ECON 410 • Public Economics • Spring 2022

Ryan Safner
Assistant Professor of Economics
safner@hood.edu
ryansafner/publicS22
publicS22.classes.ryansafner.com

The Story So Far

We need to create a State to constrain individuals from interfering against one another...but we also need to constrain the State

Constitutional rules define the domain of allowed collective decisions and the rules or procedures for doing so
Their practical function is to protect minorities from the majority

The Story So Far

Political rules allow us to make one collective choice for all, even though many will disagree with the outcome

We must agree at a constitutional level so that we can disagree on political outcomes

James Buchanan and Gordon Tullock

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

1962, The Calculus of Consent
Buchanan:
- 1986 Nobel Prize in Economics
- Collective choice as exchange, constitutional political economy, political philosophy
Tullock:
- Rent-seeking, transitional gains trap, autocracy, law & economics
Brings economic tools to political science: politics as exchange

Public Choice and Behavioral Symmetry

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“Political theorists seem rarely to have used this essentially economic approach to collective activity. Their analyses of collective-choice processes have more often been grounded on the implicit assumption that the representative individual seeks not to maximize his own utility, but to find the "public interest" or "common good,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

What is ‘the Public Interest‘ or ‘the Common Good?’

Naive Political Economy

People often recommend optimal policies that could effectively be installed by a benevolent despot who has
- Perfect knowledge to correctly identify ‘the public good’
- Has the desire and perfect incentives to achieve it
- Has no constraints on his/her actions

Naive Political Economy

People often recommend optimal policies that could effectively be installed by a benevolent despot who has
- Perfect knowledge to correctly identify ‘the public good’
- Has the desire and perfect incentives to achieve it
- Has no constraints on his/her actions

Robust Political Economy

In reality, 1^st-best policies distorted by:
- problems with knowledge
- problems with incentives
- problems with politics/agreement/control
Real world: 2^nd-to-n^th-best outcomes

Making Fair Comparisons: Nirvana Fallacy

Harold Demsetz

1930-2019

“The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing 'imperfect' institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements,” (p.1).

Demsetz, Harold, 1969, "Information and Efficiency: Another Viewpoint," Journal of Law and Economics 12(1): 1-22

Comparative Analysis

Compare imperfections of feasible and relevant alternative systems
- .hi[Nirvana fallacy]: comparing a flawed (but real) system with some flawless, ideal system
Economics: think on the margin!
- One system's “failure” does not imply another's “success”!
- the real world requires tradeoffs
- “economics puts parameters on people's utopias”
- “compared to what?”

Hume: Assume the Worst (?)

David Hume

1711-1776

“Political writers have established it as a maxim, that, in contriving any system of government, and fixing the several checks and controuls of the constitution, every man ought to be supposed a knave, and to have no other end, in all his actions, than private interest. By this interest we must govern him, and, by means of it, make him, notwithstanding his insatiable avarice and ambition, co-operate to public good. Without this, say they, we shall in vain boast of the advantages of any constitution, and shall find, in the end, that we have no security for our liberties or possessions, except the good-will of our rulers; that is, we shall have no security at all,” (“Of the Independency of Parliament”)

Hume, David, 1742, Essays: Moral, Political, and Literary

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“Throughout the ages the profit-seeker, the utility-maximizer, has found few friends among the moral and the political philosophers...In the political sphere the pursuit of private gain by the individual participant has been almost universally condemned as 'evil' by moral philosophers of many shades. No one seems to have explored carefully the implicit assumption that the individual must somehow shift his psychological and moral gears when he moves between the private and the social aspects of life,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“We are, therefore, placed in the somewhat singular position of having to defend the simple assumption that the same individual participates in both processes [the market and politics] against the almost certain onslaught of the moralists,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Politics as Exchange

