A reader asks,
What (if any) would you consider to be the most powerful rebuttal(s) of public choice theory?
First, Bueller, what is public choice theory? Jane Shaw writes that its adherents believe that
although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest.
I think that captures the spirit of public choice theory, but I would tighten it up. I prefer:
Public choice theorists examine what is likely to occur if participants in the political process are motivated primarily by personal economic gain.
In any case, one rebuttal that leaps out at me is the fact that so many people vote, given the extreme unlikelihood that one’s vote will determine the election outcome, and the rather large unlikelihood that the election outcome really will directly affect your personal well-being in a deterministic way. From the standpoint of self-interest, the cost of voting far exceeds the expected personal benefit. If people were self-interested when it comes to voting, we would expect to see fewer people bothering to cast ballots.
The same argument applies to other participants in the policy process. Some people who run for office or accept government positions clearly lower their lifetime incomes by doing so. That should not happen if they are motivated primarily by personal economic gain.
There should be a literature demonstrating how court decisions are affected by the self-interest of judges. That literature, if it exists, has not come to my attention.
One colorful model of public policy is “bootleggers and Baptists,” both of whom would like to see alcohol made illegal. Public choice theory explains the bootleggers, but not the Baptists.
Finally, what of public choice theorists themselves? If everyone is always acting solely out of a goal of personal economic gain, then why trust what a public choice theorist says? (This is a problem for any universal reductionist theory of motivation. Was Freud just articulating his theories out of hatred for his father and love for his mother?)
Thinking about public choice theory as a project to reduce political science to individualistic economics, I judge it to be a failure. Instead, you have to bring in sociology, including status hierarchies, tribalism, and sources of group cohesion, especially symbols and language.
So there is a lot to criticize in public choice theory. And I have not even brought up the issue of how, if at all, a Constitution is supposed to solve public choice problems.
But if you should not try to do too much with public choice theory, to ignore it altogether is a serious mistake. And many economists make that mistake.
For example, textbook public finance is based on public goods theory, which says that government should (and presumably will) undertake policies to correct market incentives when those incentives would lead to underproduction or overproduction of certain goods. It assumes, or implicitly predicts, that economic analysis will be the main determinant of public policy.
Instead, public choice theory predicts that those with an economic stake in a policy outcome will work harder to achieve that outcome than people who have no stake. That prediction generally holds, and it matters. It is the influence of public choice theory that leads me to predict that when single payer health care comes to the U.S., the insurance companies will remain active as profitable public utilities rather than get shut out.
When I say that government intervention in a market almost always takes the form of “subsidize demand, restrict supply,” I am applying public choice theory. In contrast, standard public goods theory would not expect this combination of policies, because one serves to increase output of the good and the other serving to decrease output. From the public goods perspective, it is contradictory to subsidize demand while restricting supply.
An even more naive political model is “good guys are with me, but there are bad guys out there who mess things up.” That model serves as the basis for every Paul Krugman column, and it strikes me as the basis for Nancy MacLean’s infamous book. And it is not just people on the left who are guilty of using the naive model. The Three Languages of Politics shows how everyone uses the naive model.
I think that the public choice framework of interpretation has plenty of room for competitors. But there is little effective competition provided by the public goods framework or the naive framework.