Public Choice III

Citation

Pyne, D. (2003), "Public Choice III", International Journal of Social Economics, Vol. 30 No. 10, pp. 1110-1112. https://doi.org/10.1108/03068290310492896

Public Choice III is an engaging and extensive review of the public choice literature. It is a major revision of its predecessor, Public Choice II. It will be of primary interest to:

1. 1.

   public choice specialists,

2. 2.

   instructors in search of a public choice “textbook”, and

3. 3.

   a general audience looking for an introduction to public choice theory.

The book touches on almost every major area of public choice theory. Part I discusses what economists believe are the reasons why states exist. These reasons deal with efficiency (e.g. supplying public goods and alleviating externalities) and redistribution. Part II deals with various voting rules. It has chapters dealing with the unanimity rule, majority rule, alternatives to majority rule and voting‐with‐the‐feet (the theory of clubs). Part III deals with representative democracies. It includes chapters on federalism, two‐party and multiparty representative democracies under determinist and probabilistic voting models, rent seeking, bureaucracy, separation of branches of government, and one of the most fundamental paradoxes of public choice theory: why rational people vote when the costs of voting are greater than the expected benefits of doing so. Despite the title of part III, it also has a chapter on dictatorship. Part IV is empirical in orientation and deals with issues such as political business cycles, lobbying, the size of government and economic performance. Part V is entitled “Normative Public Choice”, but much of the subject‐matter is more commonly known as social choice theory. It deals with issues such as social welfare functions, Arrow's impossibility theorem, Sen's Paretian liberal impossibility theorem and constitutional economics. Part VI begins with chapter 28, which responds to critics of public choice theory. It does so by responding to criticisms made by Green and Shapiro (1994). Chapter 29 concludes the book.

Readers familiar with the previous three versions (it started as an article in the Journal of Economic Literature that led to the first book, Public Choice) will note how Mueller has been forced to increase the length over time. Still, the public choice literature has grown even faster. When the extensive reference section of Public Choice II was used as a research aid, one usually found the bibliographical information for any major paper in public choice published until that time. Public Choice III contains an even more extensive bibliography (inferring from the number of entries on a randomly chosen page, the bibliography has about 1,900 entries). Yet, the number of papers that Mueller was forced not to mention is much more evident. If the field continues to grow at this rate, it is doubtful if it will be feasible for a Public Choice IV to attempt to survey the entire field in another decade.

Given the monumental task of trying to survey such an immense literature, criticizing Mueller for not emphasizing a given area may seem unfair. Nonetheless, I will make a couple of minor criticisms in this regard. For a number of years the area of endogenous trade policy (using public choice theory to study the way in which a country formulates its trade policy) has greatly expanded. Thus, I was disappointed that he only included a few pages in his chapter on rent seeking. I believe that he could easily have justified a chapter on this area.

I also think that he could have devoted more space to tax competition among competing jurisdictions in a federal state. The coverage he does give tends to view it in a positive light. This is the view of many public economists and it is a reasonable one. Nonetheless, it is not a universal view. For the sake of balance, I would have suggested that he at least provide references for the opposing view. Moreover, at times he seems to use selective evidence to support his position. An example of this is on page 533, where he examines evidence that federal states have smaller government sectors due to tax competition. First, he argues that Austria and Germany are not really federal states, as lower levels of government have limited authority to set tax rates. Then in the same paragraph, he goes on to argue that Switzerland, the USA and Australia fulfill this requirement and have small government sectors. However, this is a puzzling argument, given that Australian states have no income or sales taxes. Transfers from the federal government exceed what Australian states collect from their own limited tax base (Trewin, 2003).

I hasten to add that, in general, I think that Mueller has done a very good job of being balanced and fair to competing arguments. The example in the preceding paragraph is one of the very few exceptions to the rule.

I would strongly recommend the book to economists and political scientists who specialize in the rational choice approach to politics. It discusses and contains references to most of the major issues. Moreover, it does so in a way that is very intellectually stimulating. I cannot recommend it to these readers strongly enough.

Like its predecessors, Public Choice III is not written as a textbook. Nonetheless, Public Choice II was widely used as a textbook. Indeed my first introduction to Public Choice II was as a student in an undergraduate public choice course, which used it as a textbook. It greatly excited me and undoubtedly was a prime catalyst to my later career decisions. I believe that Public Choice III will have a similar effect for some students. Perhaps this is in keeping with a biographical essay Mueller (2000) has written on the role of similar chance events in his own life.

I do have one suggestion in this regard. Although I agree with Mueller's decision not to write it as a textbook, I nevertheless think that the publisher should consider issuing a companion problem set for use in courses, which nonetheless do use it as a textbook. Those of us who make use of it for teaching purposes would find such a volume very useful.

I would recommend Public Choice III to anyone who wants to find out more about public choice theory. It is the best and most extensive survey of the literature that I have read. Moreover, anyone with a knowledge of economics at the level of intermediate theory courses has the necessary background. Nonetheless, those who only have a casual interest may prefer Public Choice II. Although not as up‐to‐date, it still gives a very good overview of the flavour of the literature. Moreover, the shorter length of Public Choice II significantly reduces the opportunity cost of reading it.

In conclusion, Public Choice III is an excellent book and is strongly recommended.