Public Choice Perspective Research Articles

중위투표자 관점에서의 공공사회복지 지출 분석

This paper analyzes the growth of public social expenditures in Korea from a public choice perspective. Specifically, based on the median voter theory, we conduct an empirical analysis of social insurance expenditures such as national pension, national health insurance, and public social expenditures using time series data from 1993 to 2022. The empirical results support that changes in the budget constraint for lifetime utility maximization of the median voter, including financial assets, remaining life expectancy, and remaining working year, are associated with an increase in public social expenditure. In addition, macroeconomic variables such as the real interest rate, real economic growth, and the tax base per recipient are also found to affect public social expenditure. This paper suggests that as the age of the median voter increases, public social expenditures, including national pensions and national health insurance, are bound to increase both naturally and politically.

Introducing public choice in international relations: the Russian invasion of Ukraine

With this article, I present a public choice perspective on Russia’s war on Ukraine. I criticise the realist view according to which Russia’s security concerns, defined by President Putin, prompted the conflict. I argue that realism offers a deficient analytic framework to the extent that it disregards the political and economic structure of Russia and, generally speaking, how the political economy of each case study shapes preferences, strategies and intra-elite relations, which feed into foreign policy formation. Russia is a government-controlled economy and society; a key property of Russia’s political economy is the dependency of key socio-economic actors and groups on the regime’s survival. This landscape pre-empts the expression of genuine feedback and dissent from society, and explains why Putin’s decision has faced very little disagreement and resistance. Given the previously close economic ties between Russia and Ukraine, this article also challenges capitalist peace theory for its blanket assertion that dense economic relations would provide a strong disincentive for countries to resort to war. Instead of talking about capitalism generically, we can discern varieties of capitalism, as they condition state–society relations differently. In Russia, the value that key socio-economic elites assign to their relationship with Putin outweighs the costs they are experiencing from the conflict and the external sanctions. Developing a public choice perspective in the study of international relations focuses on the preferences and strategies of the leadership and of domestic elite-level actors within the aggressor state, and invites attention to the power asymmetries that characterise their relationship.

Does centralization of online content regulation affect political hate speech in a country? A public choice perspective

This study primarily examines how the centralization of online content regulation increases political hate speech in a country. It also explores the roles of the government's social media surveillance and disinformation in this relationship. Calhoun's public choice theory is used as a theoretical foundation to examine relationships. Data from 179 nations are analyzed using a mixed-method approach (i.e., path analysis and fuzzy set Qualitative Comparative Analysis), and the findings reveal how centralization of online content regulation results in higher levels of political hate speech by increasing social media surveillance of political content and disinformation through social media by the government.

Optimal taxation for democracies with less than perfect voters: A public choice perspective

AbstractThis paper analyzes optimal tax policy from the perspective of voters who want public policies to systematically advance their interests. Self‐acknowledged ignorance implies that voters have a practical interest in transparent and stable tax systems that allow personal tax burdens to be calculated accurately and easily. Such properties reduce voter mistakes. However, a voter's normative interests may conflict with these practical interests, because ideas about a good life or good society often support tax system complexity. Tradeoffs between these two aims of democratic tax systems imply that the optimal tax system for a democracy neither minimizes voter errors nor maximizes a social welfare function.

Criminal justice from a public choice perspective: an introduction to the special issue

Criminal justice from a public choice perspective: an introduction to the special issue

공공선택의 관점에서 본 상장공기업 가치의 결정요인 분석

This paper empirically analyzes determinants of the listed public enterprises both from Tobin's Q theory and from public choice perspective. Unlike private companies, the value of public enterprises continues to decrease although considering the characteristics of public enterprises such as public interest. Moreover, taking into account most of the listed public enterprises have a monopoly position in the market, this phenomenon requires analysis of political factors as well as financial factors. In this paper, panel analysis is performed based on financial data of the listed public enterprises from 2001 to 2020. As a result of empirical analysis, financial variables such as sales growth rate representing growth potential, operating profit ratio from sales representing profitability, and debt-to-equity ratio representing stability have an influence on the value of the listed public enterprises examined by Tobin's Q. In addition, it is found that when the chief executive officer of the listed public enterprises came from political or bureaucratic backgrounds, they had a negative effect on the value of the public enterprises. This paper provides a suggestion that the government's management intervention through parachute personnel or excessive control of public charges while holding a dominant stake in the listed public corporations not only undermines the value of the listed public enterprises but also increases inefficiency in the use of social resources.

