Rational Choice Theory

Rational choice theory, with its various subdivisions including public choice theory, social choice theory and game theory, emerged as a tool of political analysis in the 1950s and gained greater prominence from the 1970s onwards. Sometimes called formal political theory, it draws heavily upon the example of economic theory in building up models based upon procedural rules, usually about the rationally self-interested behaviour of individuals. Most firmly established in the United States, and associated in particular with the so-called Virginia School, rational choice theory has been used to provide insights into the actions of voters, lobbyists, bureaucrats and politicians. It has had its broadest impact upon political analysis in the form of what is called institutional public choice theory.

Using a method that dates back to Hobbes and is employed in utilitarian theorising, rational choice theorists assume that political actors consistently choose the most efficient means to achieve their various ends. In the form of public choice theory, it is concerned with the provision of so-called public goods, goods that are delivered by government rather than the market, because, as with clean air, their benefit cannot be withheld from individuals who choose not to contribute to their provision. In the form of game theory, it has developed more from the field of mathematics than from the assumptions of neo-classical economics, and entails the use of first principles to analyse puzzles about individual behaviour. The best-known example of game theory is the ‘prisoner’s dilemma’, which demonstrates that rationally self-interested behaviour can be generally less beneficial than cooperation.

Supporters of rational choice theory argue that it has introduced greater rigour into the discussion of political phenomena, by allowing political analysts to develop explanatory models in the manner of economic theory. By no means, however, has the rational choice approach to political analysis been universally accepted. It has been criticized for overestimating human rationality in that it ignores the fact that people seldom possess clear sets of preferred goals and rarely make decisions in the light of full and accurate knowledge. Furthermore, in proceeding from an abstract model of the individual, rational choice theory pays insufficient attention to social and historical factors, failing to recognize, among other things, that human self-interestedness may be socially conditioned, and not innate. Finally, rational choice theory is sometimes seen to have a conservative value bias, stemming from its initial assumptions about human behaviour.

James Buchanan (1919– ) A US economist, Buchanan used public choice theory to defend the free market and argue in favour of a minimal state. He developed the idea of constitutional economics to explain how different constitutional arrangements can affect a nation’s social and economic development. This led to an analysis of the defects and economic distortions of democracy which emphasizes, for instance, the ability of interest groups to make gains at the expense of the larger community. He supports tough constitutional limitations to keep the political market under control and prevent the expansion of state powers. Buchanan’s main works include Fiscal Theory and Political Economy (1960), The Calculus of Consent (with Tulloch, G) (1962) and Liberty, Market and the State (1985).

Anthony Downs (1930– ) A US economist and political analyst, Downs developed a theory of democracy based upon the assumptions of economic theory. His ‘spatial model’ of political behaviour, a sub-set of rational choice theory, presupposes a ‘policy space’ in which political actors, candidates and voters can measure where they stand in relation to other political actors. Influenced by Schumpeter, Downs portrayed parties as vote-maximizing machines, anxious to develop whatever policies offer the best prospect of winning power. On this basis, he explained both the behaviour of political parties and the features of particular party systems. Downs’s key political work is An Economic Theory of Democracy (1957).

Mancur Olson (1932–98) A US political scientist, Olson used public choice theory to analyse groups’ behaviour. He argued that people join interest groups only to secure ‘public goods’. As individuals can become ‘free riders’ by reaping the benefits of group action without incurring the cost of membership, there is no guarantee that the existence of a common interest will lead to the formation of an organisation to advance or defend that interest. Olson questioned pluralist assumptions about the distribution of group power, and suggested that strong networks of interest groups can threaten a nation’s economic performance. His best-known works include The Logic of Collective Action (1968) and The Rise and Decline of Nations (1982).