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“The economic approach, which assumes man to be a utility-maximizer in both his market and his political activity, does not require that one individual increase his own utility at the expense of other individuals. This approach incorporates political activity as a particular form of exchange; and, as in the market relation, mutual gains to all parties are ideally expected to result from collective action,” (p. 23)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Politics as Exchange

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“The power-maximizing approach, by contrast, must interpret collective choice-making as a zero-sum game...When one man gains, the other must lose; mutual gains from "trade" are not possible in this conceptual framework,” (p. 23-24)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Levels of Rules

The Political and the Constitutional

We must be able to examine both levels simultaneously:

Constitutional level choice among alternative sets of rules
Political level choice within a specific set of rules

The Political and the Constitutional

Each level affects the other
Constitutional rules constrain political decisions
Current political situation (preferences, interests, wealth, power) tints how we view particular constitutional rules

How to Decide How to Decide

Veil of Uncertainty

Behind veil of uncertainty at the constitutional moment
- Rawlsian veil of ignorance
Individuals do not know if they will be in majority or minority
Need to know costs of State action, but can't know this before we know how State is organized

Collective Action on the Margin

B&T assume some pre-existing property rights at some minimal level
What further collective action will individuals agree to?

“When will a society composed of free and rational utility-maximizing individuals choose to undertake action collectively rather than privately?”

Pre-existing externalities that individuals cannot mitigate alone

Collective Action on the Margin

Pre-existing externalities that individuals cannot mitigate alone
Failing to act collectively would leave these externalities

Constitutional Political Economy

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"There should be little reason to expect that constitutional rules developed in application to the passage of general legislation would provide an appropriate framework for the enactment of legislation that has differential or discriminatory impact on separate groups of citizens," (p. 22)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

The Unanimity Rule

What is the moral status of a decision rule?
- e.g. “majority rule”
Unanimity is ideal: Pareto efficient by definition
Choice of constitutional rules should be unanimous, so we can disagree about political outcomes

The Unanimity Rule

But there are costs of trying to secure unanimity!
- Need everyone to agree
A less-than-unanimous rule will create other costs on minorities that are not in the majority
Consider two types of costs to determine optimal departure from unanimity

External Costs

External costs, $C (n)$ : cost of collectively-chosen outcome on individual, falling with $n$
Expected cost of being in minority and coerced to comply with unfavorable decision
Some expected cost at 0, personal cost of unresolved externality
With unanimity $(N)$ , external costs $\to 0$

Decision-making Costs

Decision-making costs, $D (n)$ : cost of reaching an agreement, rising at an increasing rate with $n$
With more people, any one person can veto!
Holdouts, strategic bargaining, high transaction costs

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$
Total costs $C (n) + D (n)$ : the (vertical) sum of external and decision-making costs

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$
Total costs $C (n) + D (n)$ : the (vertical) sum of external and decision-making costs
Optimal decision rule: minimize total costs at $\frac{K}{N}$

Optimal-Decision Rule

ANY group of $\frac{K}{N}$ people that agree will determine the outcome
- the “decisive set”
Note: again, the minimum of Total Costs
- not necessarily the intersection of External costs and Decision-making costs
- not necessarily simple majority $\frac{n}{2} + 1$ !

The Benefits of Majority Rule

Majority rule $(\frac{n}{2} + 1)$ is a very common decision rule
Despite moral arguments for/against, practical reasons:
1. It's the smallest possible group which can ensure there will not be two contradictory measures passed
2. Can break a “voting cycle” (next class!)

