Chapter 3 Public Choice theory

Chapter 3 Public Choice theory - 8/22/11...

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Click to edit Master subtitle style 8/22/11 Chapter 3 Public Choice theory Au Yuen Mei, Ayumi (A01385942) Chan Ki Ki (A01394553) Chang Yu (Judy) Wang (A01389694) Lee Yi Ling, Elaine (A01387989)
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8/22/11 What is Public Choice Theory? The category of Political Science It defined as the economic analysis of nonmarket decision making   -treats individual decision-makers as participants in a complex interaction that generates political outcomes. 22
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8/22/11 What is Public Choice Theory? It is also defined more narrowly as the application of economic analysis to political decision-making. -  voting rules and voter behavior, apathy,  party politics, logrolling, bureaucratic  choice, policy analysis, and regulation.  33
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8/22/11 Public Choice      Mancur Olson(1966- 1998)      He was simultaneously a  founder and sympathetic  critic of public choice  analysis summed up the  situation in an appeal to the  social science research  council for support for the  44
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8/22/11 Private Sector versus Public Sector Private Sector Targets the goals  through the  price  mechanism  of the  market Public Sector Targets the goals  through  collective  decision-making  Both takes place under the aegis of the  state 55
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8/22/11 Private Sector versus Public Sector The Choice Mechanisms  Employed in each to  allocate society’s scare  resources  in the attempt to  satisfy individual or  group preferences 66
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8/22/11 The Methodology of Public Choice i) The selection of the  stage of choice  under  scrutiny ii) Whether one is engaged in  positive analysis   (“ how the world is ") or  normative  prescription  (“ how the world ought to be ") iii)  Whether one adopts the  homo economicus  approach  or a  catallactic approach 77
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8/22/11 Stages of Choice 1) Constitutional Stage of  Choice Establishment of the rules of the game   Social Contract / Constitution sets out the  rules  governing collective choices “Constitutional Economics” or “ Constitutional  Political Economy” 88
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8/22/11 Stages of Choice 2) Institutional Stage of  Choice Involoves the economic analysis of political  and governmental processes Processes include the activities of executive  branch, legislatures, and politicians, as well as of  voting procedures and bureaucracies 99
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8/22/11 Example for Positive and Normative  Analysis Policy:  Minimum-wage Laws Positive Analysis: Minimum-wage laws cause unemployment. Normative Analysis:  The government should raise the minimum wage. 10
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8/22/11 Positive vs. Normative Analysis Positive Analysis Attempt to describe  the world as it is Descriptive Confirm or refute by examining evidence Normative Analysis Attempt to prescribe how  the world should  be Prescriptive 11
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8/22/11 Positive Public Choice Concerns the 
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This note was uploaded on 08/22/2011 for the course ECON 3170 taught by Professor Oaisd during the Spring '11 term at Utah State University.

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Chapter 3 Public Choice theory - 8/22/11...

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