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Public choice, or public choice theory, is "the use of
economic An economy (; ) is an area of the production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products ...

economic
tools to deal with traditional problems of
political science Political science is the scientific study of politics Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as ...
".
Gordon Tullock Gordon Tullock (; February 13, 1922 – November 3, 2014) was an economics, economist and professor of law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of econom ...
, 9872008, "public choice," ''
The New Palgrave Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, ...
''. .
Its content includes the study of
political behavior Theories of political behavior, as an aspect of political science Political science is the scientific study of politics. It is a social science dealing with systems of governance and power, and the analysis of politics, political activitie ...
. In political science, it is the subset of
positive political theory Positive political theory (PPT) or explanatory political theory is the study of politics Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (s ...
that studies self-interested agents (voters, politicians, bureaucrats) and their interactions, which can be represented in a number of ways – using (for example) standard constrained
utility As a topic of economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within thos ...

utility
maximization,
game theory Game theory is the study of mathematical model A mathematical model is a description of a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. ...
, or
decision theory Decision theory (or the theory of choice not to be confused with choice theory) is the study of an agent's choices. Decision theory can be broken into two branches: normative Normative generally means relating to an evaluative standard. Normati ...
. It is the origin and intellectual foundation of contemporary work in political economy. Alberto Alesina, Torsten Persson, Guido Tabellini, 2006. “Reply to Blankart and Koester's Political Economics versus Public Choice Two Views of Political Economy in Competition,” Kyklos, 59(2), pp. 201-08 Public choice analysis has roots in positive analysis ("what is") but is often used for
normative Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as bad or undesirable or impermissible. A Norm (p ...
purposes ("what ought to be") in order to identify a problem or to suggest improvements to constitutional rules (i.e.,
constitutional economics A constitution is an aggregate of fundamental principles A principle is a proposition or value that is a guide for behavior or evaluation. In law, it is a rule Rule or ruling may refer to: Human activity * The exercise of political ...
). Public choice theory is also closely related to
social choice theory Social choice theory or social choice is a theoretical A theory is a rational Rationality is the quality or state of being rational – that is, being based on or agreeable to reason Reason is the capacity of consciously making sense o ...
, a mathematical approach to aggregation of individual interests, welfares, or votes. Much early work had aspects of both, and both fields use the tools of economics and
game theory Game theory is the study of mathematical model A mathematical model is a description of a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. ...
. Since voter behavior influences the behavior of public officials, public-choice theory often uses results from social-choice theory. General treatments of public choice may also be classified under
public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency In , economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being ...
. Public choice, building upon economic theory, has some core tenets that are largely adhered to. The first is the use of the individual as the common decision unit. Due to this there is no decision made by an aggregate whole. Rather, decisions are made by the combined choices of the individuals. The second is the use of markets in the political system, which was argued to be a return to true economics. The final is the self-interested nature of all individuals within the political system. However, as Buchanan and Tullock argued, "the ultimate defense of the economic-individualist behavioral assumption must be empirical...The only final test of a model lies in its ability to assist in understanding real phenomena" James M. Buchanan and Gordon Tullock, 1962. The Calculus of Consent. Ann Arbor: University of Michigan Press, pp. 28; cf. ibid., 21


Background and development


History of social choice and public choice theory

An early precursor of modern public choice theory was the work of Swedish economist
Knut Wicksell Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a leading Swedish Swedish or ' may refer to: * Anything from or related to Sweden, a country in Northern Europe * Swedish language, a North Germanic language spoken primarily i ...

