, William L. The Political Economy of Dissonance. Public Choice, 1995. Vol. 82. pp. 37-51.
Buchanan, James M. Cost and Choice, An Inquiry in Economic Theory. Markham Publishing Co.: Chicago, 1969.
Clark, J. R. and Lee, Dwight R. A Note on Public Choice and Cognitive Dissonance. Economia delle scelte pubbliche, 1993. Vol. 2. p. 3.
Downs, Anthony. An Economic Theory of Democracy. Harper & Row: New York, 1957. p. 210.
Festinger, Leon. A Theory of Cognitive Dissonance. Stanford University Press: Stanford, Calif., 1957.
Tullock, Gordon. An Economic Approach to Crime. Social Science Quarterly, 1969. Vol. 50. pp. 551-579.
Tullock, Gordon. Problems of Majority Voting. Journal of Political Economy, December, 1959. Vol. 67. pp. 551-579.
Tullock, Gordon. Toward a Mathematics of Politics. The University of Michigan Press: Ann Arbor, 1967. p. 102.
Will, George. How Congress Slices the Pork. Newsweek, August 2, 1982. p. 18.
Filed Under : Market Failure, Special Interests