Chapter 23: Public Choice

Peter T. Calcagno

Public choice Public choice economics is the intersection of economics and politics. It uses the tools of economics to examine collective decisions. Public choice economics reflects three main elements: (1) methodological individualism, in which decision making occurs only with individuals; (2) rational choice, in which individuals make decisions by weighing the costs and benefits and choosing the action with the greatest net benefit; and (3) political exchange, in which political markets operate like private markets, with individuals making exchanges that are mutually beneficial (Buchanan, 2003). It is this last element that makes public choice a distinct field of economics. Using the basic tools and assumptions of economics on collective decisions provides many insights. Economists assume that individuals are rationally self-interested in private decision making. However, this assumption is not always applied to the realm of collective decision making. In fact, for the first half of the twentieth century, it was ...

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