Knut Wicksell
(1896), which treated government as political exchange, a ''
quid pro quo Quid pro quo ('what for what' in Latin Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of the ...
'', in formulating a
benefit principle The benefit principle is a concept in the theory of taxation Several theories of taxation exist in public economics. Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance Public expend ...
linking taxes and expenditures. Some subsequent economic analysis has been described as treating government as though it attempted "to maximize some kind sort of welfare function for society" and as distinct from characterizations of self-interested
economic agents In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
, such as those in business. This is a clear dichotomy, as one cannot be self-interested in one area, while being altruistic in another. In contrast, public choice theory modeled government as made up of officials who, besides pursuing the public interest, might act to benefit themselves, for example in the
budget-maximizing modelThe budget-maximizing model is a stream of public choice theory Public choice, or public choice theory, is "the use of economic An economy (from Greek language, Greek οίκος – "household" and νέμoμαι – "manage") is an area of the ...
of
bureaucracy The term bureaucracy () may refer both to a body of non-elected governing officials (bureaucrats A bureaucrat is a member of a bureaucracy and can compose the administration of any organization of any size, although the term usually connotes ...

bureaucracy
, possibly at the cost of efficiency.William A. Niskanen (
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1994). ''Bureaucracy and Public Economics'', Elgar. Expanded ed. Description and review
links
and revie


Modern public choice theory

Modern public-choice theory, and especially election theory, has been dated from the work of
Duncan Black Duncan Black (23 May 1908 – 14 January 1991) was a Scottish Scottish usually refers to something of, from, or related to Scotland, including: *Scottish Gaelic, a Celtic Goidelic language of the Indo-European language family native to Scotla ...
, sometimes called "the founding father of public choice". In a series of papers from 1948, which culminated in ''The Theory of Committees and Elections'' (1958), and later, Black outlined a program of unification toward a more general "Theory of Economic and Political Choices" based on common
formal Formal, formality, informal or informality imply the complying with, or not complying with, some set theory, set of requirements (substantial form, forms, in Ancient Greek). They may refer to: Dress code and events * Formal wear, attire for forma ...
methods, developed underlying concepts of what would become median voter theory, and rediscovered earlier works on voting theory.Duncan Black (1948a). "On the Rationale of Group Decision-making, ''Journal of Political Economy'', 56(1), pp. 23–34 .
   • _____ (1948b). "The Decisions of a Committee Using a Special Majority," ''Econometrica'',16(3), pp. 245–61 .
   • _____ (1969). "Lewis Carroll and the Theory of Games," ''American Economic Review'', 59(2), pp
206–210.
br />   • _____ (1976). "Partial Justification of the Borda Count," ''Public Choice'', 28(1), pp
1–15
Black's work also included the possibility of entirely random outcomes in a voting structure, where the only governance over the outcome is the where a particular motion falls in the sequence presented.
Kenneth J. Arrow Kenneth Joseph Arrow (23 August 1921 – 21 February 2017) was an American economist, mathematician, writer, and political theorist {{unreferenced, date=June 2015 A political theorist is someone who engages in constructing or evaluating politica ...
's ''
Social Choice and Individual Values #REDIRECT Social Choice and Individual Values#REDIRECT Social Choice and Individual Values Kenneth Arrow's monograph ''Social Choice and Individual Values'' (1951, 2nd ed., 1963) and a theorem within it created modern social choice theory Soc ...
'' (1951) influenced formulation of the theory of public choice and election theory. Building on Black's theory, Arrow concluded that in a non-dictatorial setting, there was no predictable outcome or preference order that can be discerned for a set of possible distributions. Among other important works are
Anthony Downs Anthony Downs (; born November 21, 1930) is an Americans, American economist specializing in public policy and public administration. He has been a senior fellow at the Brookings Institution in Washington, D.C., since 1977. Before 1977, Downs ser ...