Optimal Decision Rules Vary

Costs are different issue by issue
- No single voting rule optimal for all issues
High $C (n)$ -issues
- Exercise of State power vs. individual
- Constitutional amendment
- Criminal convictions
- Require much larger decisive set than a simple majority

Optimal Decision Rules Vary

Costs are different issue by issue
- No single voting rule optimal for all issues
High $C (n)$ -issues
- Exercise of State power vs. individual
- Constitutional amendment
- Criminal convictions
- Require much larger decisive set than a simple majority

Optimal Decision Rules Vary

Low $C (n)$ -issues, common access rules:
- Nomination (1 person)
- Introducing a motion/bill (moved and seconded)
- Writ of certorari
- Require much smaller decisive set than a simple majority

Optimal Decision Rules Vary

Low $C (n)$ -issues, common access rules:
- Nomination (1 person)
- Introducing a motion/bill (moved and seconded)
- Writ of certorari
- Require much smaller decisive set than a simple majority

A Little Tool I Made

https://ryansafner.shinyapps.io/ccmodel/

Common Decision Rules

Access rules: less than majority
- Bringing issues to the group
Decision rules: majority
- Actual business of passing resolutions
Changing the rules: more than majority (closer to unanimity)

What Affects Total Costs

Size of $N$ : larger groups create larger $C + D$ costs
- We want the smallest group consistent with the size of the externality
Heterogeneity (of preferences, wealth, power, etc)
- $C$ -costs rise: greater fear of being in minority
- $D$ -costs rise: harder to get very different people to agree

Heterogeneity

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"Many activities that may be quite rationally collectivized in Sweden, a country with a relatively homogenous population, should be privately organized in India, Switzerland, or the United States."

Comparing the Cure and the Disease

Different alternative decisions regarding an externality have different costs:
$A$ : do nothing, live with externality
$B$ : voluntary collective action
- cost of collective action might yield underprovision
$C$ : government action
- cost of collective action might create new political externalities

Comparing the Cure and the Disease

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"The existence of external effects of private behavior is neither a necessary nor a sufficient condition for an activity to be placed in the realm of collective choice," (p.61)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

When Optimal Collective Action is Second-Best

Even with optimal collective decision rule, it might be better off left to private hands if total costs are lower (at A)
In general, the higher $C + D$ costs are (for whatever reason), the greater likelihood that an activity should be left private

The Importance of the Starting Point

Constitutional choice does not take place in a vacuum
Veil of ignorance assumes we have no specific stake in changing rules in a particular way, but
Our current political situation (preferences, wealth, power, etc.) naturally will affect how we view different rules

The Importance of the Starting Point

Incorrect to start from Hobbes (no rules); irrelevant to our actual decisions
Constitutional economics is practically about reform of rules, rather than designing from scratch
We must always start from where we are
We would build a different house from scratch than if we change our existing one

ECON 410 • Public Economics • Spring 2022

Ryan Safner
Assistant Professor of Economics
safner@hood.edu
ryansafner/publicS22
publicS22.classes.ryansafner.com

The Story So Far

We need to create a State to constrain individuals from interfering against one another...but we also need to constrain the State

Constitutional rules define the domain of allowed collective decisions and the rules or procedures for doing so
Their practical function is to protect minorities from the majority

The Story So Far

Political rules allow us to make one collective choice for all, even though many will disagree with the outcome

We must agree at a constitutional level so that we can disagree on political outcomes

James Buchanan and Gordon Tullock

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

1962, The Calculus of Consent
Buchanan:
- 1986 Nobel Prize in Economics
- Collective choice as exchange, constitutional political economy, political philosophy
Tullock:
- Rent-seeking, transitional gains trap, autocracy, law & economics
Brings economic tools to political science: politics as exchange

Public Choice and Behavioral Symmetry

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“Political theorists seem rarely to have used this essentially economic approach to collective activity. Their analyses of collective-choice processes have more often been grounded on the implicit assumption that the representative individual seeks not to maximize his own utility, but to find the "public interest" or "common good,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

What is ‘the Public Interest‘ or ‘the Common Good?’