The family and the state: a public choice perspective

The family is an institution within which exchange takes place. The state depends on the productivity of families for its current and future revenues. Yet, work on family policy often ignores the role of local knowledge, incentives, and special interests, while families themselves are often overlooked in accounts of the unintended consequences of public policy. The work of Julian Simon is a notable exception. Building upon his insights about the family’s production of children in particular, this paper offers a way to think about family policy that is consistent with both family economics and public choice. I conclude by applying some basic principles to better understand three patterns: the gap between intended and actual fertility in the developing world today, the lack of successful pro-natal public policy, and the oscillation of totalitarian family policy.

Political Power and Housing Provision in Contemporary South Africa: Khutsong Township Settlement Project

This article interrogates the power dynamics in Khutsong Township from the prism of applicable theories on urban politics. The housing project in the Khutsong Township was unique due to a change in the initial objective. The intention was a resettlement project due to dolomite hazards; but it eventually became a settlement project. This was a result of the core role-players who affected the outcomes of the project, based on their interpretation of the main aspects. The article reports the empirical study on these power relationships and compares the results to the mentioned urban political theories. From the main findings, it can be concluded that the local power situation in this project is explained best by referring to hyper-pluralism, party hegemony and a negative public choice perspective. The article thereby reveals the unique and dynamic multi-directionality of the power exercised in this case. Thus, the article contributes to understanding power configurations that may emerge in housing projects within South Africa.

Health system efficiency and democracy: A public choice perspective

Due to increasing demand and scarce financial resources for healthcare, health system efficiency has become a major topic in political and scientific debates. While previous studies investigating determinants of health system efficiency focused primarily on economic and social influence factors, the role of the political regime has been neglected. In addition, there is a lack of formal theoretical work on this specific topic, which ensures transparency and logical consistency of arguments and implications. Using a public choice approach, this paper provides a rigorous theoretical and empirical investigation of the relationships between health system efficiency and political institutions. We develop a simple principal-agent model describing the behavior of a government with respect to investments in population health under different political regimes. The main implication of the theoretical model is that governments under more democratic regimes put more effort in reducing embezzlement of health expenditure than non-democratic regimes. Accordingly, democratic countries are predicted to have more efficient health systems than non-democratic countries. We test this hypothesis based on a broad dataset including 158 countries over the period 1995-2015. The empirical results clearly support the implications of the theoretical model and withstand several robustness checks, including the use of alternative indicators for population health and democracy and estimations accounting for endogeneity. The empirical results also indicate that the effect of democracy on health system efficiency is more pronounced in countries with higher income levels. From a policy perspective, we discuss the implications of our findings in the context of health development assistance.

Squatter housing transformations in Turkey after 2002: public choice perspective

This article uses the public choice perspective to examine the squatter housing transformations in Turkey implemented by the Justice and Development Party (Adalet ve Kalkinma Partisi, AKP) after 2002. AKP used the discourse of earthquake risk to the public for speeding up and legitimating transformation projects and reducing social opposition. However, in practice the principal purpose of these transformation projects has been to increase voter support for the AKP by increasing economic growth and employment, obtaining revenue, and using this revenue for social housing projects. This paper concludes that transformation projects, where economic goals have priority, stimulate the economy and satisfy the government in the short term but harm the transformation itself and the squatter community.