Anthony Downs
(1957) '' An Economic Theory of Democracy'' and
Mancur Olson Mançur Lloyd Olson Jr. (; January 22, 1932 – February 19, 1998) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A ...
(1965) '' The Logic of Collective Action''.Mancur Olson, Jr. (
965 Year 965 ( CMLXV) was a common year starting on Sunday A common year starting on Sunday is any non- leap year (i.e. a year with 365 days) that begins on Sunday, 1 January, and ends on Sunday, 31 December. Its dominical letter hence is A. T ...
1971). ''The Logic of Collective Action: Public Goods and the Theory of Groups'', 2nd ed. Harvard University Press
DescriptionTable of Contents
an
preview
'' The Logic of Collective Action'' was fundamental in beginning the study of special interests. In it, Olson began to open questions about the nature of groups, including their lack of incentive to act with a lack of organization and free-rider problems of these larger groups upon specialized group's actions. Due to the incentive for concentrated groups (such as farmers) to act for their own interest, paired with a lack of organization of large groups (such as the public as a whole), legislation implemented as a result benefits a small group rather than the public at large. James M. Buchanan and
Gordon Tullock Gordon Tullock (; February 13, 1922 – November 3, 2014) was an economics, economist and professor of law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of econom ...
coauthored '' The Calculus of Consent: Logical Foundations of Constitutional Democracy'' (1962), considered one of the landmarks in public choice and
constitutional economics A constitution is an aggregate of fundamental principles A principle is a proposition or value that is a guide for behavior or evaluation. In law, it is a rule Rule or ruling may refer to: Human activity * The exercise of political ...
. In particular, the preface describes the book as "about the ''political organization"'' of a free society. But its methodology, conceptual apparatus, and analytics "are derived, essentially, from the discipline that has as its subject the ''economic'' organization of such a society" (1962, p. v). Buchanan and Tullock build out a framework within ''Calculus'' of constitutional decision making and structures. This framework differentiates decisions that are made into two categories: Constitutional decisions and political decisions. Constitutional decisions establish long standing rules that rarely change and govern the political structure itself. Political decisions are those that take place within and are governed by the structure. The book also focuses on positive-economic analysis as to the development of constitutional democracy but in an ethical context of consent. The consent takes the form of a
compensation principle In welfare economics Welfare economics is a branch of economics that uses microeconomic Microeconomics (from Greek prefix ''mikro-'' meaning "small" + ''economics'') is a branch of economics that studies the behavior of individuals and Theo ...
like
Pareto efficiency Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after Vi ...
for making a policy change and unanimity or at least no opposition as a point of departure for social choice. Somewhat later, the probabilistic voting theory started to displace the median voter theory in showing how to find
Nash equilibria In game theory Game theory is the study of mathematical models of strategic interaction among Rational agent, rational decision-makers.Roger B. Myerson, Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Pre ...
in multidimensional space. The theory was later formalized further by Peter Coughlin.


Decision-making processes and the state

One way to organize the subject matter studied by public choice theorists is to begin with the foundations of the state itself. According to this procedure, the most fundamental subject is the origin of
government A government is the system or group of people governing an organized community, generally a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Departmen ...

government
. Although some work has been done on
anarchy Anarchy is the state of a society being freely constituted without authorities or a governing body A governing body is a group of people that has the authority to exercise governance Governance is all the processes of interactions be they ...
,
autocracy Autocracy is a system of government in which supreme power over a State (polity), state is concentrated in the hands of one person, whose decisions are subject to neither external legal restraints nor regularized mechanisms of popular control (ex ...
,
revolution In political science Political science is the scientific study of politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, suc ...

revolution
, and even
war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (new ...

war
, the bulk of the study in this area has concerned the fundamental problem of collectively choosing . Much of this study on constitutional rules is based on work by James M. Buchanan. This work assumes a group of individuals who aim to form a government, then it focuses on the problem of hiring the agents required to carry out government functions agreed upon by the members.


Bureaucracy

Another major sub-field is the study of
bureaucracy The term bureaucracy () may refer both to a body of non-elected governing officials (bureaucrats A bureaucrat is a member of a bureaucracy and can compose the administration of any organization of any size, although the term usually connotes ...

bureaucracy
. The usual model depicts the top bureaucrats as being chosen by the chief executive and legislature, depending on whether the democratic system is
presidential President most commonly refers to: *President (corporate title) *President (education), a leader of a college or university *President (government title) President may also refer to: Automobiles * Nissan President, a 1966–2010 Japanese full- ...
or
parliamentary A parliamentary system or parliamentary democracy is a system of democratic Democrat, Democrats, or Democratic may refer to: *A proponent of democracy Democracy ( gr, δημοκρατία, ''dēmokratiā'', from ''dēmos'' 'people' an ...
. The typical image of a bureau chief is a person on a fixed salary who is concerned with pleasing those who appointed him or her. The latter has the power to hire and fire him or her more or less at will. The bulk of the
bureaucrats A bureaucrat is a member of a bureaucracy and can compose the administration of any organization of any size, although the term usually connotes someone within an institution of government or corporate. The term ''bureaucrat'' derives from "burea ...
, however, are civil servants whose jobs and pay are protected by a civil service system against major changes by their appointed bureau chiefs. This image is often compared with that of a business owner whose profit varies with the success of production and sales, who aims to maximize profit, and who can in an ideal system hire and fire employees at will. William Niskanen is generally considered the founder of public choice literature on the
bureaucracy The term bureaucracy () may refer both to a body of non-elected governing officials (bureaucrats A bureaucrat is a member of a bureaucracy and can compose the administration of any organization of any size, although the term usually connotes ...

