Description
This textbook uses modern political economy to introduce students of political science, government, economics, and public policy to the politics of the policymaking process. The book's distinct political economy approach has two virtues. By developing general principles for thinking about policymaking, it can be applied across a range of issue areas. It also unifies the policy curriculum, offering coherence to standard methods for teaching economics and statistics, and drawing connections between fields.
The book begins by exploring the normative foundations of policymaking—political theory, social choice theory, and the Paretian and utilitarian underpinnings of policy analysis. It then introduces game theoretic models of social dilemmas—externalities, coordination problems, and commitment problems—that create opportunities for policy to improve social welfare. Finally, it shows how the political process creates technological and incentive constraints on government that shape policy outcomes. Throughout, concepts and models are illustrated and reinforced with discussions of empirical evidence and case studies.
This textbook is essential for all students of public policy and for anyone interested in the most current methods influencing policymaking today.
- Comprehensive approach to politics and policy suitable for advanced undergraduates and graduate students
- Models unify policy curriculum through methodological coherence
Chapter
1.5.1 Why Be a Libertarian?
1.5.2 Some Problems for Libertarianism
2.2 Aggregation Procedures
2.3 Evaluative Criteria for Aggregation Procedures
2.3.1 Transitivity of Social Preferences
2.3.3 Independence of Irrelevant Alternatives
2.5 Social Decisions Instead of Social Preferences
2.6.1 Only Two Alternatives: May’s Theorem
2.6.2 Ruling Out Some Collections of Preferences: The Median Voter Theorem
2.6.3 Intensity of Preferences
3.2 From Pareto Efficiency to Pareto Improvements
3.3 A Model of Policies and Preferences
3.3.1 Actions and Transfers
3.3.2 Quasi Linearity: A Bridge from Pareto Efficiency to Pareto Improvement
3.4.1 Limited Transfers and Distributional Concerns
3.4.2 Non Quasi Linear Preferences
3.5 Relationship to Cost-Benefit Analysis
3.6 Are Pareto Improvements Unambiguously in the Public Interest?
3.10 Appendix: Proof of Theorem 3.3.1
Summing Up Normative Foundations
4.2.1 Comparison to the First Best or Utilitarian Optimum
4.2.3 Concentrated vs. Diffuse Interests
4.3 The Tragedy of the Commons
4.3.1 A Pareto Improvement
4.4.1 The Failure of Persuasion
4.4.2 Pigovian Subsidies and Taxes
4.5 The Theory of the Second Best
4.5.1 The Second Best Pigovian Subsidy
4.6 Alternative Responses
4.6.2 A Market in Externalities
4.6.3 Ongoing Relationships and Self Organization
5.2.1 A Basic Model of Coordination Traps: Investment in Developing Countries
5.2.2 A Model of Bank Runs
5.2.3 A Model of Revolutions
5.3.2 Short Run Intervention
5.3.3 Insurance and the Second Best
6.1.1 Inefficient Conflict
Summing Up Social Dilemmas
III CONSTRAINTS ON GOOD GOVERNANCE
7.1 Strategic Adversaries
7.1.1 Do Terrorists Really Strategically Adjust?
7.2 Incentivizing Multiple Tasks
7.2.1 High Stakes Testing
8.1.2 What Will the Government Do?
8.1.3 How Much Will a Consumer Consume?
8.1.4 Is the Government Time Consistent?
8.1.5 Time Inconsistency and Externalities
8.1.6 Rules vs. Discretion
8.2.3 Discounting the Future
8.3 When Policy Affects Future Power
8.3.1 The (Political) Second Best
9 The Need for Information
9.1.1 Second Price Auction
9.2 Providing a Public Good
9.3 Regulating a Monopolist
9.3.1 Monopolistic Equilibrium
9.3.2 Regulation with Full Information
9.3.3 Regulation with Uncertainty
9.3.4 An Informed Regulator
10 Influence over Elected Officials
10.1 Particularistic Interests
10.2 Special Interests and Campaign Donations
10.3 Electoral Accountability
10.3.3 Incentives and Screening
10.3.5 The Risk of Electoral Pandering
11 Institutions, Incentives, and Power
11.1.2 Outcomes and Institutions
11.2 Institutions and Development
11.2.1 Settler Mortality, Institutions, and the Economy
11.3.1 Poverty Traps and Foreign Aid
11.3.2 Does Foreign Aid Work through Poverty Traps?
11.3.4 A Political Economy of Foreign Aid
Summing Up Constraints on Good Governance
Concluding Reflections on Politics and Policy
IV APPENDICES ON GAME THEORY
A Utility, Strategic-Form Games, and Nash Equilibrium
A.2 Games in Strategic Form
A.2.3 Cleaning an Apartment
A.4 Why Nash Equilibrium?
A.4.1 No Regrets and Social Learning
A.4.2 Self Enforcing Agreements
A.5 Solving for Nash Equilibrium
A.6 Nash Equilibrium Examples
A.6.3 Cleaning an Apartment
A.6.4 Choosing a Number with Two Players
B.1 Games in Extensive Form
B.1.1 A Model of International Crisis
B.2.1 International Crisis Game
B.3 Strategies as Complete Contingent Plans
B.3.1 International Crisis Game
B.4 Representing an Extensive-Form Game as a Strategic-Form Game
B.4.1 The International Crisis Game
B.5 Nash Equilibria of Extensive-Form Games
B.5.1 International Crisis Game
B.6 Subgame Perfect Nash Equilibrium
B.6.3 Indifference and Multiple Equilibria
Index of Referenced Authors
Political Economy for Public Policy
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