The comparative endurance and efficiency of religion: a public choice perspective

All of the major religious confessions existing today have outlasted every single secular ruling regime known in human history. That observation poses an interesting puzzle for social scientists interested in institutional durability. If religions can be seen as governance institutions that organize and coordinate people’s lives, why have they outlasted secular states? Despite claims regarding the inevitability of secularization, religious institutions refuse to fade from the social landscape and in many places are thriving and expanding. I argue that the durability of religious institutions relative to secular governing regimes is related to the unique ability of religions to avoid the public choice “paradox of government” as laid out by James Buchanan. More precisely, religious institutions are more resilient because they effectively provide vital public goods, involve “citizens” in the process of governance at the local level, and provide a credible neutral arbitrator for violations of the governing covenant. A further argument is made for the efficiency of religious institutions relative to states based on the smaller deadweight losses associated with participatory governance. Finally, state-sponsored confessions expose themselves to the paradox of government and become less effective in pursuing their missions.

Catalysing private and public action for climate change mitigation: the World Bank’s role in international carbon markets

ABSTRACT This policy analysis examines the role of the World Bank in shaping and stimulating international carbon markets. Adopting a public choice perspective, we argue that its engagement can be understood as a response to the joint goal of reputational and financial benefits. The detailed empirical account of the Bank’s activities – from its pioneering role through the Prototype Carbon Fund in the early 2000s, to its initiatives for upscaled crediting subsequent to the 2015 Paris Agreement – is broadly in line with this interpretation. The period between 2005 and 2011 most clearly shows that the Bank was ready to forego some reputational benefits for the sake of financial benefits. During this period, it followed a flourishing privately driven carbon market, mostly competing with, rather than catalysing, private activities. After the Paris Agreement opened the door for a new phase of carbon markets, the Bank again took up a pioneering role, now focusing on the public sector. However, since transparency in relation to its activities is limited – thus reducing reputational risk – these activities may not meet the quality standards, notably with respect to additionality, that are a precondition for carbon markets to be an effective tool for climate change mitigation. Key policy insights Over time, the World Bank has alternated between being an ‘agenda setter’, catalysing private and public sector engagement in carbon markets, and a ‘regime follower’ regarding international carbon markets, based on varying reputational and financial benefits. In the post-Paris climate regime, the Bank has resumed its original pioneering role, although the scale of its activities is smaller, and they are less transparent, than during the Kyoto Protocol period of the early 2000s. To maximize its contribution, the Bank can act as a source of initial demand for carbon credits, but must have an exit strategy in place once the private and public sector gets sufficiently involved. Sufficient transparency on the Bank’s activities is required; reputational considerations provide an incentive to support generation of high-quality carbon credits.

Applying Political Business Cycle to Explain Macroeconomic Policies in Iran: A Public Choice Perspective

Public choice theorists evaluate the government’s behavior within the framework of political business cycles. Considering the significant role of macroeconomic factors such as inflation and unemployment in voters’ behavior, governments with politically beneficial behaviors seek to increase voter satisfaction and the probability of their re-election through adopting economic policies. Thus, the long-term welfare of the current and future generations will be sacrificed to governments' short-term beneficial policies. This study analyzed the political business cycles within the framework of the Nordhaus (1975) approach by using the optimal control method and maximizing the social voting function. The results indicated that the election-winning government increases the unemployment rate to control inflation. However, by approaching the next election period, the elected government reduces the unemployment rate close to the point corresponding to short-term policy, resulting in increasing the inflation again. In the long-term, the policymaker selects a policy with lower unemployment and higher inflation with respect to the optimal point.

Did You Say that Voting is Ridiculous?: Using South Park to Teach Public Choice

This note describes an approach to teaching the public choice perspectives on voting using an episode from Comedy Central’s animated television show, South Park. The episode titled, “Douche and Turd,” demonstrates the near-zero value of an individual vote, the intrinsic value individuals place on the act of voting itself, problems arising when voters must choose amongst undesirable candidates rather than issues, and the role of political campaigning; and mirrors public perception regarding the 2004 presidential campaign between George W. Bush and John Kerry.