bureaucracy
.


"Expressive interests" and democratic irrationality

Geoffrey Brennan and Loren Lomasky claim that democratic policy is biased to favor "expressive interests" and neglect practical and
utilitarian Utilitarianism is a family of normative Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as ba ...
considerations. Brennan and Lomasky differentiate between instrumental interests (any kind of practical benefit, both monetary and non-monetary) and expressive interests (forms of expression like applause). According to Brennan and Lomasky, the paradox of voting can be resolved by differentiating between expressive and instrumental interests. This argument has led some public choice scholars to claim that politics is plagued by irrationality. In articles published in the ''
Econ Journal Watch ''Econ Journal Watch'' is a semiannual peer-reviewed Peer review is the evaluation of work by one or more people with similar competencies as the producers of the work ( peers). It functions as a form of self-regulation by qualified members o ...
'', economist
Bryan Caplan Bryan Douglas Caplan (born April 8, 1971) is an American economist An economist is a practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from e ...
contended that voter choices and government economic decisions are inherently irrational. Caplan's ideas are more fully developed in his book ''
The Myth of the Rational Voter ''The Myth of the Rational Voter: Why Democracies Choose Bad Policies'' is a 2007 book by the economist Bryan Caplan, in which the author challenges the idea that voters are reasonable people whom society can trust to make laws. Rather, Caplan co ...
'' (Princeton University Press 2007). Countering Donald Wittman's arguments in ''The Myth of Democratic Failure'', Caplan claims that politics is biased in favor of irrational beliefs. According to Caplan, democracy effectively subsidizes irrational beliefs. Anyone who derives utility from potentially irrational policies like
protectionism Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies sh ...
can receive private benefits while imposing the costs of such beliefs on the general public. Were people to bear the full costs of their "irrational beliefs", they would lobby for them optimally, taking into account both their instrumental consequences and their expressive appeal. Instead, democracy oversupplies policies based on irrational beliefs. Caplan defines rationality mainly in terms of mainstream price theory, pointing out that mainstream economists tend to oppose protectionism and government regulation more than the general population, and that more educated people are closer to economists on this score, even after controlling for confounding factors such as income, wealth or political affiliation. One criticism is that many economists do not share Caplan's views on the nature of public choice. However, Caplan does have data to support his position. Economists have, in fact, often been frustrated by public opposition to economic reasoning. As Sam Peltzman puts it:
Economists know what steps would improve the efficiency of HSE ealth, safety, and environmentalregulation, and they have not been bashful advocates of them. These steps include substituting markets in property rights, such as emission rights, for command and control ... The real problem lies deeper than any lack of reform proposals or failure to press them. It is our inability to understand their lack of political appeal.
Public choice's application to government regulation was developed by
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A br ...
(1971) and Sam Peltzman (1976).


Special interests

Public choice theory is often used to explain how political decision-making results in outcomes that conflict with the preferences of the general public. For example, many
advocacy group Advocacy groups, also known as special interest groups, use various forms of advocacy Advocacy is an activity Activity may refer to: * Action (philosophy), in general * Human activity: human behavior, in sociology behavior may refer to al ...
and
pork barrel ''Pork barrel'', or simply ''pork'', is a metaphor A metaphor is a figure of speech A figure of speech or rhetorical figure is a word or phrase that entails an intentional deviation from ordinary language use in order to produce a rheto ...
projects are not the desire of the overall
democracy Democracy ( gr, δημοκρατία, ''dēmokratiā'', from ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which people, the people have the authority to deliberate and decide legislation ("direct democracy"), or to cho ...

