Lesson 2: The Public Choice Perspective | Intercollegiate Studies Institute

Lesson 2 Lesson 2: The Public Choice Perspective

Presented by: Dr. Jay Richards and Dr. Anne Rathbone Bradley
Busch School of Business and Economics at the Catholic University of America and George Mason University

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Economies: Private and Public

The persistence of policy failures despite progress in economics provided a group of economists known as the Public Choice School with the opportunity for scientific innovation. Their innovation was to apply economic theory to voting and policy making in a manner that parallels its application to business and consumer decision-making. This economics of the public sector—public choice—has developed into a field that crosses over between the academic communities of economics and political science.

Key Concepts: (1) Public Economy, (2) Private Economy, (3) Public Good, (4) Public Choice Economics

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EPH Lesson 2: The Public Choice Perspective

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Transactions in the private economy have fewer “third-party” effects than transactions in the public economy.
- True
- False

Taxes are the prices we pay for services provided by government
- True
- False

Public choice economists use theory such as demand and supply that was developed to understand the private economy in order to understand the public economy.
- True
- False

“Public goods” have two distinguishing characteristics. They are nonexcludable and nonrival.
- True
- False

“The imperfections of market solutions to public-goods problems must be weighed against the imperfections of government solutions.”

Tyler Cowen

“Adopting the assumption that all individuals, be they voters, politicians, or bureaucrats, are motivated more by self-interest than by public interest evokes a Madisonian perspective on the problems of democratic governance.”

William F. Shughart II

“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.”

James M. Buchanan

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Link

Tyler Cowen, “Public Goods,” The Concise Encyclopedia of Economics, 431-432.

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Link

William F. Shugart II, “Public Choice Theory,” The Concise Encyclopedia of Economics, 427-430.

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Link

James M. Buchanan, “Public Choice: Politics without Romance,” Policy, 19 (3) (2003), p. 13-18.

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PDF

James M. Buchanan, "Constitutional Political Economy" in C. K. Rowley and F. Schneider, ed., 2004, The Encyclopedia of Public Choice, v. 2, pp. 60-67.

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