Public choice theory

Political actors are modelled like market actors: they pursue goals under constraints, so government failure deserves study alongside market failure.

Duncan Black and Kenneth Arrow laid social-choice foundations, Anthony Downs modelled party competition (1957), Mancur Olson showed that concentrated interests organise more easily than diffuse ones (1965), and Buchanan and Tullock's Calculus of Consent (1962) analysed constitutional rules. Tullock (1967) and Krueger (1974) developed the notion of rent-seeking. Buchanan received the 1986 Economic Sciences Prize for work on the contractual and constitutional bases of decision-making.

• Analyses of tariff and licensing lobbying as rent-seeking.
• Studies of voter turnout and rational ignorance.
• Proposals for constitutional limits on taxes and deficits drawing on constitutional political economy.

Green and Shapiro (1994) argued that many rational-choice applications in political science fail empirical tests or are unfalsifiable. Critics also say the self-interest assumption neglects ideas, norms and altruism, and may be self-fulfilling.

Public choice reshaped how economists and political scientists analyse institutions, though how far its assumptions hold in practice is contested.