Ten rules for public economic policy

Abstract

This paper discusses ten simple rules for the formulation of public economic policies efficiently, using both old wisdom and recent results. In proposing the ten rules, the normative foundation used is that of social welfare maximization or welfarism. The scientific foundation is the first theorem in welfare economics supplemented by other analyses in economics and beyond. The ten rules are: Using the Invisible Hand; Provision of Essential Public Goods; Reducing Excessive Inequalities Efficiently; Adopt Free Trade and Eliminate Administrative and Collusive Monopolies; Provide Useful Information and Regulation; Raise Taxes Efficiently; Mitigate against Excessive Market Fluctuations; Undertake Public Projects Efficiently; Soft Paternalism; Happiness-Oriented Objectives. Justifications and qualifications are discussed.