Naive Political Economy

People often recommend optimal policies that could effectively be installed by a benevolent despot who has
- Perfect knowledge to correctly identify ‘the public good’
- Has the desire and perfect incentives to achieve it
- Has no constraints on his/her actions

Naive Political Economy

People often recommend optimal policies that could effectively be installed by a benevolent despot who has
- Perfect knowledge to correctly identify ‘the public good’
- Has the desire and perfect incentives to achieve it
- Has no constraints on his/her actions

Robust Political Economy

In reality, 1^st-best policies distorted by:
- problems with knowledge
- problems with incentives
- problems with politics/agreement/control
Real world: 2^nd-to-n^th-best outcomes

Making Fair Comparisons: Nirvana Fallacy

Harold Demsetz

1930-2019

“The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing 'imperfect' institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements,” (p.1).

Demsetz, Harold, 1969, "Information and Efficiency: Another Viewpoint," Journal of Law and Economics 12(1): 1-22

Comparative Analysis

Compare imperfections of feasible and relevant alternative systems
- .hi[Nirvana fallacy]: comparing a flawed (but real) system with some flawless, ideal system
Economics: think on the margin!
- One system's “failure” does not imply another's “success”!
- the real world requires tradeoffs
- “economics puts parameters on people's utopias”
- “compared to what?”

Hume: Assume the Worst (?)

David Hume

1711-1776

“Political writers have established it as a maxim, that, in contriving any system of government, and fixing the several checks and controuls of the constitution, every man ought to be supposed a knave, and to have no other end, in all his actions, than private interest. By this interest we must govern him, and, by means of it, make him, notwithstanding his insatiable avarice and ambition, co-operate to public good. Without this, say they, we shall in vain boast of the advantages of any constitution, and shall find, in the end, that we have no security for our liberties or possessions, except the good-will of our rulers; that is, we shall have no security at all,” (“Of the Independency of Parliament”)

Hume, David, 1742, Essays: Moral, Political, and Literary

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“Throughout the ages the profit-seeker, the utility-maximizer, has found few friends among the moral and the political philosophers...In the political sphere the pursuit of private gain by the individual participant has been almost universally condemned as 'evil' by moral philosophers of many shades. No one seems to have explored carefully the implicit assumption that the individual must somehow shift his psychological and moral gears when he moves between the private and the social aspects of life,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Behavioral Symmetry

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“We are, therefore, placed in the somewhat singular position of having to defend the simple assumption that the same individual participates in both processes [the market and politics] against the almost certain onslaught of the moralists,” (p. 19)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Politics as Exchange

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“The economic approach, which assumes man to be a utility-maximizer in both his market and his political activity, does not require that one individual increase his own utility at the expense of other individuals. This approach incorporates political activity as a particular form of exchange; and, as in the market relation, mutual gains to all parties are ideally expected to result from collective action,” (p. 23)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Politics as Exchange

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

“The power-maximizing approach, by contrast, must interpret collective choice-making as a zero-sum game...When one man gains, the other must lose; mutual gains from "trade" are not possible in this conceptual framework,” (p. 23-24)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

Levels of Rules

The Political and the Constitutional

We must be able to examine both levels simultaneously:

Constitutional level choice among alternative sets of rules
Political level choice within a specific set of rules

The Political and the Constitutional

Each level affects the other
Constitutional rules constrain political decisions
Current political situation (preferences, interests, wealth, power) tints how we view particular constitutional rules

How to Decide How to Decide

Veil of Uncertainty

Behind veil of uncertainty at the constitutional moment
- Rawlsian veil of ignorance
Individuals do not know if they will be in majority or minority
Need to know costs of State action, but can't know this before we know how State is organized

Collective Action on the Margin

B&T assume some pre-existing property rights at some minimal level
What further collective action will individuals agree to?

“When will a society composed of free and rational utility-maximizing individuals choose to undertake action collectively rather than privately?”

