Friday, October 14, 2011

Some thoughts on public choice theory

Tyler Cowen says it's underrated. My sense is that's probably right (I don't know if it's the most underrated), but I wouldn't necessarily place all the blame on the economics profession. Some of the blame certainly goes to public choice theorists themselves. Yglesias puts it this way:

"While of course I agree with many of the specific observations made under the banner of public choice (public officials often do corrupt and self-interested things), I don’t really “get” public choice and think I never will. The basic theory (here’s a good recent example from Jerry Brito) seems to go like this:

1) Spread cynicism about public officials.
2) …
3) Libertarianism

I think his point #1 is too much. It's not a case of spreading cynicism - it's about imputing motives to public officials that we impute to all actors. That part of public choice is fine. Now, I think public choice theory goes to far in assumptions about motivation in some cases. It is not absurd to note that a public spirit motivates a lot of public officials, and we can say this without abandoning the idea that self-interest motivates them too. I've never worked for the government, but in my immediate circle of family my wife does, my mom and aunt work for local school systems as teachers, my grandad was in the Army and then worked in the veteran's court of appeals, and my grandma worked with military child care centers. Every single one of them was largely motivated by a public spirit. My wife does not come home from work discussing how she wants to obtain more resources for her agency. We worry a little about her pay freeze, but aside from that what she talks about (aside from mundane work drama) is how invested she is in using education as a form of public diplomacy. She works at National Defense University with a department that has mostly foreign officers as student, and she gets very passionate about how great it is to see Pakistani officers talking with Americans about what's going on over there, and especially about how Pakistani and Indian officers interact and learn to appreciate each other while in classes (my impression is that these two countries form the bulk of the foreign students). So is a public choice theory about resource appropriation and self interest essential? Of course it is. But this scoffing at the idea of a "public spirit" I think is deeply out of touch with reality. My wife's experience is reproduced for a lot of other people I know that have worked in government. Anyway - all I'm saying is that that is important in the analysis as well, but generally speaking I disagree with Yglesias that the starting assumptions are all about "spreading cynicism". Self interest is good starting assumption. It's just not complete.

I'm more in agreement with Yglesias on his #3. A lot of public choice theory seems to just be a thinly veiled way of smuggling a political disposition into economics departments.

It really doesn't have to be this way. Public Choice Theory makes a lot of good solid claims about good governance centering on federalism, constitutionalism (Buchanan's enormous contribution), decentralization, etc. There's considerable material to work with without necessitating the libertarianism that the discussion often descends into. But often that's not what ends up happening.

Peter Boettke recently wrote about public choice theory too here. I think he falls into the same trap. This is a comment I wrote on that post:

"re: "Imagine, just imagine if you will, what fiscal and monetary policy would have to look like if we took seriously the Humean dictum that in designing governmental institutions we must presume that all men are knaves."

Isn't this exactly what the constitution does take seriously? Don't we take this seriously?

When I first read Buchanan as an undergrad I fell in love with public choice theory. Since then, reading more broadly, it's been more disappointing. The literature seems like if you're not coming out guns blazing for libertarianism there's a sense that you're not doing public choice theory or you're ignoring public choice theory. No wonder others have stayed away too.

When Pennington came out with his work recently my reaction to it was "this is dead-on - this is why constitutional systems and federalized systems and decentralized systems are good governance". It was a rigorous statement of robust governance. But then in all the commentary on Pennington it got turned into sloganeering for libertarianism.

If the claim is "federalism is robust", "constitutionalism is robust", and "decentralization is robust" I am fully on board. But too often public choice theory in practice instead is just a very inappropriate cudgel to be used against Keynesianism or liberalism.

When public choice theory gets to the point where it gets past this idea that decentralized constitutionalism is incompatible with Keynesianism or modern liberalism and that decentralized constitutionalism does not imply libertarianism, perhaps I'll take a deeper interest in it. For the time being there seems to be a lot wrong not with public choice theory so much as the way that it is practiced

One final point is that because of the political entanglements of public choice theory, a lot of good public choice theory doesn't get counted as such. There is a lot of work in political economy and public economics that doesn't get put under the banner of "public choice theory" because it doesn't come to libertarian conclusions.


  1. Well,Smith certainly thought that a legislator could be motivated by concern for the public interest. The Wealth of Nations is addressed to just such a legislator.

    More generally, the economist who advances the theory that self-interest motivates all of our actions is embroiled in a sort of pragmatic self-contradiction. If his theory is correct, then he adopts beliefs that advance his interests, he doesn't abide by the norms of science except to the extent that they advance his interests, and thus his "theory" isn't to be taken seriously. If his theory is incorrect, if we as scientists are engaged in a dis-interested search for truth, then we can take his theory seriously.

  2. You don't have to "spread cynicism" about legislators, etc.; they do that well enough on their own.

    "I'm more in agreement with Yglesias on his #3. A lot of public choice theory seems to just be a thinly veiled way of smuggling a political disposition into economics departments."

    Once you acknowledge that you have to acknowledge that everyone engages in smuggling. In other words, Keynesians engage in smuggling too, lots and lots of smuggling.

    Since Hume was mentioned I'll just parrot what Hume said about politics - it is a clash of interests; and that is something which various strains of modern thinking find unsavory* (Hume actually thought within a certain framework it was virtuous - in his limited view of what virtue is).

    One of the best resources for understanding politics remains Hume, but to tap into that resource you have to read Hume (which means going well beyond the first book of the _Treatise..._).

    *This often includes libertarians BTW, but I can throw in many liberals and conservatives as well.

  3. Well, obviously politicians are neither saints nor devils, they are somewhere in the middle.

    I wonder if you could model this somehow. Maybe analyze the number of "compromised positions" as a function of amount of power and of campaign contributions?

  4. Public choice theory is cited passingly in "This Time is Different: Eight Centuries of Financial Folly" by Kenneth Rogoff and Carmen Reinhart. Otherwise, I do agree with your observations, Daniel.

  5. 1) Spread cynicism about public officials.
    2) …
    3) Libertarianism!

    You can substitute any methodological starting point for 1) and it will stand for most libertarian arguments.


All anonymous comments will be deleted. Consistent pseudonyms are fine.