Public Choice: The Discipline

Public choice is a branch of economics that studies non-market decision making proces­ses and institutions. Examples are analyses of the decision-making behavior of voters, politicians and government officials and studies on the role of central banks or decision-making in international organizations such as the European Union. Given its area of research and the methodology chosen, public choice is often considered to bridge the gap between economics and political science.

Though some trace its history back to earlier centuries, public choice emerged as a discipline in the nineteen-fifties. It is no coincidence that the field emerged then. Recovering from World War II, western governments were allocating op to 50% of their total product through (semi-) governmental institutions rather than through markets. Economists, however, were mainly interested in understanding the market sector. No attention was being paid to issues of collective decision-making. Political scientists, on the other hand, had developed no theory of individual behavior that could serve as a benchmark for systematic analysis. Public choice’s application of rigorous economic theory to problems traditionally studied in political science proved to be a fruitful and successful endeavor that received widespread public attention in 1986, when James Buchanan, one of its leading architects, was awarded the Nobel Prize in economics.

Modern public choice still focuses on non-market decision-making, though the topics covered and the methodologies used have expanded tremendously. For example, some modern theories explore the role of non-selfish preferences and/or bounded rationality in the political economy. Laboratory and field experiments have extended the methodological tools beyond the original method of theory and field data analysis.