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Brennan and Lomasky: Democracy and decision

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Brennan and Lomasky. 1993. Democracy and decision: The pure theory of electoral preference. Cambridge: Cambridge University Press.

In Brief (ch 1)

Public choice generally assumes that (1) people are rational wealth-maximizers (homo economicus) and (2) this is true regardless of institutional context (that is, it is true in markets, in politics, and in any other interaction). The authors have little complaint with assumptions of rationality (though they back away from pure wealth-maximization), but they attack a supposed implication of the second assumption. This is the central claim: Even if people always have the same motivations regardless of context, this does not mean that those motivations will be expressed in exactly the same way; institutions affect which "preferences" are revealed.

Before I can explain this in more detail, several definitions are essential.

Terms

  • Rationality. People have preferences, and we can represent them with utility; people act in a way that maximizes utility. (We assume nothing about the nature of these preferences.)
  • Self-interest/Egoism. People care about themselves first. Too vague a term for economic analysis, so economists claimed that egoism was represented as...
  • Economic self-interest. For economists, egoism is manifested as wealth maximization. Economists do not require that people value only wealth, only that wealth is part of their utility function; this is sufficient to produce the proper comparative statics.
  • Homo economicus. The combination of rationality with economic self-interest.
  • Motivational neutrality. The idea that your motivations are the same regardless of context. If you are a homo economicus in the market, you are also a homo economicus as a voter, as a bureaucrat, as a legislator, or as a president.
  • Behavioral neutrality. Not only are your motivations the same in every setting, but they have an identical expression in every setting (see pg 15 for details).

Overview of the Argument

The authors accept motivational neutrality but argue against behavioral neutrality. Though people carry the same utility function into every arena, "each institutional structure engages ... with different aspects of human motivation ... so that the behavior that emerges will be different."

This behavioral non-neutrality will be especially pronounced when comparing market behavior with voting. In markets, your actions are decisive; if you want a good, your choice of whether to buy it entirely determines the outcome (i.e. whether you get it). As a result, we aren't surprised that preferences for wealth maximization seem dominant in markets. But when voting, your actions are not decisive. Elections are (almost always) decided by everybody else, not by you. Thus, there is no logical reason to suppose that you will necessarily behave in a wealth-maximizing way. As the book proceeds, the authors will argue that voting might be more "expressive" (of ethical and ideological principles) than wealth maximizing. That's why we observe rent control, minimum wages, and pricing strategies of state enterprises that don't necessarily maximize the median voter's self-interest.

The authors emphasize that they will not be making an empirical argument to prove all these claims--merely a logical one to force us to think twice about what we already observe.