Budgeting, Rational Models

Jason A. MacDonald

Budgeting refers to decisions about how much funding to provide for the programs, staffs, and infrastructures of government, as well as about the processes used to arrive at funding levels. In examining processes, budgeting theories explain how individuals who hold budget-writing positions choose funding levels for programs. A second class of theories explain how and why political elites try to manipulate budgets to foster their goals. Rational theories of individuals responsible for choosing how much to fund budget lines offer bounded rationality explanations of these decisions. Due to limits on human cognition, vast numbers of lines in the budget, and complex decision-making environments, budgeters' forecasts about how well their choices will facilitate their goals are imperfect. Despite these limitations, budgeters use decision-making strategies that help them foster their goals. Such strategies are boundedly rational because, although the choices and behavior resulting from such strategies are not optimal, budgeters' decisions still ...

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