Greece’s Referendum Was Still a Good Idea

After Greek Prime Minister Alexis Tsipras called for Sunday’s vote on whether Greece should accept the austerity measures its creditors are demanding, the international reaction was nearly universally negative, with the leftist Greek leader accused of engaging in demagoguery at the expense of his nation. The criticism has even made its way to Urban Dictionary:

The average Greek citizen is not a political economist or an expert in international finance, which means most eligible voters weren’t nearly knowledgeable enough on the technical financial issues involved to make an informed decision—certainly not as informed as the government they elected to make these decisions. Nevertheless, the mere fact that Greek citizens were given a choice means that the Greek referendum might actually be good for the country in the long run.

Going into the vote, Greece faced two very bad options. On the one hand, it could turn down Europe’s bailout proposal, reject the attached austerity measures, and face the wrath of its creditors. This would destroy Greece’s credit rating for years and probably lead to the country’s exit from the European Union, which would in all likelihood trigger massive capital flight, inflation, and all sorts of other economic horrors. On the other hand, Tsipras and his team could accept yet another round of unpopular austerity measures, further cutting salaries and pensions and raising taxes, under the hope that this austerity package (unlike the last several) would finally lead to an improvement in the Greek economy. But with unemployment already at record highs, this would put severe financial strain on Greek families, and potentially cause the economy to collapse further.

In other words, it didn’t matter which decision the Greeks made; the ramifications were going to be pretty bad. It was pick-your-poison time.

One might say that the biggest threat to Greece right now, however, wasn’t austerity, nor is it the now very real possibility of leaving the Euro. The biggest threat to Greece right now may be the political instability that could result from citizens’ frustrations regarding the inevitable fallout from either of those two unenviable paths. Disruptive protests, rioting, constitutional change, or (at worst) an unconstitutional change in government or regime would only make Greece’s economic situation worse—and could have ripple effects on every aspect of Greek life for years to come.

So how does the government in Athens prevent unrest? Bringing its citizens into the decision-making process may make them more likely to accept the ultimate outcome, whatever that outcome may be. As we discussed in our book, Democracy Despite Itself, there is a strong psychological principle that people are much more at peace with a decision—even one they disagree with—if they are given a voice in the decision-making process. This so-called “procedural justice” also reduces corruption and makes people more willing to follow rules and get along.

Research captures these effects. During the 1991 California drought, the amount of water residents rationed wasn’t influenced by their beliefs about the drought’s severity, but instead was driven by how fair they thought water pricing and allocating polices were. Studies show that people are more likely to pay taxes when they get to vote on where the tax money goes, even when they aren’t on the winning side of the vote.

The referendum result isn’t likely to help Greece make better decisions about it s future, but it very well could help Greece nonetheless. The mere fact that the voters themselves are deciding could make all the difference in the world.

Mike Edwards is a writer and political analyst based in Boston. Daniel Oppenheimer is a professor of psychology and marketing at the UCLA Anderson School of Management. They are the co-authors of Democracy Despite Itself: Why a System that Shouldn’t Work at All Works so Well. They wrote this for Zocalo Public Square.