Pre-existing externalities that individuals cannot mitigate alone

Collective Action on the Margin

Pre-existing externalities that individuals cannot mitigate alone
Failing to act collectively would leave these externalities

Constitutional Political Economy

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"There should be little reason to expect that constitutional rules developed in application to the passage of general legislation would provide an appropriate framework for the enactment of legislation that has differential or discriminatory impact on separate groups of citizens," (p. 22)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

The Unanimity Rule

What is the moral status of a decision rule?
- e.g. “majority rule”
Unanimity is ideal: Pareto efficient by definition
Choice of constitutional rules should be unanimous, so we can disagree about political outcomes

The Unanimity Rule

But there are costs of trying to secure unanimity!
- Need everyone to agree
A less-than-unanimous rule will create other costs on minorities that are not in the majority
Consider two types of costs to determine optimal departure from unanimity

External Costs

External costs, $C (n)$ : cost of collectively-chosen outcome on individual, falling with $n$
Expected cost of being in minority and coerced to comply with unfavorable decision
Some expected cost at 0, personal cost of unresolved externality
With unanimity $(N)$ , external costs $\to 0$

Decision-making Costs

Decision-making costs, $D (n)$ : cost of reaching an agreement, rising at an increasing rate with $n$
With more people, any one person can veto!
Holdouts, strategic bargaining, high transaction costs

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$
Total costs $C (n) + D (n)$ : the (vertical) sum of external and decision-making costs

Optimal-Decision Rule

With greater $n$ , a tradeoff between lower External costs $C (n)$ and higher Decision-making costs $D (n)$
Total costs $C (n) + D (n)$ : the (vertical) sum of external and decision-making costs
Optimal decision rule: minimize total costs at $\frac{K}{N}$

Optimal-Decision Rule

ANY group of $\frac{K}{N}$ people that agree will determine the outcome
- the “decisive set”
Note: again, the minimum of Total Costs
- not necessarily the intersection of External costs and Decision-making costs
- not necessarily simple majority $\frac{n}{2} + 1$ !

The Benefits of Majority Rule

Majority rule $(\frac{n}{2} + 1)$ is a very common decision rule
Despite moral arguments for/against, practical reasons:
1. It's the smallest possible group which can ensure there will not be two contradictory measures passed
2. Can break a “voting cycle” (next class!)

Optimal Decision Rules Vary

Costs are different issue by issue
- No single voting rule optimal for all issues
High $C (n)$ -issues
- Exercise of State power vs. individual
- Constitutional amendment
- Criminal convictions
- Require much larger decisive set than a simple majority

Optimal Decision Rules Vary

Costs are different issue by issue
- No single voting rule optimal for all issues
High $C (n)$ -issues
- Exercise of State power vs. individual
- Constitutional amendment
- Criminal convictions
- Require much larger decisive set than a simple majority

Optimal Decision Rules Vary

Low $C (n)$ -issues, common access rules:
- Nomination (1 person)
- Introducing a motion/bill (moved and seconded)
- Writ of certorari
- Require much smaller decisive set than a simple majority

Optimal Decision Rules Vary

Low $C (n)$ -issues, common access rules:
- Nomination (1 person)
- Introducing a motion/bill (moved and seconded)
- Writ of certorari
- Require much smaller decisive set than a simple majority

A Little Tool I Made

https://ryansafner.shinyapps.io/ccmodel/

Common Decision Rules

Access rules: less than majority
- Bringing issues to the group
Decision rules: majority
- Actual business of passing resolutions
Changing the rules: more than majority (closer to unanimity)

What Affects Total Costs

Size of $N$ : larger groups create larger $C + D$ costs
- We want the smallest group consistent with the size of the externality
Heterogeneity (of preferences, wealth, power, etc)
- $C$ -costs rise: greater fear of being in minority
- $D$ -costs rise: harder to get very different people to agree

Heterogeneity

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"Many activities that may be quite rationally collectivized in Sweden, a country with a relatively homogenous population, should be privately organized in India, Switzerland, or the United States."

