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(共38张PPT)
PUBLIC CHOICE AND THE POLITICAL PROCESS
C h a p t e r 5
Political Equilibrium
Public choice – one made through political interaction of many people according to established rules
Political equilibrium – an agreement on the level of production of one or more public goods, given the specified rule for making the collective choice and the distribution of tax shares among individuals
Tax shares – preannounced levies assigned to citizens; equal to a portion of the unit cost of a good proposed to be provided by government
Elections and Voting
Economic analysis assumes that people evaluate government goods in the same way as market goods and vote in favor of a proposal only if they will be made better off by its passage.
The most-preferred political outcome is the quantity of the government-supplied good corresponding to the point at which the person’s tax share is exactly equal to the marginal benefit of the good.
Elections and Voting
Elections and Voting
Many citizens choose not to vote because:
The cost of time and effort to vote outweighs the perceived benefit.
They believe that their votes do not make any difference.
They may see little or no difference between the alternatives considered in the election.
They have scanty information.
Rational ignorance – lack of information about public issues that results because the marginal cost of obtaining the information exceeds the apparent marginal benefits of doing so
Determinants of Political Equilibrium
Public choice rule; the proportion of yes votes in relation to the number of votes required for approval of the issue
Average and marginal costs of the public good
Information available to voters on the cost and benefit associated with the issue
Distribution of tax shares among voters and the way in which extra taxes vary with extra output of the good provided
Distribution of benefits among voters
Political Equilibrium Under Majority Rule
An example:
Under simple majority rule, citizens must decide on the quantity of a pure public good to produce.
Given the average cost of producing the good, a tax-sharing scheme is announced whereby each person will pay the same tax per unit of the good.
If the good can be produced under conditions of constant costs and there are n individuals in the community, each individual will pay a tax equal to AC/n per unit of the public good.
Political Equilibrium Under Majority Rule
Voting to Provide Security Protection
The Median Voter
The median voter is the one whose most-preferred outcome is the median of the most preferred outcomes of all those voting.
The greater the dispersion of most-preferred outcomes from the median, the more likely there will be dissatisfaction with public choices under majority rule.
Political externalities occur when voters do not obtain their most-preferred outcomes, given their tax shares.
Political transactions costs measure the value of time, effort, and other resources expended to reach and enforce a collective agreement.
Single- and Multiple-Peaked Preferences
Consider the following information regarding three voters’ preferences on number of fireworks displays per year:
Voter Rankings of Alternatives
Voter Rankings of Alternatives
Pair-Wise Elections
Pair-wise elections are held between any two alternatives when three or more alternatives are possible.
Each loser can become a winner when paired with another alternative.
Depending on the order in which elections are held, any alternative can emerge as the winner under simple majority rule; this is called cycling.
In pair-wise elections, no political equilibrium exists.
Tally Sheets for Pair-Wise Elections
Arrow’s Impossibility Theorem
Conditions for “collective rationality”:
All voters must have free choices among alternatives, and public choices cannot be made by any one individual.
A unique political equilibrium must be attained no matter what the preferences of individuals comprising the electorate.
If all voters change their rankings of a particular alternative, the public choice that emerges must not move in the opposite direction.
Arrow’s Impossibility Theorem
Conditions for “collective rationality” (continued):
Public choices and political equilibrium must not be influenced by the order in which alternatives are presented to voters.
Public choices must not be affected by the elimination or addition of an alternative.
Public choices should be transitive: If A is chosen over B and B is chosen over C, then A should be chosen over C.
Voter Rankings: Single-Peaked Preferences
Median Peak as the Political Equilibrium
Tally Sheets for Pair-Wise Elections
Declining Marginal Benefit of Pure Public Good
Declining Marginal Benefit of Pure Public Good
Collective Choice Rules
Minority rule runs the risk of imposing decisions that do not satisfy a majority of the community.
Decisions are made by a specific minority group: oligarchy
Decisions are made by one member of the community: monarchy
Majority rule may mean simple majority rule (agreement of 51%) or other majority standards (such as a two-thirds majority).
Unanimous Consent
Allows only Pareto-efficient changes to be approved
Will block those changes that involve redistribution of either property rights to ownership or wealth, or income
Could result in high transactions costs
May encourage strategic behavior on the part of voters
Concern for minority rights has led to discussion of “relative unanimity,” such as a seven-eighths majority
Plurality Rule
A commonly use collective decision-making rule when at least three alternatives are on the ballot
Disadvantage of simple majority rule in this case is that when more than two alternatives are on the agenda, no single one may receive a simple majority
May result in high transactions costs, runoff elections
Often allows a minority to decide
Can result in cycling
Point-Count Voting
Under this system, each voter is assigned a number of points they may allocate in any way they wish among the possible alternatives
Affords opportunity for greater revelation of preferences
May protect the rights of minority voters with strong feelings on particular issues
Increases possibility to strategic behavior
Instant Runoff Voting
A scheme that makes it more likely that a winning candidate receives a simple majority rather than a plurality
Voters rank candidates according to their first, second, third choices, and so on, if there are more than two alternatives.
If no candidate receives a simple majority based on first choice votes, the one with the fewest first place votes is eliminated.
A recount is taken for the remaining candidates.
Ballots are retabulated with votes registered based on ranking for the remaining candidates.
Political Parties
Political parties are individuals with similar ideas on the role of government and other issues who group together
Act as brokers to encourage vote trading among voters
Characterized by economists as vote maximizers, because they tend to put together political programs and tax-sharing arrangements designed to maximize the votes that they receive
The Median Voter and Political Parties
Assuming each voter has a single-peaked net benefit function, Q* will emerge as the political equilibrium, because the net benefits will be higher than for any alternative quantity of goods and services, given tax shares.
The Median Voter and Political Parties
If most-preferred outcomes of voters are normally distributed, a political party can maximize votes by taking a center position (Q*).
Logrolling
When intensities of preference differ on issues, groups may trade votes for those issues of great interest to them; this is called logrolling.
Incentives exist when an asymmetry of gains on the issues is involved.
Implicit logrolling occurs when political interests succeed in pairing two or more issues of strong interest to divergent groups on the same ballot or the same bill.
Logrolling
Logrolling
Special-Interest Groups
Special-interest groups are organizations that seek to increase government expenditures that benefit their constituents.
Differ from political parties in that their leaders do not run for political office
Exist to promote policies favorable to workers, regions, minorities, environmental preservation, and taxpayers in general
Successful special-interest groups are likely to be small relative to the portion of the population that pays taxes to support their subsidies
Bureaucracy and Public Output
A bureaucracy is developed to implement public choices made through political institutions.
Influences the delivery of services and the efficiency with which services can be produced
Bureaucrats do not directly own the inputs they use for production, and any financial gains for efficiency are rare
Bureaucratic and Efficiency
Bureaucratic and Efficiency
Issues with Managing Bureaucracies
Bureaucrats often have monopolistic power.
Bureaucrats often have specialized information not available elsewhere.
Difficult to manage bureau activities because of high transactions costs
Bureaucrats can seek to convince governing authorities that their output needs to be increased.
Can increase the amounts of input necessary to produce any given amount of output by using inefficient production techniques

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