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Public Choice: The Rest of the Story

JANUARY 01, 1988 by DWIGHT R. LEE

Tibor Machan, in a recent article in The Freeman (September 1987), faulted public choice theory for ignoring the importance of ideas and ideological convictions in political behavior. Machan is correct in arguing that ideas and ideology are important influences on political decisions. He is wrong, however, in arguing that public choice theory needs to be modified to take these influences into account. The public choice model as it stands provides a coherent explanation of why, when making political choices, an individual’s understanding of what is in the public interest is often more important than concern over his or her private interest, narrowly defined.

Lowering the Cost of Ideological Expression

It is true, as Machan points out, that public choice is rooted in the assumption that people are motivated by self-interest in both their market and political roles. This is admittedly a simplifying assumption, but it is the basis for the enormous analytical leverage economic theory in general, and public choice theory in particular, is able to apply to our understanding of social interaction. It should be pointed out. however, that the assumption of self-interest is not as restrictive as it is commonly made out to be.

It is undeniable that people value a wide range of things not normally thought of as economic goods and services. Among the noneco-nomic items that people value are their opinions and beliefs. Certainly nothing in public choice theory rules out the recognition that self-interested people may want to promote their vision of the good society.

Caution has to be exercised here, however. If we attempt to explain why people act on the basis of ideological considerations by simply putting an ideological variable in their utility function have we not, as Machan says, made “shambles of the explanatory value of the economic man model. Any . . . model that explains anything whatever . . . simply explains nothing much!” (p. 355) While this point is well taken, and does indeed indicate a risk, this risk is avoided by making sure that we go beyond simply explaining that people behave ideologically because they want to.

The public choice model does go beyond this obvious tautology by predicting that people will behave more in accordance with their ideological convictions when the cost of doing so is low than when the cost is high. This prediction is subject to rejection by empirical evidence and thus avoids Machan’s methodological concern. It also forms the basis upon which public choice is able to provide an explanation for why self-interested people are more likely to make political choices on the basis of their view of the public interest than they are in making their market choices.

While individuals may place value on their personal beliefs, it does not follow that they will be prepared to make great sacrifices in order to promote those beliefs and put them into action. Some will, of course. History is full of examples of people who have endured great hardship, even death, in order to express and spread their beliefs. But most people are less dedicated and heroic. This does not mean that people will ignore their ideological preferences in the decisions they make. It does mean that people are more likely to let ideology influence their choices when making political decisions because the political process lowers the cost of ideological expression.

Consider an individual who feels that the general public would be better served by a reduction in government and is considering how to vote on a proposal that would increase his income but also expand government. Because of the ideological preference for the ideals of limited government, the individual will receive satisfaction from voting against the proposal.

But isn’t the loss of income that will occur if the proposal is voted down a high personal price to pay for this satisfaction? The answer is “no” for the reason that no single vote is likely to determine the outcome. The probability is effectively zero that the individual’s vote against the government program will break what otherwise would have been a tie vote and make the difference between the proposal’s passing or losing. So it costs the individual essentially nothing to vote for his perception of the public interest (against government expansion) and against his financial interest because, with near certainty, the outcome will be the same no matter how he votes.

The costlessness of making ideological choices in the political process contrasts sharply with the cost of doing so in the marketplace. In the marketplace if an individual chooses a particular product the choice is decisive. The consumer gets the product he chooses and he gets it because he chose it. There is no hope of voting for a less preferred product for ideological reasons and still receiving the more preferred product. It is possible to express ideological preferences in the marketplace, but there is a real cost of doing so in terms of sacrificed alternatives.

We now have the basis for the public choice explanation of why ideological factors are more important in the political process than in the market process. The explanation in no way depends upon ad hoc assumptions that people are more concerned with the public interest when making political choices than when making market choices. People behave differently in a political setting than in a market setting, not because they bring different preferences into the two settings, but because the relative costs of alternative choices are different in the two settings.

This explains why Machan is half right and half wrong when he says: “If public servants were to become convinced that the promotion of some popular project is indeed not a proper government activity in the first place, then de-spite what they might do in circumstances which are not governed by this ‘ideological’ consideration, they could come to behave very differently from what public choice theory predicts.” (p. 355, emphasis in original)

Machan is right to say that public servants will more likely behave differently when ideological considerations are present than when they are not. Machan is wrong, however, when he asserts that public choice fails to predict the difference in behavior. By failing to understand the public choice explanation for the importance of ideology in political decisions, Machan also fails to understand a powerful explanation as to why ideas do have consequences; in particular why ideas have political consequences.

Ideas have far-reaching consequences in all areas of human activity and they have consequences for a variety of reasons. But clearly an important reason why ideas have consequences in the political realm is provided by the public choice insight that in the political realm it costs people less to act in accordance with their ideas of what is right and proper. For this reason the battle over the proper role of government in our constitutional democracy is a crucial one. If we can once again engender a prevailing ideological commitment to the classical liberal ideal of limited government, this commitment is sure to translate into a government that is smaller and more effectively restrained than the one we have today.

Conclusion

Public choice, like any model of complex human behavior, is not the whole story. But it is more of the story than Professor Machan realizes. By subjecting the political process to rigorous analysis, public choice has been able to make a strong case for imposing strict limits on the size and scope of government. Furthermore, public choice provides a compelling explanation of why it is so important to make such a case. If the public choice understanding of government becomes generally accepted, then it will once again be possible for the people to control government instead of being controlled by government.

ASSOCIATED ISSUE

January 1988

ABOUT

DWIGHT R. LEE

Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.

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