James M. Buchanan

James M. Buchanan, winner of the 1986 Nobel Prize in Economic Science, developed a program that changed the way economists analyze economic and political decision-making. He examined how politicians' self-interest and noneconomic forces affect government economic policy.

"Public choice is summarized as the extension and application of the tools and methods of economics to the subject matter of political science," he says. "That is, to the behavior of persons in public choosing roles-as voters, representatives, legislators, bureaucrats, political agents generally-and to the functioning of the institutions within which they act in these roles.

"In a shorthand sense, I have referred to public choice as 'politics without romance,' but the program also embodies attention to prospects for changing the rules with the purpose of getting better results," he says. "In a general sense, public choice proceeds from the presupposition that political agents are just like everyone else."

Buchanan, the advisory general director of the James Buchanan Center for Political Economy at George Mason University, first outlined this theory in a book he wrote with Gordon Tullock in 1962, The Calculus of Consent. "Public choice, as a research program was developed by many scholars over a full half century," says Buchanan. "Its origins are in public finance theory, welfare economics, game theory, rational choice theory, institutional economics, and other areas of inquiry."

Buchanan explained his thinking process in an interview in 1995: "In my own case it was a general sense that people who were supposed to know didn't really know what democracy was about. I started out as a regular public finance economist. Once you start in that direction, you soon come to the question of how it is that taxes and expenditure decisions and budgets get made, so you're forced to think about the political process.

"One of my first pieces goes all the way back to 1949 and was nothing more than asking economists to think about their political models. What model of politics are you assuming before you start talking about what's good taxation? What's good spending? I called for them to clarify their assumptions of politics," he said. "I was influenced by the Swedish economist Wicksell, who said if you want to improve politics, improve the rules, improve the structure. Don't expect politicians to behave differently. They behave according to their interests."

Applying economic analyses to the political arena has had a major impact on public policy. Public choice theory says economists can no longer assume government intervention alone will fix economic problems but that economists must also look at how government actions are implemented.

"Public choice was not a primary cause for the general disaffection with governments that emerged in the last decades of the century," says Buchanan. "But public choice did offer explanatory bases for understanding why governments everywhere failed to meet public expectations."

Buchanan, the son of a Tennessee farmer, received his PhD from the University of Chicago in 1948 and has held teaching positions at the University of Virginia, the University of California at Los Angeles, and Virginia Polytechnic Institute. He says he became an economist "for the simple reason that a small graduate fellowship was available in economics, rather than in either of my other two undergraduate majors, mathematics or English literature."

On winning the Nobel Prize, Buchanan says, "For me, the award was a vindication both of the importance of the program and of my own willingness to follow my own interests rather than the drift of the orthodoxy."

By MR