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Copyrighted material – 978– 1– 137– 42741– 0 © Andrew Hindmoor and Brad Taylor 2006, 2015 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6– 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identifi ed as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First edition 2006 Second edition 2015 Published by PALGRAVE Palgrave in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of 4 Crinan Street, London, N1 9XW. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave is a global imprint of the above companies and is represented throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978– 1– 137– 42742– 7 hardback ISBN 978– 1– 137– 42741– 0 paperback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Typeset by MPS Limited, Chennai, India. Copyrighted material – 978– 1– 137– 42741– 0 Copyrighted material – 978– 1– 137– 42741– 0 Contents List of Boxes, Figures and Tables viii Preface x 1 Introduction 1 Political economy to economics 6 The emergence of rational choice ( 1950– 1970) 8 The take- off to growth ( 1970– 1994) 9 A diffi cult decade ( 1994– 2004) 11 Major combat operations are over? ( 2004–) 14 2 James M. Buchanan and Constitutional Political Economy 21 Setting the stage: the state as an escape from Hobbesian anarchy 21 Exchange and the constitutional framework 28 Choice within rules versus choice among rules 31 The Calculus of Consent 33 Covenants without the sword 39 Assessment 44 3 Anthony Downs and the Spatial Theory of Party Competition 48 Setting the stage: the demands of democracy 48 The precursors of party competition 50 The median voter theorem 53 Qualifying the argument: accounting for divergence 56 Assumption 1: there are only two parties 57 Assumption 2: political space is one- dimensional 60 Assumption 3: parties can move to and occupy any point in this one- dimensional space 67 Assumption 4: parties are vote- maximizers 69 Assumption 5: voters vote for the party closest to them in political space 70 Assumption 6: there is perfect information 72 Copyrighted material – v978– 1– 137– 42741– 0 Copyrighted material – 978– 1– 137– 42741– 0 vi Contents Assumption 7: voters’ preferences are fi xed 74 Assessment 76 4 William Riker and the Theory of Coalitions 79 Setting the stage: choosing a voting system 79 Riker and the theory of the minimal- winning coalition 83 Policy- seeking parties 87 The portfolio- allocation model 91 The transaction costs of policy agreements 95 Assessment 104 5 Kenneth Arrow and Social Choice Theory 108 Setting the stage: democracy and the public will 108 The precursors of social choice theory 110 Arrow: social choice and individual values 116 Riker: liberalism against populism 123 The possibility of social choice 131 Assessment 137 6 Mancur Olson and the Logic of Collective Action 139 Setting the stage: individuals, groups and rationality 139 Olson’s The Logic of Collective Action 140 Resolving collective action problems 152 Elinor Ostrom and common pool governance 155 Assessment 162 7 Gordon Tullock, Rent- Seeking and Government Failure 165 Setting the stage: government without angels 165 Rent- seeking: the welfare costs of tariffs, monopolies and theft 167 Corruption, slack and bureaucracy 178 Political agency, constraint and selection 186 Assessment 190 8 Anthony Downs (again) and The Economics of Information and Voter Choice 194 Setting the stage: motivation, information and rational choice 194 Rational ignorance 199 Low- information rationality 203 Copyrighted material – 978– 1– 137– 42741– 0 Copyrighted material – 978– 1– 137– 42741– 0 Contents vii Rational irrationality 207 Expressive voting 210 Assessment 213 9 Rational Choice Explanation 216 Introduction 216 Positivism and explanation through laws 217 All other things being equal: tendency laws and the inexact (social) sciences 220 Scientifi c realism and the search for mechanisms 225 The place of rational choice theory in political science 231 Bibliography 236 Index 265 Copyrighted material – 978– 1– 137– 42741– 0 Copyrighted material – 978– 1– 137– 42741– 0 Chapter 1 Introduction Rational or, as it is sometimes known, public choice theory, is one of the most influential and controversial theories used to study politics. This book aims to provide an accessible account of the origins, assumptions and applications of rational choice theory and a balanced assessment of its strengths, limitations and policy recommendations. Rational choice can most simply be defined as the application of the methods of economics to the study of politics (Mueller, 2003: 1). More precisely, rational choice theorists, like economists, construct analytical models which assume that individuals are both rational and self- interested. These two assumptions are often thought to constitute the ‘hard core’ of the rational choice method (Maki, 2002; Vanberg, 2008: 605), though we will see shortly that not all rational choice theorists agree. In trying to understand the world around us and the people in it we usually proceed on the assumption that people have reasons for behav- ing in certain ways. When we see someone nodding their head when we are talking we think that they are doing so because they agree with what we are saying and want to show us that this is so. When we are driving and we see a person in the car ahead indicating we assume it is because they are about to turn a corner. Clearly this method is not fool- proof. When we see someone in a lake waving we might conclude that they are greeting us only to find out later that they were in trouble and asking for our assistance. But whilst experience may tell us to be careful about overestimating our ability to understand someone’s actions, we nevertheless assume that people do have reasons for behav- ing in particular ways. Philosophers use the term folk psychology to refer to the concep- tual scheme by which we predict and explain people’s actions on the basis of the beliefs and desires we attribute to them. Folk psychology assumes that people are rational in the sense that they have reasons to believe what they believe; reasons to act in the way that they act given their beliefs and desires, and that their beliefs and desires Copyrighted material – 1978– 1– 137– 42741– 0 Copyrighted material – 978– 1– 137– 42741– 0 2 Rational Choice actually cause them to act in this way through the creation of an intention (see Davidson, 1980). The ‘received’ (Satz and Ferejohn, 1994: 71) or even ‘ubiquitous’ (Lovett, 2006: 268) interpretation of rational choice theory is that it is a variant of folk psychology in which rationality is equated not simply with reason but with opti- mality (Elster, 1985, 1986). When rational choice theorists assume that people are rational they are not simply assuming that people have reasons to believe what they believe. They are assuming, firstly, that their desires are self- interested and, secondly, that their beliefs are the best possible beliefs they could have given the information available and that this is the reason why they believe what they believe. In a similar way, when rational choice theorists assume that people are rational they are not simply assuming that they have rea- sons to act in the ways that they act. They are assuming that their actions were the best possible actions they could have taken given their beliefs and desires. Understood in this way, rational choice theorists employ an instru- mental concept of rationality in which actions are judged as being rational to the extent that they constitute the best way of achieving some given self- interested goal. Rational choice theorists use the assumptions of self- interest and rationality to construct models of particular political processes or events. What is a model? People usu- ally think of models as small objects which, in perfect scale, exactly represent some larger object. That is, they think of model aeroplanes and model cities. Models of this sort are ‘isomorphic’ in the sense of having a high degree of correspondence with the object of which they are a model. Rational choice models are not models of this sort. They are, instead, attempts to pick out the essential features of some situation. Models are, in this sense, idealizations which, although flawed representations of the world, can nevertheless help us under- stand something about that world (Cartwright, 1983; Dowding, forthcoming: ch. 2). Models can be used to explain and predict outcomes by identifying the expected equilibrium which results from the interaction of the com- ponent parts of that model. Equilibrium is a stable outcome. Natural scientists conceive of equilibrium as arising when physical forces inter- act in such a way that a process is either endlessly repeated, as is the case with the movement of the planets around the sun, or comes to a rest, as is the case when a cup of tea eventually cools to room tempera- ture.

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