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CHAPTER ONE
RATIONALITY IN POLITICS
AND ECONOMICS
1. It does have earlier twentieth-century roots, however. As early as 1929 Harold Hotelling
drew a parallel between market competition for consumers and party competition for votes.
This way of thinking about democracy was reinforced in Joseph Schumpeter's 1942 classic
Capitalism, Socialism and Democracy, in which he argued that democratic theory's traditional
preoccupation with participation and the public good should be abandoned. He argued instead
1
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theory was a small subfield in a political science discipline that was dominated by
institutional analysis, behaviorist methods, and the group-based pluralist theory of
politics.2 Today, by contrast, rational choice theory has ventured well beyond its
esoteric publications and audiences of the 1950s and 1960s. It is well represented in
the principal journals and conferences of the discipline, and its proponents are highly
sought by all major American political science departments. Rational choice theory
has also expanded beyond political theory and American politics, first into the study
of international relations and more recently into comparative politics. Indeed,
scarcely an area of political science has remained untouched by its influence. A count
of rational choice articles published in the American Political Science Review at five-
year intervals since 1952, illustrated in figure 1.1, attests to the steady growth
of rational choice theorizing. Invisible in 1952, rational choice scholarship some
forty years later accounted for fifteen of forty-one articles in the discipline's leading
journal.3
Many perceive this transformation of the study of politics to have been a triumph.
For example, William Riker (1990, 177-78) insists that the use of rational choice
theory accounts for the only genuine advances ever to occur in political science.
Although others would not go this far, it has become standard to introduce an-
thologies and review essays by genuflecting in the direction of the theory's achieve-
ments. Jack Knight (1992,1063) asserts that rational choice theory "has significantly
advanced our understanding of the role of institutions in social life." Nowhere, says
Gregory Kavka (1991, 371), has the expansion of economic models of rational choice
been "more extensive, or successful, than in the field of politics." Kristen Monroe
(1991, 2) describes rational choice as "one of the dominant paradigms of political and
social science, offering insightful, rigorous and parsimonious explanations," and
Peter Abell (1992, 203-4) urges sociologists to adopt rational choice theory partly
because of its many achievements in political science, which are "barely necessary to
mention."
Rational choice theorists are by no means the first to try to account for what
happens in politics by assuming that both voters and politicians are rational maxi-
for a model in which political leaders and parties are treated as firms that produce a product—
"governmental output"—competing for votes just as firms compete for market share.
2. For a description of the political science orthodoxies against which the early rational
choice theorists were reacting see Schumpeter 1942, 250-68, and Olson 1965, 98-131.
3. This count is not exact, because some articles are difficult to classify. That technical
nonrational choice articles can easily be confused with rational choice articles is illustrated by
the fact that Herbert Simon (1992), in the course of complaining about Theodore Lowi mis-
classifying his work as rational choice, misidentifies Green 1992 as a piece of rational choice
scholarship. Gaffes and marginal cases aside, the growth in rational choice scholarship in the
discipline is beyond dispute.
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mizers of interest or utility, but most earlier treatments have been informal and
impressionistic.4 What sets contemporary rational choice scholarship apart is the
systematic manner in which propositions about the microfoundations of political
behavior are derived. In their efforts to explain political outcomes, rational choice
theorists appeal to deductive accounts of incentives, constraints, and calculations that
confront individuals. Systematic analytic inquiry into the strategic behavior of indi-
viduals has led rational choice theorists to approach traditional questions of political
science in novel ways, and to ask previously unasked questions about the nature of
political phenomena. They do not contend that traditional political scientists have
studied the wrong phenomena; rather, their view is that traditional political scientists,
by ignoring the logic of microfoundations, have studied the right phenomena in the
wrong ways.
The advent of rational choice theory has recast much of the intellectual landscape
in the discipline of political science. Since the 1950s rational choice models have
generated a series of theorems about the logic of majority rule, for example, that have
raised the possibility that democratic institutions might be profoundly dysfunctional
4. See Hans Morgenthau's Politics Among Nations, Charles Beard's Economic Theory of
the Constitution, JohnCalhoun's Disquisition ofGovernment, andThe Federalist Papers, not to
mention Marx's abundant corpus and Hobbes's Leviathan.
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in ways that had not hitherto been appreciated. These analytic results have opened up
at least three related lines of research. One strand of literature that developed is
designed to plumb the incoherencies of democratic procedures and to devise institu-
tional reforms that might in principle remedy them (Riker 1982). In a second line of
research, the analytic results of the 1950s have been employed to account for a variety
of features of the political landscape that had gone unexplained, or at any rate were
not well explained by political scientists. Erratic patterns of policy making (Riker
1992), systemic inflation (Nordhaus 1975), deficit spending (Buchanan and Wagner
1977), and a continuously expanding public sector (Meltzer and Richard 1978, 1981;
Peltzman 1980) have all been interpreted by reference to the arbitrary and manipula-
ble character of democratic institutions. Finally, early rational choice findings about
the logic of majority rule have prompted new types of reflection on the normative
foundations of democracy. If apparent majorities are often chimerical, if minorities
can manipulate democratic decision rules to generate the results they desire, and if
there is no way to amalgamate individual desires into a "general will," as Rousseau
had claimed in The Social Contract, then the nature and desirability of democracy
require reevaluation (Buchanan and Tullock 1962; Brittan 1977; Riker 1982).