democracy
. However, it makes sense for politicians to support these projects. It may make them feel powerful and important. It can also benefit them financially by opening the door to future wealth as
lobbyists In politics, lobbying, persuasion, or interest representation is the act of lawfully attempting to influence the actions, policies, or decisions of government officials, most often legislators or members of regulatory agency, regulatory agenci ...
. The project may be of interest to the politician's local
constituency An electoral district, also known as an election district, legislative district, voting district, constituency, riding, ward, division, (election) precinct, electoral area, circumscription, or electorate, is a subdivision of a larger state St ...
, increasing district votes or
campaign contributions Campaign finance, also known as election finance or political donations, refers to the funds raised to promote candidates, political parties A political party is an organization that coordinates candidates to compete in a country's electio ...
. The politician pays little or no cost to gain these benefits, as he is spending public money. Special-interest lobbyists are also behaving rationally. They can gain government favors worth millions or billions for relatively small investments. They face a risk of losing out to their competitors if they don't seek these favors. The taxpayer is also behaving rationally. The cost of defeating any one government give-away is very high, while the benefits to the individual taxpayer are very small. Each citizen pays only a few pennies or a few dollars for any given government favor, while the costs of ending that favor would be many times higher. Everyone involved has rational incentives to do exactly what they are doing, even though the desire of the general constituency is opposite. Costs are diffused, while benefits are concentrated. The voices of vocal minorities with much to gain are heard over those of indifferent majorities with little to individually lose.• William C. Mitchell and Michael C. Munger, 1991. "Economic Models of Interest Groups: An Introductory Survey," ''American Journal of Political Science'', 35(2), pp. 512–46 .
   • Gordon Tullock,
987 Year 987 ( CMLXXXVII) was a common year starting on Saturday A common year starting on Saturday is any non-leap year A leap year (also known as an intercalary year or wikt:bissextile, bissextile year) is a calendar year that contains an ad ...
2008. "public choice," ''
The New Palgrave Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, ...
''. 2nd Edition
Abstract

   •
Gary S. Becker Gary Stanley Becker (; December 2, 1930 – May 3, 2014) was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic ...
, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," ''Quarterly Journal of Economics'', 98(3), pp
371–400

   •_____, 1985. "Public Policies, Pressure Groups, and Dead-weight Costs," ''Journal of Public Economics'', 28(3), pp. 329–47
Abstract
and reprinted in George J. Stigler, ed., 1988, ''Chicago Studies in Political Economy'', pp
85–105
• Gordon Tullock,
987 Year 987 ( CMLXXXVII) was a common year starting on Saturday A common year starting on Saturday is any non-leap year A leap year (also known as an intercalary year or wikt:bissextile, bissextile year) is a calendar year that contains an ad ...
2008. "rent seeking," ''The New Palgrave Dictionary of Economics'', 2nd Edition
Abstract

   • _____, 1967. "The Welfare Costs of Tariffs, Monopolies, and Theft,"''Western Economic Journal'', later ''Economic Inquiry'', 5(3), pp
224
32.
   • Anne O. Krueger, 1974. "The Political Economy of the Rent-Seeking Society," ''American Economic Review'', 64(3), pp
291–303

   • Gordon Tullock, 1989. ''The Economics of Special Privilege and Rent Seeking, Springer
Description
and chapter-previe
links

   • Jagdish N. Bhagwati, 1982. "Directly Unproductive, Profit-Seeking (DUP) Activities," ''Journal of Political Economy'', 90(5), pp. 988–1002 .''
However the notion that groups with concentrated interests will dominate politics is incomplete because it is only one half of political equilibrium. Something must incite those preyed upon to resist even the best organized concentrated interests. In his article on interest groups Gary Becker identified this countervailing force as being the deadweight loss from predation. His views capped what has come to be known as the Chicago school of political economy and it has come in sharp conflict with the so-called Virginia faction of public choice due to the former's assertion that politics will tend towards efficiency due to nonlinear deadweight losses and due to its claim that political efficiency renders policy advice irrelevant. While good government tends to be a pure public good for the mass of voters, there may be many
advocacy groups Advocacy groups, also known as special interest groups, use various forms of advocacy Advocacy is an activity Activity may refer to: * Action (philosophy), in general * Human activity: human behavior, in sociology behavior may refer to al ...
that have strong incentives for
lobbying In politics Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the Cognition, cognitive process resultin ...

