Constitutional political economy

Distinguish choice among rules from choice within rules. Constitutional rules are legitimate to the extent that individuals could unanimously agree to them as the framework for later politics.

James Buchanan and Gordon Tullock (1962) modelled how individuals choose decision rules by weighing the external costs that others' decisions may impose on them against the costs of reaching decisions. Uncertainty about future positions at the constitutional stage is argued to encourage impartial rules. The Nobel committee honoured Buchanan for the contractual and constitutional bases of political decision-making.

The approach is used to analyse supermajority requirements, fiscal and balanced-budget rules, and the design of federal systems.

Critics argue that the unanimity benchmark favours the existing distribution of rights and wealth, and that rules limiting majorities can entrench the status quo. Rawls-style approaches draw stronger egalitarian conclusions from a similar contractual starting point.

It founded the Virginia school of public choice and constitutional economics, and remains a reference for analysing political institutions as rules.