Rational choice scholarship has also brought a new look to the ways in which
political scientists study the dynamics within democratic institutions. Seniority rules
and committee assignments (McKelvey and Riezman 1992; Cox and McCubbins
1993), the methods by which elected officials control bureaucracies (McCubbins and
Schwartz 1984; Weingast 1984), the internal structure and character of bureaucracies
themselves (Moe 1989), and the macroeconomic policies of governments (Nordhaus
1975; Lindbeck 1976; Tufte 1978) have all been traced to the job-saving and turf-
guarding impulses that are often characteristic of elected officials. And what goes for
politicians also goes for political organizations and voters. In most rational choice
accounts parties try to maximize their chances of electoral victory rather than any
particular ideological agenda, and voters seek to maximize their individual interests
through the political process. People who give time and money to political campaigns
do so not merely because it fulfills a sense of civic obligation and a felt need to try to
influence public policy, as many political scientists traditionally had thought (Hedges
1984). Rather, rational choice theorists contend, campaign contributions may fre-
quently be understood as market transactions; they are "investments" made by donors
in exchange for promised "favors" from political candidates once they are elected
(Snyder 1990).
Although a good many of these claims might be compatible with arguments that
have been made about politicians and voters in the past, rational choice theorists have
worked out the microfoundations of these behaviors with a parsimony and rigor that
has not hitherto been attempted by political scientists. By working through the logic
of the incentives confronting political actors in a variety of structural settings, rational
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choice theorists have sought to enrich our understanding of the nature of politics and
of the possibilities and limits of political reform.
The aura of success that surrounds the rational choice movement has
produced a circumstance in which political science journals "are replete with game-
theoretic models of elections, committees, and war and deterrence; and press editors
eagerly pursue half-completed manuscripts by practitioners in the field" (Ordeshook
1993,74). Curiously, however, the stature of rational choice scholarship does not rest
on a readily identifiable set of empirical successes. In 1978 McKelvey and Rosenthal
(405-6) noted that although game theory had achieved a substantial impact on politi-
cal science at the "conceptual level," only rarely had it led to "rigorous empirical
analysis of real world political behavior." A year later Fiorina (1979,48) quipped that
contemplating the empirical achievements of rational choice theory "is a bit like
dwelling on the rushing accomplishments of Joe Namath." Little appears to have
changed in the interim. In his review of the literature on legislative politics Krehbiel
(1988, 259) contends that "during the last decade, several breakthroughs have in-
creased the usefulness and visibility of spatial models," but he concedes that empiri-
cal successes are as yet difficult to identify. Likewise, in Lalman, Oppenheimer, and
Swistak's review chapter on rational choice theory's contribution to political science,
analytic innovations overshadow empirical accomplishments (1993).5
Critics of rational choice theory often seem no more interested in addressing
empirical applications. Most attacks focus on rational choice assumptions about
human psychology and rationality or on what are taken to be rational choice theory's
ideological ramifications. Four book-length anthologies written since 1986 attest to
this tendency: In an entire issue of Rationality and Society (October 1992) devoted to
a symposium on rational choice theory, not a single contributor from either side
addressed the empirical successes and failures of rational choice models, even though
the journal is advertised as having been created "to provide a forum for debate over
the conceptual apparatus and empirical application of rational choice theory in the
social sciences." The same is true of Rational Choice Theory: Advocacy and Cri-
tique, edited by Coleman and Fararo (1992), though it contains articles with such
titles as "Rational Choice Theory: A Critical Assessment of its Explanatory Power"
and "The Limits of Rational Choice Explanation." Essays in Jon Elster's collection
5. Lalman et al. do claim that "the body of formal results and their empirical tests have
grown steadily" (82) and that "repeatedly, formal theory models have led to better specification
of statistical models, even to the point of specifying the functional form to be estimated. Many
new (at times nonobvious) relationships have been uncovered through the use of formal
methods" (98). Unfortunately, these assertions are not elaborated further.
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science might be, rational choice scholarship has yet to get off the ground as a
rigorous empirical enterprise. Indeed, many of the objections that rational choice
theorists characteristically advance against rival modes of social science turn out to be
applicable to their own empirical work. Rational choice theorists complain, for
instance, that inductive theory building lacks "fecundity because it contains too few
logical constraints," that explanatory categories can arbitrarily be "multiplied to fit all
cases," and that it is impossible to tell "a consequential finding" from "an artifact"
(Achen and Snidal 1989, 167-68). We demonstrate here that the bulk of empirical
rational choice scholarship to date is similarly vulnerable. It is marred by unscien-
tifically chosen samples, poorly conducted tests, and tendentious interpretations of
results. As a consequence, despite its enormous and growing prestige in the disci-
pline, rational choice theory has yet to deliver on its promise to advance the empirical
study of politics.
