Public choice is about understanding the rules of the political game. Romantic notions of politics suggest that what is in the public good is obvious—or at least that it would be if we could get rid of corruption/greed/that one jerk—and that politicians will have no difficulty in setting aside their personal interests in pursuit of that good. Public choice economists take the alternative view that successful collective action is hard to pull off. Even when a large group can agree on a best course of action, the individuals involved will struggle to set aside their diverse, deeply embedded, and often mutually conflicting personal interests in order to pursue that course. Although this may sound discouraging, the optimistic heart of public choice is the idea that if we can identify a set of rules of the political game that can better withstand our pathologies and imperfections, we might actually be able to succeed in bringing out the best in ourselves.
Public choice logic can be found in the earliest discussions of political economy, but its development as a unique subfield took off in economics and political science beginning in the 1950s. The field has covered a lot of ground in the time since, so figuring out where to get started can be daunting. Below I suggest five books on the public choice framework and its value in use that I find to be both insightful and accessible. For those of you who are already familiar with the approach, what was the first book you read that really brought this framework into focus for you?
Doing Bad by Doing Good: Why Humanitarian Action Fails by Christopher J. Coyne
In Doing Bad by Doing Good, Coyne uses public choice reasoning to address the two great questions in economics: (1) why some nations are relatively wealthy and peaceful while others are relatively poor and conflict-prone, and (2) when will our impulses to help the less fortunate actually be helpful, and when might we unknowingly cause harm. I can’t think of a better place to start than this book. Coyne is an unflinching and clear writer, and the subject matters gives the application of public choice reasoning an immediacy that more abstract treatments sometimes lack.
Beyond Politics: The Roots of Government Failure by Randy T. Simmons
This is an incredibly useful book. It’s well written and provides strong theoretical foundations. There is a section on “Case Studies in the Anatomy of Government Failure” that goes through a wide range of examples from environmental law to consumer protection to the welfare state. The structure and ability to skip around makes this a great choice for anybody looking to get a broad overview of public choice. An important take-away is the universal relevance of the public choice framework. Incentives are everywhere, and it’s only by taking account of those incentives that we can understand otherwise baffling political outcomes.
Crisis and Leviathan: Critical Episodes in the Growth of Government by Robert Higgs
In Crisis and Leviathan, Higgs presents the idea that the growth of government in American history can be largely explained by the way we respond to crises. Many of the significant expansions of governmental authority in American history have been motivated by war and economic depression, yet those expanded authorities are rarely set aside once the crisis is past. In addition to this important theoretical contribution, Higgs offers a careful and engaging historical treatment of the important episodes that have shaped American’s public institutions, making this a great starting point for history buffs in particular.
The Pathology of Privilege: The Economic Consequences of Government Favoritism by Matthew Mitchell
You could buy this very short book on Amazon, but why not just download the free PDF? In The Pathology of Privilege, Mitchell offers an accessible overview of public choice reasoning and how it differs from alternative theories of politics and collective action. This is an especially good place to start if you’re looking for clarity on the relationship between government and business. There is a world of difference between being pro-market and being pro-business, and Mitchell explains the relevant incentive structures in a way that is both insightful and rooted in public choice reasoning.
As a follow up, you can pick up Luigi Zingales’ A Capitalism for the People, which has a great discussion of how the dynamics of privilege have shaped banking and Italian politics.
Advanced Introduction to Public Choice Economics by Randall Holcombe
Once you’re hooked, it’s time for Holcombe’s Advanced Introduction. In this short volume, Holcombe concisely surveys the most important theories and models used in public choice economics. If the application of public choice reasoning from previous reading or the other books on this list have piqued enough interest that you’d like to go deeper into the lingo, either to prepare for advanced undergraduate or graduate coursework or as an aid in reading the academic literature, this is the perfect next step.