lobbying
the government to implement specific policies that would benefit them, potentially at the expense of the general public. For example, lobbying by the sugar manufacturers might result in an inefficient
subsidy A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...

subsidy
for the production of sugar, either directly or by
protectionist Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies sh ...
measures. The costs of such inefficient policies are dispersed over all citizens, and therefore unnoticeable to each individual. On the other hand, the benefits are shared by a small special-interest group with a strong incentive to perpetuate the policy by further lobbying. Due to
rational ignorance Rational ignorance is refraining from acquiring knowledge when the supposed cost of educating oneself on an issue exceeds the expected potential benefit that the knowledge would provide. Ignorance about an issue is said to be "rational" when the ...
, the vast majority of voters will be unaware of the effort; in fact, although voters may be aware of special-interest lobbying efforts, this may merely select for policies which are even harder to evaluate by the general public, rather than improving their overall efficiency. Even if the public were able to evaluate policy proposals effectively, they would find it infeasible to engage in
collective action Collective action refers to action taken together by a group of people whose goal A goal is an idea of the future or desired result that a person or a group of people envision, Planning, plan and commit to achieve. People endeavour to reac ...
in order to defend their diffuse interest. Therefore, theorists expect that numerous special interests will be able to successfully lobby for various inefficient policies. In public choice theory, such scenarios of inefficient government policies are referred to as ''
government failure Government failure, in the context of public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiencyIn microeconomics, economic efficiency is, roughly speaking, a sit ...
'' – a term akin to ''
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where indivi ...
'' from earlier theoretical
welfare economics Welfare economics is a branch of economics that uses microeconomics, microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics gives rise to the fiel ...
.


Rent-seeking

A field that is closely related to public choice is the study of
rent-seeking In public-choice theory, as well as in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumpt ...
. This field combines the study of a market economy with that of government. Thus, one might regard it as a new political economy. Its basic thesis is that when both a market economy and government are present, government agents may rent or sell their influence (i.e. a vote) to those who are seeking input into the lawmaking process. The government agent stands to benefit from support from the party seeking influence, while the party seeks to gain benefit through having public policy implemented that benefits them. This essentially results in a capture and reallocation of benefit, wasting the benefit and any resources used from being put to a productive use in society. This is due to the fact that the party attempting to acquire the benefit will spend up to or more than the benefit accrued, resulting in a zero-sum gain, or a negative sum gain. The real gain is the gain over the competition. This political action will then be used to keep competition out of the market due to a lack of real or political capital. Rent-seeking is broader than public choice in that it applies to autocracies as well as democracies and, therefore, is not directly concerned with collective decision making. However, the obvious pressures it exerts on legislators, executives, bureaucrats, and even judges are factors that public choice theory must account for in its analysis of collective decision-making rules and institutions. Moreover, the members of a collective who are planning a government would be wise to take prospective rent-seeking into account. Another major claim is that much of political activity is a form of rent-seeking which wastes resources.
Gordon Tullock Gordon Tullock (; February 13, 1922 – November 3, 2014) was an economics, economist and professor of law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of econom ...
,
Jagdish Bhagwati Jagdish Natwarlal Bhagwati (born July 26, 1934) is an India-born naturalized Naturalization (or naturalisation) is the legal act or process by which a non-citizen of a country may acquire citizenship Citizenship is the status of a person ...

Jagdish Bhagwati
, and
Anne Osborn Krueger Anne Osborn Krueger (; born February 12, 1934) is an United States, American economist. She was the World Bank Chief Economist from 1982 to 1986, and the first deputy managing director of the International Monetary Fund (IMF) from 2001 to 2006. S ...
have argued that rent-seeking has caused considerable waste.


