Updated: November 10, 2015 2:10:05 pm
I, like every other student of Economics, have stories about my early struggles at mastering the concept of “average” and “marginal”. First it was Average Cost vs Marginal Cost. Then it moved to “Average Propensity to Consume” versus “Marginal Propensity to Consume”. As years went by, the understanding of the concept became clearer.
The end of student life did not, however, mean the end of struggles with the difference between the “average” and the “marginal”. At work places, one struggled between advocating user charges based on average cost or marginal cost. Let me not bore you with details, but believe me, the implications between choosing one over the other can often be staggering.
This fundamental principle hit me with a staggering force while I was watching the Bihar election results this Sunday. How did the things change so decisively for the NDA [or JD(U)] just in a span of 18 months? The answer, to me, lies in understanding the difference between understanding the demands of your “average voter” and “marginal voter”. The average voter is your cadre, your committed voter, who is likely to stick with you for many years, many elections. He will condone your lapses and give you many chances. Average voters are very crucial – when their number dwindles, which often is a slow and long drawn process, the party loses standing. Take Congress in Bihar. Most of its average voters had left Congress, not suddenly, but over a long period of time. in the 2010 Assembly elections, Congress got four seats. In 2014 Lok Sabha, it drew a blank!
BJP has been assiduously building up a base of its average voters since the famous Rath Yatra. One of the core traits of the average BJP voter is disillusionment with the concept of secularism practised by the Congress government or plain aversion to the dynastic rule of and in the Congress. But as with the reliance on average pricing model, a firm can’t maximise its sales or profits. To get in marginal voters, development got added to agenda in 2014. The huge focus on development was akin to focus on marginal voters. It reminded me of the marginal pricing principle. Not surprisingly, the votes got maximised and BJP got a clear majority.
And then began the confusion. The doubt. Should the party return to concerns of the average voters? Recall the pricing principle: if a firm can equate its price with the average cost without losing customers, it will rake in profits. The problem is that when you do that, your demand goes down, as marginal customers no longer buy your product. As we now know, BJP decided to reward its average voters. It focussed on their concerns. The marginal voters did what the customers do under such circumstances. They did not buy the product! The vote percentage dropped. Not significantly as their average voters continued to put their faith in the party. But the marginal voters who had maximised the reward to BJP in Bihar 2014 withdrew their favour. Their was a slight drop in the vote percentage.
But the impact on the bottomline was telling!
PS.: It did not help that the two biggest rival firms had tied up and launched a glitzy door to door campaign.
– The author is a bureaucrat who does not wish to be identified. Views expressed are personal.
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