Public Choice i Public Governance

obligatory courses

The aim of the course is to familiarize students with the main topics of public choice, also referred to as economic analysis of politics, as well as the problem of public governance in an economic perspective. The emphasis is on indicating empirical illustrations and practical applications of the discussed theories and mechanisms. Upon completing the course, the student understands, by reference to economic theory, and knows how to predict the consequences of various mechanisms in the political sphere.

Classes are carried out in the form of a seminar and assume active participation of participants (preparation of presentations / projects based on their own research, discussions).

The list of detailed topics that will be dealt with in the course includes:

1. Homo oeconomicus in the world of politics - introduction to public choice

Why are economists interested in politics? What does public choice deal with? Public choice and public finance. Historical roots of public choice and its main contemporary schools. Rational choice theory as the basic assumption for public choice. The place of public choice in economics and its connections with other social sciences. Normative and positive approach in public choice research. Areas of interest of public choice and examples of applications. Discussion of the organization of classes.

2. Public governance through the lens of economists

What is (in theory and practice) public governance? Public governance and private governance. Systems and models of public governance in various countries. Areas of economic governance in public governance. The importance of public governance for the economy. Introduction to the concept of Good Governance, operationalization and measurement. Example: Good Governance in post-socialist countries

3. Problems of delivering common goods from the point of view of public choice

Classification of goods in economics. Theory of public goods and common goods, free riding. Models of providing public goods (Pareto optimum in the economy with private and public goods, Lindahl model). Problem of revealing preferences (Groves-Clarke tax). Can public goods be privatized? The role of private-public partnership in providing public goods. Common-pool resources and the problem of excessive use. Club goods - Buchanan and Tiebout models. Concepts of anticommons and gridlock economy.

4. Social choice

Introduction to social choice - its area of interest and historical roots. Preferences and ordinal utility. Axioms of social choice. May's theorem. Condorcet paradox. Median voter and Black's theorem. Spatial preferences. Social welfare functions. Arrow's theorem. Vote manipulation. Review of voting methods. Practical applications.

5. An economic theory of democracy

An economic model of democracy according to A. Downs and the critical remarks concerning this model. Rational ignorance and the paradox of electoral participation. Is democracy conducive to economic efficiency and development?

6. Constitutional economics

Research program of constitutional economics – its area of interest and historical roots. Categories of constitutions in constitutional economics. Normative constitutional political economy and creation of the institutional order. Social contract concepts and their importance for the functioning of the economy, state and society. Model of the political process according to Buchanan and Tullock. Positive constitutional political economy - constitutional design and economic effects of constitutional rules. Examples of empirical research. Post-socialist transformation in the constitutional economics perspective.

7. Economic theory of state power

Basic economic analysis of the power structure in the state. The bargaining model of separation of powers and the demand-supply analysis. Economic theory of the legislative power (the optimal size of the legislature, the role of electoral rules, bicameralism). Economic theory of the judiciary (what do judges maximize?, judicial independence and its economic consequences).

8. Economic theory of bureaucracy, regulation and interest groups

Bureaucracy theory of M. Weber and W.A. Niskanen. Ways of regulating and controlling bureaucrats. The pros and cons of civil service. Introduction to the economic theory of regulation. Theory of interest groups and distribution coalitions. Motives and conditions for creating interest groups. The logic of collective action (M. Olson). Interest group analysis by the Chicago School. The effects of interest groups' activities on economic efficiency and economic growth.

9. Rent seeking

The phenomenon of rent seeking in modern economies. Economic and political rent. Methods of capturing political rent. The effects of this phenomenon on the functioning of the economy and the political system. How can rent seeking be constrained? Examples of rent seeking in the Polish economy.

10. Regulatory policy and the quality of government in the state

Economic studies of regulation and the basics of economic analysis law. The quality of regulation as an economic problem. Impact Assessment (IA) and Regulatory Impact Assessment - RIA. RIA system in Poland, EU, USA and other countries. RIA quality assessment. Application and implications of behavioral economics. Challenges for the further development of RIA. Regulatory policy as a manifestation of the efficiency and strength of the state.

11. Summary

Part of the classes will be devoted to student presentations / projects prepared by the participants, which will include their own research on the subject of classes and practical applications of the discussed theories (including the application of RIA methodology in practice). Presentations will be accompanied by discussions.

Obligatory readings:

Wilkin J. (ed.), 2012, Teoria wyboru publicznego. Główne nurty i zastosowania, Warszawa: Wydawnictwo Naukowe Scholar.

Selected additional readings:

Buchanan J.M., 2003, Public Choice: The Origins and Development of a Research Program, Fairfax, Va.: Center for Study of Public Choice.

Buchanan J.M., Musgrave R.A., 2005, Finanse publiczne a wybór publiczny. Dwie odmienne wizje państwa. Warszawa: Wydawnictwo Sejmowe.

Lissowski G. (ed.), 2001, Elementy teorii wyboru społecznego, Warszawa: Wydawnictwo Naukowe Scholar.

Mueller D.C., 2003, Public Choice III, Cambridge: Cambridge University Press.

Sztaba S., 2002, Aktywne poszukiwanie renty. Teoria, przykłady historyczne, przejawy w polskiej gospodarce, Warszawa: Szkoła Główna Handlowa.

Knowledge:

The student has knowledge of public choice including economic bases of decision-making in the political sphere and understands the importance of the quality of governance in the state for the functioning of its economy. In particular, the student has an in-depth knowledge of the theory of common goods, social choice, economic theory of democracy, theory in the field of constitutional economics, economic theory of bureaucracy, regulation and interest groups, as well as rent seeking. The student understands, by referring to the above theories and methodology of economics, the mechanisms of functioning of the political sphere and the effects of decisions made its participants, also regarding regulatory policy. The student knows the methods of economic analysis of decision-making processes in the political and social context and empirical research conducted in this field. The student understands the possibilities of applying theories and methods appropriate for economic sciences to study issues from other social sciences.

Skills:

The student is able to interpret the processes taking place in the political and social sphere through the lens of economics, can use the knowledge of public choice to analyze and predict specific political decisions, mechanisms and phenomena occurring in the political sphere. He/she also has the ability to anticipate the consequences of these decisions, mechanisms and phenomena and understands their economic and social importance (including regulatory policy). The student is able to prepare presentations / projects / analyses on issues in the field of economic analysis of politics and public governance.

Social competences:

The student is open to searching for new methods of analyzing phenomena from the political and social spheres, based on economics. He/she can interact in small groups when preparing presentations / projects on a given topic.

KW01, KW02, KW03, KW04, KU01, KU02, KU03, KU04, KU05, KU06, KU07, KK01, KK02, KK03

The final grade is composed of: the exam grade (60%) and the assessment of the student’s presentation / project and class participation (40%). Attendance at the classes is compulsory (you can have 2 unjustified absences).