Political stance

From such results it is sometimes asserted that public choice theory has an anti-state tilt. But there is ideological diversity among public choice theorists.
Mancur Olson Mançur Lloyd Olson Jr. (; January 22, 1932 – February 19, 1998) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A ...
for example was an advocate of a strong state and instead opposed political
interest group Advocacy groups, also known as special interest groups, use various forms of advocacy Advocacy is an activity by an individual or group that aims to influence decisions within political, economic, and social institutions. Advocacy include ...
lobbying. More generally, James Buchanan has suggested that public choice theory be interpreted as "politics without romance", a critical approach to a pervasive earlier notion of idealized politics set against market failure. The British journalist,
Alistair Cooke Alistair Cooke (20 November 1908 – 30 March 2004) was a British-born American writer whose work as a journalist, television personality and radio broadcaster was done primarily in the United States The United States of America ...
, commenting on the Nobel Memorial Prize awarded to James M. Buchanan in 1986, reportedly summarized the public choice view of politicians by saying, "Public choice embodies the homely but important truth that politicians are, after all, no less selfish than the rest of us."


Recognition

Several notable public choice scholars have been awarded the
Nobel Prize in Economics The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
, including James M. Buchanan (1986),
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A br ...
(1982),
Gary Becker Gary Stanley Becker (; December 2, 1930 – May 3, 2014) was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Econo ...
(1992), Vernon Smith (2002) and
Elinor Ostrom Elinor Claire "Lin" Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American political economist whose work was associated with the New Institutional Economics New institutional economics (NIE) is an economic perspective that attem ...
(2009). In addition, James Buchanan, Vernon Smith, and Elinor Ostrom were former presidents of the Public Choice Society.


Limitations and critiques

Buchanan and Tullock themselves outline methodological qualifications of the approach developed in their work ''
The Calculus of Consent ''The Calculus of Consent: Logical Foundations of Constitutional Democracy'' is a book A book is a medium for recording information Information can be thought of as the resolution of uncertainty; it answers the question of "What an enti ...
'' (1962), p
30
: en if the model ith its rational self-interest assumptionsproves to be useful in explaining an important element of politics, it does not imply that all individuals act in accordance with the
behavioral assumption The behavioral assumption is one of the basics theories in classical finance. The assumption is that, under their resource constraints, human attempt to maximize their utilities, which means biggest profit and outcomes. The two most important char ...
made or that any one individual acts in this way at all times ... the theory of collective choice can explain only some undetermined fraction of collective action. However, so long as some part of all individual behavior ... is, in fact, motivated by utility maximization, and so long as the identification of the individual with the group does not extend to the point of making all individual utility functions identical, an economic-individualist model of political activity should be of some positive worth. Further, Steven Pressman (economist) offers a critique of the public choice approach, arguing that public choice actually fails to explain political behavior in a number of central areas including politicians behavior as well as
voting behavior Voting behavior is a form of electoral behavior. Understanding voters' behavior can explain how and why decisions were made either by public decision-makers, which has been a central concern for political scientists, or by the electorate Electorat ...
. In the case of politicians' behavior, the public choice assumption that a politician's utility function is driven by greater political and economic power cannot account for various political phenomena. These include: why politicians vote against their constituent's interests, why they would advocate for higher taxation, fewer benefits, and smaller government, or why wealthy individuals would seek office. As for critiques concerning voter behavior, it is argued that public choice is unable to explain why people vote due to limitations in
rational choice theory Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory postulates that an individual will perform a cost-benefit analysis to determine whether an option is right for them. It also sugge ...
. For example, from the viewpoint of
rational choice theory Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory postulates that an individual will perform a cost-benefit analysis to determine whether an option is right for them. It also sugge ...
, the expected gains of voting depend on (1) the benefit to the individual if their candidate wins, and (2) the probability that the individual's vote will determine the election's outcome. However, even in a tight election the probability that an individual's vote makes the difference is estimated to be effectively zero. This would suggest that even if an individual expects gains from their candidate's success, the expected gains from voting would also logically be near zero. When this is considered in combination with the multiple recognized costs of voting such as the
opportunity cost In microeconomic theory Microeconomics (from Greek prefix ''mikro-'' meaning "small" + ''economics'') is a branch of economics Economics () is the social science that studies how people interact with value; in particular, the Produ ...
of foregone wages, transportation costs, and more, the self-interested individual is, therefore, unlikely to vote at all (at least theoretically). Pressman is not alone in his critique, other prominent public choice economists also recognize that theorizing voting behavior is a major issue for the public choice approach. This includes critiques by
Anthony Downs Anthony Downs (; born November 21, 1930) is an Americans, American economist specializing in public policy and public administration. He has been a senior fellow at the Brookings Institution in Washington, D.C., since 1977. Before 1977, Downs ser ...

