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The Institutions and Mechanisms of Public Choice


Ballot initiatives, referenda, and other institutions of direct democracy aside, most political decisions are made not by the citizenry itself, but by the politicians elected to represent them in legislative assemblies. Because the constituencies of these representatives typically are geographically based, legislative officeholders have strong incentives to support programs and policies that provide benefits to the voters in their home districts or states, no matter how irresponsible those programs and policies may be from a national perspective. Such “pork barrel” projects are especially likely to gain a representative’s endorsement when they are financed by the taxpayers in general, most of whom reside, and vote, in other districts or states.

Legislative catering to the interests of the minority at the expense of the majority is reinforced by the logic of collective action. Small, homogeneous groups with strong communities of interest tend to be more effective suppliers of political pressure and political support (votes, campaign contributions, and the like) than larger groups whose interests are more diffuse. The members of smaller groups have greater individual stakes in favorable policy decisions, can organize at lower cost, and can more successfully control the free riding that otherwise would undermine the achievement of their collective goals. Because the vote motive provides reelection-seeking politicians with strong incentives to respond to the demands of small, well-organized groups, representative democracy frequently leads to a tyranny of the minority. George Stigler, Sam Peltzman, Gary Becker, and others used that same reasoning to model the decisions of regulatory agencies as being influenced by special-interest groups’ relative effectiveness in applying political pressure.