Public Choice Theory

Public choice theory is a subfield of rational choice theory that was originally articulated in James M. Buchanan and Gordon Tullock's The Calculus of Consent (1962). This school of thought claims that the traditional domain of political theory, that is, constitutional design and electoral processes, is better understood in terms of calculable self-interest. Buchanan and Tullock drew on Anthony Down's median voter theory and Duncan Black's research on single-peaked preferences to put forward their theory that all political processes are best analyzed as the product of the self-interested actions of all agents, whether public officials, voters, or political candidates. They perceived their work as injecting realism into political theory by casting into doubt such concepts as public service and public interest as meaningful motivations animating political action. In the view of public choice theory, any bureaucratic organization is best studied as being comprised of individuals striving to achieve their own ends instead of some larger social goal.

Public choice exists as both a specific school of thought pioneered by Buchanan and Tullock and as a more pluralistic body of scholarship, some of which is published in the journal Public Choice. In the early 1960s, researchers met under the name of the Committee for Non-Market Decision Making, which is a telling title for the main thrust of the then-new research initiative: to apply the idea of rational egoism to individuals' choices in political arenas not governed by monetary prices. Since economic science up until that time was concerned with scarce commodities that were exchanged in markets for objective prices, it is important to recognize that public choice theory represents a break with economic analysis. Public choice is doubly innovative: for applying the idea of calculable, rational self-interest to political actors, and for breaking free from the confines of viewing economics as the science of constricted maximization of purchases under a budget constraint.

Much research in public choice has been focused on constitutional design and legislative rules for achieving collective outcomes. Public choice theory incorporates the impossibility theorem, holding that if one starts with individuals' preferences, it is impossible to achieve any collective expression of the public good or public interest. The Calculus of Consent subjects decision rules to scrutiny, finding that self-interested rational actors would insist on a procedure of unanimous decision making to establish a constitution. This is because the costs of living under a constitution that do not reflect personal interests would be prohibitive; hence total agreement guarantees each individual that personal interests are secure. On the other hand, for routine legislative decisions, citizens would agree to a less-than-unanimous decision rule because the costs in energy and resources to reach any type of agreement would outweigh the possibly negative repercussions of a decision for any single person.

Public choice has extended its research to many of the problems addressed by political economy and political science: public goods, voting rules, majority voting, two-party and multiparty political systems, rent seeking, lobbying, federalism, and the appropriate role of the state.