Governing Public-Private Partnerships: The Problem of Low-Cost Decisions

In many cases, the expected efficiency advantages of public-private partnership (PPP) projects as a specific form of infrastructure provision did not materialize ex post. From a Public Choice perspective, one simple explanation for many of the problems surrounded by the governance of PPPs is that the public decision-makers being involved in the process of initiating and implementing PPP projects (namely, politicians and public bureaucrats) in many situations make low- cost decisions in the sense of Kirchgässner (1948–2017). That is, their decisions may have a high impact on the wealth of the jurisdiction in which the PPP is located (most notably, on the welfare of citizen-taxpayers in this jurisdiction) but, at the same time, these decisions often only have a low impact on the private welfare of the individual decision-makers in politics and bureaucracy. The latter, for example, in many settings often have a low economic incentive to monitor/control what the private-sector partners are doing (or not doing) within a PPP arrangement. The purpose of this paper is to draw greater attention to the problems created by low-cost decisions for the governance of PPPs. Moreover, the paper discusses potential remedies arising from the viewpoint of Public Choice and Constitutional Political Economy.

An Economic and Public Policy view of Demonetization in India

The paper will look at the recent demonetization exercise that the government of India imposed on its people. The demonetization exercise was marketed from a Public Interest perspective as a way to eliminate corruption, increase the tax base and to fight terrorism. However, the Public Choice perspective brings out the political self-interest involved in the demonetization exercise. The role of foreign and domestic interest groups involved in pushing for demonetization will be explored. Insights from Austrian Economics will show why top down planning fails and results in more controls. Insights from Public Policy shows that the lasting impact of demonetization is an increased interest in digital payments.

Comment on “A Stream That Rises above Its Source: Judicial Review from a Public Choice Perspective”

Comment on “A Stream That Rises above Its Source: Judicial Review from a Public Choice Perspective”

A Stream That Rises above Its Source: Judicial Review from a Public Choice Perspective

A typical discussion of judicial review pits the view of Alexander Hamilton in Federalist no. 78 (protection from the “cabals of a representative body”) against the much more circumscribed view of Justice Owen Roberts (“lay the article of the Constitution which is invoked beside the statute which is challenged and decide whether the latter squares with the former”). This tension between two views informs much of the current debate over judicial review. But the “tension” is illusory; the real problem can be analyzed as a two-dimensional spatial problem, with participants having preferences over both the substantive issue being litigated and the principle of judicial review in the abstract. This article presents a set of results based on such a spatial analysis and considers an answer to the apparent paradox that judicial review may prevail against political majorities for long periods. Furthermore, the results from the model indicate that any purely issue-oriented “median voter” approach to court voting is misspecified and will lead to incorrect predictions.

An Economic and Public Policy View of Demonetization in India

The paper looks at the recent demonetization exercise that the government of India imposed on its people. The demonetization exercise was marketed from a Public Interest perspective as a way to eliminate corruption, increase the tax base and to fight terrorism. However, the Public Choice perspective brings out the political self-interest involved in the demonetization exercise. The role of foreign and domestic interest groups involved in pushing for demonetization is explored. Insights from Austrian Economics shows why top down planning fails and results in more controls. Insights from Public Policy shows that the lasting impact of demonetization is an increased interest in digital payments.

James M. Buchanan and the Journal of Public Finance and Public Choice: extending the Italian tradition of public finance

The Journal of Public Finance and Public Choice began publication in 1983 under the title Economia delle scelte pubbliche/Journal of Public Finance and Public Choice, changing to Journal of Public Finance and Public Choice/Economia delle scelte pubbliche in 1997. Under either name, the Journal reflected the founding editor’s (Domenico da Empoli) desire to amplify and extend the Italian orientation toward public finance that Antonio de Viti de Marco (1888) set in motion. It’s fitting that James Buchanan’s (1983) ‘The public choice perspective’ opened the Journal, for Buchanan (1960) was instrumental in promoting awareness among Anglo-Saxon scholars of the Italian tradition that da Empoli sought to carry forward in establishing the JPFPC. With da Empoli’s death in December 2016, the Journal is now proceeding with a new editorial team (Emma Galli and Giampaolo Garzarelli) and a new publisher (Bristol University Press). The Journal’s orientation, however, remains unchanged, in that it continues to welcome contributions within public finance and public choice within the broad tradition outlined here. In this essay, I mark this change in editorial regime by reviewing how Buchanan’s orientation toward public finance continues and extends the tradition that de Viti (1888) began.