Stated Preferences and the Alternative-Vote

Thursday Britain votes on changing its electoral system in favor of an alternative-vote (AV) process. David Cameron is campaigning against the change, while his junior coalition partners are pressing hard to see it win. If passed, the AV system would certainly hurt the Tories and Labour, the two dominant parties, most. (See coverage in The Economist and in The New York Times.)

In an alternative-vote system, voters rank their candidates in order of preference. Votes are counted in rounds. Each time, the lowest rank candidate is eliminated and his or her supporters’ votes move to their next highest ranked candidate. And so on, until a candidate reaches 50% of the vote.

The AV system speaks to the distinction between “revealed” and “stated” preferences. Economists usually argue that we have to consider revealed preferences—what folks’ actually do, what they spend their money or votes or time on—to be the true preferences. I have been arguing that we need to revalue stated preferences—what folks say they would like to do. What about when we have to make choices between unsavory alternatives? Do such choices reveal our true preferences? I think not.

The AV system allows one to vote for the candidate he or she truly supports, the candidate that best matches their vision, without regard for the pragmatics and cosmetics of electability. They can thus reveal their true stated preferences while, through ranking candidates, still support their least worst alternative.
Stated preferences, as compared to revealed preferences, tend to be more pro-social, long-term oriented, and less concerned with immediate gains. Through our stated preferences, we can imagine the world as it ought to be, not just as it is, and mechanisms such as AV allow us to pursue those visions. No wonder the established political parties are worried.