Anthony Downs
in An Economic Theory of Democracy, Morris P. Fiorina, and
Gordon Tullock Gordon Tullock (; February 13, 1922 – November 3, 2014) was an economics, economist and professor of law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of econom ...
.Tullock, G. Towards a Mathematics of Politics. Ann Arbor: University of Michigan Press, 1967.


See also

*
Abilene paradoxIn the Abilene paradox, a group of people collectively decide on a course of action that is counter to the preferences of many or all of the individuals in the group. It involves a common breakdown of group communication in which each member mistaken ...
*
Choice modelling Choice modelling attempts to model the decision process of an individual or segment via revealed preferences or stated preferences made in a particular context or contexts. Typically, it attempts to use discrete choices (A over B; B over A, B & C) ...
* Economics empiricism *
Fiscal illusionIn public choice theory, fiscal illusion is a failure to accurately perceive the amount of government expenditure. The theory of fiscal illusion was first developed by the Italian economist Amilcare Puviani in his 1903 book ''Teoria della illusione f ...
*
Flipism Flipism, sometimes written as "flippism", is a pseudophilosophy under which decisions are made by flipping a coin. It originally appeared in the '' Donald Duck'' Disney comic " Flip Decision" by Carl Barks, published in 1953. Barks called a pract ...
*
Flypaper effect The flypaper effect is a concept from the field of public finance that suggests that a government grant to a recipient municipality increases the level of local public spending more than an increase in local income of an equivalent size. When a doll ...
*
Free-rider problem In the social sciences, the free-rider problem is a type of market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a n ...
*
Political economy Political economy is the study of production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products ( ...
*
New institutional economics New institutional economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the sociology, social and legal Norm (sociology), norms and rules) that underlie economic activity and ...
*
Prisoner's dilemma The prisoner's dilemma is a standard example of a game analyzed in game theory Game theory is the study of mathematical models of strategic interaction among Rational agent, rational decision-makers.Roger B. Myerson, Myerson, Roger B. (1991) ...
*
Realpolitik ''Realpolitik'' (; ) is politics or diplomacy based primarily on considerations of given circumstances and factors, rather than explicit ideological notions or moral and ethical premises. In this respect, it shares aspects of its philosophical app ...
*
Regulatory captureIn politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such as the distribution of resources or status. The branch of social scien ...
*
Sortition In governance Governance is all the processes of interactions be they through the laws Law is a system of rules created and law enforcement, enforced through social or governmental institutions to regulate behavior,Robertson, ''Crim ...
*
Socialist calculation debate The socialist calculation debate, sometimes known as the economic calculation debate, was a discourse on the subject of how a socialist economy Socialist economics comprises the economic theories, practices and norms of hypothetical and existi ...
*
Subsidiarity Subsidiarity is a principle of social organization that holds that social and political issues should be dealt with at the most immediate (or local) level that is consistent with their resolution. The ''Oxford English Dictionary'' defines subs ...
*
Tax choice In public choice theory, tax choice (sometimes called taxpayer sovereignty, earmarking or Fiscal subsidiarity) is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of co ...


References


Bibliography

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896 __NOTOC__ Year 896 ( DCCCXCVI) was a leap year starting on Thursday A leap year starting on Thursday is any year with 366 days (i.e. it includes 29 February) that begins on Thursday Thursday is the day of the week between Wednesday Wedne ...
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Further reading

* *
Pdf.
* {{Wikiquote * Public economics Political science theories