Comparing the Cure and the Disease

Different alternative decisions regarding an externality have different costs:
$A$ : do nothing, live with externality
$B$ : voluntary collective action
- cost of collective action might yield underprovision
$C$ : government action
- cost of collective action might create new political externalities

Comparing the Cure and the Disease

L: James Buchanan (1919—2013)

R: Gordon Tullock (1922—2014)

"The existence of external effects of private behavior is neither a necessary nor a sufficient condition for an activity to be placed in the realm of collective choice," (p.61)

Buchanan, James M and Gordon Tullock, 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy

When Optimal Collective Action is Second-Best

Even with optimal collective decision rule, it might be better off left to private hands if total costs are lower (at A)
In general, the higher $C + D$ costs are (for whatever reason), the greater likelihood that an activity should be left private

The Importance of the Starting Point

Constitutional choice does not take place in a vacuum
Veil of ignorance assumes we have no specific stake in changing rules in a particular way, but
Our current political situation (preferences, wealth, power, etc.) naturally will affect how we view different rules

The Importance of the Starting Point

Incorrect to start from Hobbes (no rules); irrelevant to our actual decisions
Constitutional economics is practically about reform of rules, rather than designing from scratch
We must always start from where we are
We would build a different house from scratch than if we change our existing one

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2.3 — The Calculus of Consent

ECON 410 • Public Economics • Spring 2022

Ryan Safner Assistant Professor of Economics safner@hood.edu ryansafner/publicS22 publicS22.classes.ryansafner.com

The Story So Far

The Story So Far

James Buchanan and Gordon Tullock

Public Choice and Behavioral Symmetry

Behavioral Symmetry

What is ‘the Public Interest‘ or ‘the Common Good?’

Naive Political Economy

Naive Political Economy

Naive Political Economy

Robust Political Economy

Making Fair Comparisons: Nirvana Fallacy

Comparative Analysis

Hume: Assume the Worst (?)

Behavioral Symmetry

Behavioral Symmetry

Politics as Exchange

Politics as Exchange

Levels of Rules

The Political and the Constitutional

The Political and the Constitutional

How to Decide How to Decide

Veil of Uncertainty

Collective Action on the Margin

Collective Action on the Margin

Constitutional Political Economy

The Unanimity Rule

The Unanimity Rule

External Costs

Decision-making Costs

Optimal-Decision Rule

Optimal-Decision Rule

Optimal-Decision Rule

Optimal-Decision Rule

The Benefits of Majority Rule

Optimal Decision Rules Vary

Optimal Decision Rules Vary

Optimal Decision Rules Vary

Optimal Decision Rules Vary

A Little Tool I Made

Common Decision Rules

What Affects Total Costs

Heterogeneity

Comparing the Cure and the Disease

Comparing the Cure and the Disease

When Optimal Collective Action is Second-Best

The Importance of the Starting Point

The Importance of the Starting Point

The Story So Far

Help

2.3 — The Calculus of Consent

2.3 — The Calculus of Consent

ECON 410 • Public Economics • Spring 2022

Ryan Safner Assistant Professor of Economics safner@hood.edu ryansafner/publicS22 publicS22.classes.ryansafner.com

The Story So Far

The Story So Far

James Buchanan and Gordon Tullock

Public Choice and Behavioral Symmetry

Behavioral Symmetry

What is ‘the Public Interest‘ or ‘the Common Good?’

Naive Political Economy

Naive Political Economy

Naive Political Economy

Robust Political Economy

Making Fair Comparisons: Nirvana Fallacy

Comparative Analysis

Hume: Assume the Worst (?)

Behavioral Symmetry

Behavioral Symmetry

Politics as Exchange

Politics as Exchange

Levels of Rules

The Political and the Constitutional

The Political and the Constitutional

How to Decide How to Decide

Veil of Uncertainty

Collective Action on the Margin

Collective Action on the Margin

Ryan Safner
Assistant Professor of Economics
safner@hood.edu
ryansafner/publicS22
publicS22.classes.ryansafner.com

Ryan Safner
Assistant Professor of Economics
safner@hood.edu
ryansafner/publicS22
publicS22.classes.ryansafner.com