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Stevens: The economics of collective choice

Disclaimer. Don't rely on these old notes in lieu of reading the literature, but they can jog your memory. As a grad student long ago, my peers and I collaborated to write and exchange summaries of political science research. I posted them to a wiki-style website. "Wikisum" is now dead but archived here. I cannot vouch for these notes' accuracy, nor can I say who wrote them.

Stevens. 1993. The economics of collective choice. Boulder: Westview Press, Inc.

In Brief

While WikiSummary rarely summarizes textbooks, this book provides excellent reviews of the economic theory of the firm and its applications to political science. It connects economic theories to political ones in ways that are often assumed but rarely made explicit.

Ch 1-4

The first four chapters are a textbook-style review of basic economic concepts. In keeping with WikiSummary policy of not summarizing textbooks, we present only a few brief notes here.

Ch 1-2

A review of supply and demand, utility curves, Edgeworth boxes, and introductory microeconomics.

Ch 3: Efficiency

Market failure type I: Efficiency failures.

Ch 4: Equity

Market failure type II: Equity failures.

Ch 5: Voluntary Solutions

Voluntary solutions to market failure. It is possible for non-coercive solutions to market failures to be produced.

Ch 8: Regulation and Taxation

Looks at 5 main models of regulation/taxation.

1,2,3: Begins with nice summaries of Stigler, Peltzman, and Becker, which are individually summarized in separate entries (follow the links).

4: Hettich and Winer give a model of tax systems (how many tax bases, what rate structure, and what special provisions) based on marginal tax administration costs and marginal tax discrimination benefits.

5: Shepsle and Weingast (1984) give a model based on pork. When legislators have geographic districts, they vote for local benefits, even at the expense of national welfare. Since benefits of federally-supported local projects are concentrated, but costs are dispersed, this rarely leads to an efficient outcome.

On the median voter theorem:

Legislative markets: five characteristics

  1. Outcomes are anticipated, not actual; (2) Expected outcomes are favorable for both demanders and suppliers; (3) Outcomes are uncertain (other legislators might oppose the one you buy off); (4) Outcomes may be short-lived (e.g. overturned next year); (5) Legislative activities vary greatly in time and in importance (having a senator hear your argument is nice, but getting her to support you on the floor is better).
  2. PAC money is the main currency given to legislators in exchange for legislative activities. Ideology predicts PAC contributions fairly well: highly polarized interest groups give legislators money with which to compete for moderate votes. (The interest groups are polarized b/c only those with more extreme views have any incentive to contribute.)
  3. Legislative activities (i.e. what legislators supply to lobbyers): access (hear you out), consideration (think about it, hold hearings), voting.
  4. Legislative committes (i.e. how legislators trade votes with one another): Weingast and Marshall 1988. It is in the legislative committee that legislators implement deals made in legislative markets.
  5. And legislative committees make it easier to provide pork, making more districts "safe." Combine that with the high entry costs of running for office, and you see why the House in particular has so little turnover.

Ch 9: Administrative Government, part 1

Begins by considering a few common views of congressional-administrative relations:

Observations on whether the median voter is as effective a principal as a legislator (he isn't):

Ch 10: Administrative Government, part 2

Ch. 9 considered whether agencies or principals are in charge (an open debate). Ch. 10 considers how we can analyze the effects of an agency's policy. There are several DECISION FRAMEWORKS for doing so. Most of the chapter examines the most common framework: benefits-cost analysis. Some of these frameworks are empirical; others are normative.

Ch 11: Federated Government

Reviews themes from the whole book, and introduces problems that arise from having federated government.

Governments perform three functions: allocation (how to use resources, what to produce), distribution, and stabilization (fiscal/monetary policy to drive general growth).

Citizen mobility across federal units implies that stabilization should be done by the central government. Stevens also claims that mobility implies that distribution done centrally, but his argument lacks any logic whatsoever (see notes on pg 331). Allocation should be shared by all levels of government.

Some public goods are local (e.g. a fire department)--the farther you get from it, the less you can consume it.

Tiebout (1956): a summary and criticism. Main problem: even if Tiebout's system is efficient, it will doubtful be equitable.

Intergovernment grants: Stevens reviews the effects of various types of grants to local governments: block grants, categorical grants, formula grants, matching grants, and so on (pg 335).

Research on similar subjects


Stevens, Joe (author)EconomicsSocial ChoiceEqualityEfficiencyUtilityMarket FailurePublic GoodsExternalitiesCollective ActionAllocation

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