Another great way to get into public choice is to start with fiction. Literature has a remarkable ability to help us step into the shoes of others. Since one of the tasks of public choice is to develop a theory of government failure to serve as an essential counterpart to theories of market failure, a good way to get a sense of the stakes of the public choice project is to step into one of the greatest government failures of all time: the USSR’s catastrophic experiments with communism and national economic planning in the 20th century. My two favorite entries in this genre are Francis Spufford’s Red Plenty and Ayn Rand’s We the Living. Although she is best known as the author of Atlas Shrugged, Rand’s semi-autobiographical work of historical fiction on life in Russia in the 1920s is a powerful testimony to the impact of extensive political control of economic life. Similarly, Spufford’s Red Plenty is a beautifully written work that uses both fictional characters and real historical figures to create a window into the history of life in the Soviet Union in the 1960s and 70s. Both of these works are fictional but deeply rooted in a very real history that illustrates the importance of understanding public choice and the impact that political decision processes have on human progress and the human experience.
Jayme Lemke is a Senior Research Fellow and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University and a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics.
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READER COMMENTS
Thaomas
Mar 17 2020 at 10:36am
Most of this sounds like standard neo-liberal critique, the need for cost benefit analysis of policy, with little input of how “public choice” affects the policy prescriptions or political strategy for getting neo-liberal policies enacted.
I’m still waiting to see an analysis taking a standard welfare economics economic proposal — net CO2 emissions taxation, free trade, progressive consumption taxation, NGDP targeting, etc. and show how it should be modified on “public choice” grounds. Alternatively, take some existing policy — Social Security, TSA, SNAP, immigration restrictions — and lay out a “public choice” informed reform proposal.
John Ruf
Mar 17 2020 at 7:28pm
Here is one example using optimal taxation: https://www.nber.org/papers/w6789
However, they are definitely in the “chicago school” of political economy/public choice which is very different from Caplan’s public choice here: http://econfaculty.gmu.edu/bcaplan/e854.html
Thaomas
Mar 17 2020 at 8:25pm
Thanks. But how does it work? The “optimal” tax raises “too much” revenue that is used in welfare diminishing activities so a less optimal tax that raises less revenue is welfare improving once both tax and spending is incorporated into the welfare function?
What I was looking for was a little closer to home case. I think by definition if we assume that there is a “public choice” distortion either in the way that the “optimal” proposal P will be modified in the legislative process or in its administration, the result is no longer optimal. But that possibility does not help with the design of proposal P’ including that P ‘ is the status quo.
The “optimal tariff” is close but the mainstream objection to it is the empirical practical difficulty in estimating the relevant elasticity of demand, although lurking in there is probably also the suspicion that precisely because the elasticity is difficult to estimate that it would open the door for protectionist capture of the process.
John Ruf
Mar 17 2020 at 11:10pm
Basically the way that it works is that the tax itself has an “equilibrium” that comes from the deadweight costs that it imposes on a pressure group. If you impose the tax in the way that minimizes the deadweight cost of that tax, the tax rate will increase such that you get an “inefficient” level of government total revenue. However, if you change the deadweight costs of the tax itself you can change the equilibrium point that the total revenue comes to.
What’s going on in the model is that if the marginal increase in deadweight costs is too small, then there’s gains to be had from one pressure group to increase predation on the taxed pressure group, but if the tax is inefficient enough then the predatory pressure group doesn’t have enough of an incentive to warrant spending more funds on producing influence, and the group being predated upon has a large incentive to spend lots of funding to fight increases in revenue generation.
Jon Murphy
Mar 18 2020 at 1:03pm
Great list. In particular, I love Chris’ book “Doing Bad by Doing Good.” It’s an excellent, real-world examination of public choice problems in action and the problems with a lot of policy goals. I quote heavily from that book in my lectures and it features prominently in my lecture on public choice.
Henri Hein
Mar 18 2020 at 8:30pm
I got my introduction to Public Choice from the horse’s mouth with The Calculus of Consent. A surprisingly good read — Tullock is nothing if not a great writer.
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