Behavioral public choice: the next subfield in economics

by on February 20, 2007 at 6:42 am in Political Science | Permalink

Jane Galt writes:

The post below also applies to behavioural economics, which the left
seems to believe is a magical proof of the benevolence of government
intervention, because after all, people are stupid, so they need the
government to protect them from themselves.  My take is a little subtler
than that:

1)  People are often stupid
2)  Bureaucrats are the same stupid people, with bad incentives.

There are few subfields in economics that have not been fleshed out with every possible combination of mechanisms, but this is one of them.  Yes, it is hard to come up with generalizable results about the psychological and behavioral biases of bureaucrats, but that hasn’t stopped many other areas in economics (like, um…behavioral economics) from taking off.  In fifteen years someone will write a JEL survey on Behavioral Public Choice, and you will regret not having written at least one of the early papers in the field.

I might add that Behavioral Public Choice gives us a better sense of when government programs actually work.  When morale is high, many people in government will "feel they matter," even if they do not, and do a very good job.  So Behavioral Public Choice is not just government-bashing, although there is a place for that too.  Behavioral factors also help account for why corruption becomes the norm in some settings but not others; psychological propensities are one way to narrow the set of possible equilibria.

1 Jacqueline February 20, 2007 at 7:46 am

“1) People are often stupid
2) Bureaucrats are the same stupid people, with bad incentives.”

This is one of the main reasons I’m a libertarian.

2 anne February 20, 2007 at 8:14 am

“I might add that Behavioral Public Choice gives us a better sense of when government programs actually work well.”

When exactly is it that government programs do work well? Do we have any examples of when a government programs has been efficient and effective?

3 billb February 20, 2007 at 8:32 am

Barbar: Good thing we libertarians are generally of the mind to keep ourselves and our government out of peoples’ business. I’d hate to think of what might happen if our stupidity spilled over into governance. Personally, I try to confine my stupidity to home improvement and and the stock market. 🙂

4 GVV February 20, 2007 at 9:18 am

I am interested in a behavioural macroeconomics and a new psycho-economics which is different from neuroeconomics and based on social psychology.

5 hbi February 20, 2007 at 10:16 am

The Besley-Ghatak work on intrinsic motivation in bureaucracies also seems related

6 Sergey Kurdakov February 20, 2007 at 12:04 pm

just a spare thought on

“Bureaucrats are the same stupid people, with bad incentives.”

as it was discussed earlier ( Clark related topics ) it seems that ‘quality’ of people affects the economic outcomes. And also this ‘quality’ could be measured ex by IQ.

Now there is a meritocratic approach for governance of country, we could find the one in Singapore. So there might be a way to select ‘proper’ bureaucrats.

it really quite uncommon way to treat the situation. Still a possibility to look for better bureaucrats changes the weight of argument and also requires to show that the selection of bureaucrats is unrealistic so that the argument was valid.

7 Barkley Rosser February 20, 2007 at 1:42 pm

Tyler,

Prescient post. For those not sure what is up here, I think the issue is
doing experiments with people playing roles of bureaucrats or other
government agents (not all of them are bureaucrats). There has not
been much work of this sort, but I am beginning to see some papers
moving in that direction. Some of the public goods game work is
already partly there. Another area that is already active involves
experimental work on corruption, which often takes the form of that
old fave of pub choice, rent seeking.

As some of the papers I have seen are under editorial review, I am
not at liberty to cite them.

anne,

You probably do not approve of what it is doing, but the Social Security
Administration has extremely low administrative costs, less then 1/2% of
the monies it hands out. You may not think it should be handing out the
money it does, but it does so very efficiently.

Likewise Medicare, which is arguably more efficient in some ways (even if
it delayed on covering prescription drugs) than private insurance because
it does not spend huge amounts of money and labor time trying to show that
patients do not deserve to get covered for that treatment they had, and
so forth, not to mention all the pooling of risk issues.

8 Michael Greinecker February 20, 2007 at 3:17 pm

Behavioral theories are not particularly good at explaing the behavior of trained technocrats.

9 Paul February 20, 2007 at 6:46 pm

I’m not convinced the field of behavioral public choice is as fertile as it might initially appear. Most of the examples suggested in Jane Galt’s comments thread are just standard invocations of public choice theory wherein rational bureaucrats pursue goals incompatible with the public good.

A true theory of behavioral public choice would involve situations where administrators systematically make decisions inconsistent with rational maximisation of their own utility.

However, most of the classes of decision making bias identified by behavioral economics are quite specific to choices affecting oneself, rather than choices affecting others. A bureaucratic decision making process will do a pretty god job of removing loss aversion and time horizon effects from the policies it suggests, because the policy makers are asking a fundamentally different question about, say, risk, saving, or health than individual consumers of investments or cholesterol.

I can see arguments about escalating commitment holding in relation to policy design, but beyond that I’d be surprised to see the field advance much beyond its vapid “bureaucrats are stupid too” starting point any time soon.

10 Mike Huben February 22, 2007 at 8:40 pm

The problem with stupid, glib theories like Jane’s is that they are incapable of explaining why we’re not worse off than we are.

Oh, and of course they also would apply to corporate bureaucracies as well.

11 herefast123 October 27, 2008 at 6:12 am
12 Anonymous October 29, 2008 at 3:03 am
13 battery November 14, 2008 at 9:39 pm

Thank you for this outstanding article.I thought Centrino was the best technology for laptop battery performance.

14 shaiya gold December 31, 2008 at 1:01 am

Please come to cheap shaiya gold, we will give you a great surprise.

15 laptop bettery March 2, 2009 at 9:52 pm

Do you want to own some betteries which have more function , more economical and long life? Please visit the following Web site:hp dv9200 battery,it will help you find the ideal battery.

16 iPad accessories September 19, 2010 at 10:50 am

Meet me at the coffee shop, we can dance like iggy pop. Another go in the parking lot.

17 replica designer handbags November 26, 2010 at 11:26 am

The problem with stupid, glib theories like Jane’s is that they are incapable of explaining why we’re not worse off than we are.

Oh, and of course they also would apply to corporate bureaucracies as well.

18 mydriasis February 2, 2011 at 3:55 am

Mechanism is not rich in any combination, with several branches of the economy, but this is one of them. Yes, it is difficult to get the mental and behavioral abnormalities result of bureaucratic fashion, but this does not prevent the economy from the start (such as behavioral economics, ah …) and many other areas. In the fifteen years to write a book about the behavior of JEL in the vote for the book, you may regret it, at least not written in the newspapers start. i love your writings. Thank you for this outstanding article.

Comments on this entry are closed.

Previous post:

Next post: