Public Choice Theory
During my formal training in economics, I mainly learned price theory (also known as microeconomics) and theories related to economic development. Only after I was done with my Ph.D. did I learn about public choice theory and constitutional political economy. Those are my favorites. Let’s talk about public choice.
What is public choice? It is not “private choice.” When you choose something in your private capacity, that’s private choice. You are self-interested and choose to do the best you can for yourself and your loved ones. You try to get the most bang for your buck, so to speak. Your private choices affect you only and you reap the benefits or suffer the costs of your choices. It’s karma.
However we live in society. Therefore people don’t just act in their private capacity; they act in their public capacity too. As voters, elected politicians and appointed bureaucrats, their choices affect others, not just themselves. That’s public choice. Hence the theory that models public choice.
Allow me to quote from a May 2019 piece: Public Choice Theory and Behavioral Symmetry.
Begin quote.
One major premise of public choice theory is “behavioral symmetry”.
People act in their rational self-interest. They do what they believe will get them the most bang for the buck for themselves and their loved ones. This they do in the private sphere, such as in the supermarket.
Behavioral symmetry posits that when people act in the public sphere — as voters, politicians, bureaucrats — they also act in their rational self-interest. They don’t get transformed into other-directed, selfless beings capable of discovering what is true, beautiful and act solely in the interest of the “common good.”
As the economist James M. Buchanan stated it, politicians are people just like the rest of us. When a person moves from the supermarket to the polling booth, he does not necessarily leave his self-interest at the door. When a person gets elected to political office or is appointed as a bureaucrat, he should not be expected to even know, let alone act in accordance with, what’s in the “public interest” any more than can be expected of the supermarket shopper.
Considered that way — “politics without romance” as Buchanan formulated it — it’s reasonable to expect politicians to act precisely as the norms of the society dictate since they are part of the society that they are drawn from. Politicians act in the public interest (properly defined) only to the extent that society expects and allows them to do so.
End quote.
Alistair Cooke in his weekly radio broadcast on BBC Radio 4, A Letter from America, once explained the theory of public choice to his listeners as “the homely but important truth that the politicians are after all just the same as the rest of us.” It is an accessible, though incomplete, definition of what public choice is about.
Politicians and bureaucrats are motivated by self-interest, and the will to power and control is deeply ingrained in them, perhaps more so than in the average person.
One cannot talk public choice theory without reference to James Buchanan. James McGill Buchanan was born in Tennessee in October 1919 to a family of high social status (his grandfather was the governor of Tennessee in the 1890s) but of modest means. He received his Ph.D. in economics from the University of Chicago in 1948. He was the architect of “public choice school,” and for his contributions to that academic enterprise he was awarded the Nobel Memorial Prize economics in 1986.
Here’s Buchanan on public choice:
Public choice did not emerge from some profoundly new insight, some new discovery, some social science miracle. Public choice, in its basic insights into the workings of politics, incorporates an understanding of human nature that differs little, if at all, from that of James Madison and his colleagues at the time of the American Founding. The essential wisdom of the 18th century, of Adam Smith and classical political economy and of the American Founders, was lost through two centuries of intellectual folly. Public choice does little more than incorporate a rediscovery of this wisdom and its implications into economic analyses of modern politics.
Here’s an extended quote from Buchanan (from his essay Economics and Its Scientific Neighbors) :
As a ‘social’ scientist, the primary function of the economist is to explain the workings of these institutions and to predict the effects of changes in their structures. As the interaction process that he examines becomes more complex, it is but natural that the task of the economic scientists becomes more intricate. But his central principle remains the same, and he can, through its use, unravel the most tangled sets of structural relationships among human beings.
The economist is able to do this because he possesses this central principle – an underlying theory of human behavior. And because he does so, he qualifies as a scientist and his discipline as a science. What a science does, or should do, is simply to allow the average man, through professional specialization, to command the heights of genius. The basic tools are the simple principles, and these are chained forever to the properly disciplined professional. Without them, he is as a jibbering idiot, who makes only noise under an illusion of speech.
I have to underline the primary message above. The average person can be like a genius in a domain such as economics provided he puts in the hard work of understanding the simple principles which form the foundation of the discipline; otherwise he is no better than a jibbering idiot.
James Buchanan helped me avoid being a jibbering idiot.
(The above lifted from an Oct 2019 piece. I like recycling bits.)
Several years ago I attended a “Public Choice Society” conference. It was held in lovely San Antonio, Texas. (I left my heart in San Antonio.) There I had the distinct pleasure of spending some time with Prof. Geoffrey Brennan. He was the first non-American president of the Public Choice Society in 2002.
I never had a chance to meet Buchanan. But Brennan was his friend and co-authored two books and many papers with him. Meeting Brennan was special for me.
Here’s Brennan. Please do watch.
Geoff Brennan, born in 1944, passed away in July 2022.
Well now you know a bit more of what one needs to know to not be a jibbering idiot.