Although we believe that this claim can be defended across the board,
we sustain it here with respect to part of the literature only. This is unavoidable. The
rate at which rational choice studies are being conducted and published is so rapid that
anyone who sets out to conduct a fully comprehensive evaluation of the literature
might never finish. Our focus here is on studies of American politics, where much of
the most sophisticated rational choice work has been done, with particular attention to
the collective action, legislative policy making, and party competition. These litera-
tures have grown out of three classic texts: Kenneth Arrow's Social Choice and
Individual Values (1951), Anthony Downs's An Economic Theory of Democracy
(1957), and Mancur Olson's The Logic of Collective Action (1965).
Arrow's impossibility theorem rendered all democratic rules of collective decision
potentially suspect. In response to Abram Bergson's influential analysis of social
welfare functions (1938), which appeared to show that the state could maximize
social welfare through objective aggregation of individual preferences, Arrow dem-
onstrated that so long as minimal assumptions about rationality and the complexity of
choice are granted, no social welfare function exists that is neither imposed nor
dictatorial. This impossibility result, which was to earn Arrow a Nobel Prize, had an
enormous impact on how rational choice theorists have thought about the basic
characteristics of democracy and majority rule.
In particular, it set the terms of future inquiry into the potentially unstable character
of majority coalitions. Arrow noticed that when three voters {I, II, III} attempt to
decide among three outcomes {A, B, C} by majority vote, a voting cycle may result.
Suppose, for example, that voter I prefers A to B and B to C; voter II prefers B to C
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and C to A; and voter III prefers C to A and A to B. If A is the status quo, it can
be defeated by C, which in turn can be defeated by B, which in turn can be defeated
by A. Majority rule, in this instance, is incapable if rendering a stable collective
choice. Although the possibility of voting cycles had been known since the time of
Condorcet, Arrow called attention to their broader significance for the study of
politics.
An Economic Theory of Democracy (Downs 1957) is widely regarded as "one
of the cornerstones for contemporary rational actor theory" (Monroe 1991, ix). For
Downs, each party's platform represents a means by which office is won, not simply a
list of party objectives. When two political parties jockey for position along an
ideological continuum in an effort to garner voter support, Downs argued, their
platforms tend to converge to the ideological position of the "median voter" (see
Chapter 7). If the numbers of parties or ideological dimensions increase, or if voters
abstain when each of the alternatives put before them is unappealing, however, the
story becomes more complex. Much of the literature on party competition since the
1950s has been concerned with exploring these complexities, which attests to
Downs's continuing influence on the study of American politics. Downs also re-
shaped the way in which political scientists viewed the nature of mass opinion and
political participation. In contrast with the then prevailing lamentations about voter
apathy and ignorance, Downs argued that the collective nature of electoral choice
made it irrational for voters to expend resources gathering information about politics.
Along similar lines, Downs suggested that voter turnout represents a collective action
problem. Given the minuscule probability that a single individual's vote will influ-
ence the result of an election, why should a rational individual bother to vote?
Downs's accounts of party competition, spatial voting, rational ignorance, and voter
turnout have so reshaped the study of American politics that Mueller (1989, 4)
attributes to An Economic Theory of Democracy "perhaps the greatest influence on
political scientists" of any work of rational choice theory.
The Logic of Collective Action (Olson 1965) expanded the purview of rational
choice theory beyond the actions of governments and political parties. Olson's focus
was on the logical basis of interest group membership and participation. The reigning
political scientists of his day had granted groups an almost primordial status. Some
appealed, with Gaetano Mosca (1939, 163), to a natural human "instinct" for "herd-
ing together and fighting with other herds." Others followed Talcott Parsons and
Robert Bales (1955, 9) in ascribing the formation of groups that are not rooted in
kinship to the process of modernization. Whatever the justification, political scien-
tists generally assumed organized groups to be the basic units of politics, entities that
coalesced more or less inevitably around shared values and interests. This group
theory of politics, associated with such names as Arthur Bentley, David Truman, and
Earl Latham, was the central focus of Olson's critical attack. Challenging their
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assumption that private groups and associations operate according to principles that
differ "from those that govern the relationships among firms in the marketplace or
between taxpayers and the state" (1965, 16), Olson offered a radically different
account of the logical basis of organized collective action. His central thesis was that
"only a separate and 'selective' incentive will stimulate a rational individual in a
latent group to act in a group-oriented way" (1965, 51); that is, an incentive that
accrues exclusively to those who contribute to the group.
Like Downs, Olson was centrally concerned with the logic of free-riding. If an
economic, political, or social good is provided regardless of whether one contributes
to its provision, the rational individual will consume it without contributing. Olson's
work elevated the free-rider problem to an issue of importance for political scientists,
and this theme remains prominent in rational choice scholarship. In Mueller's estima-
tion, "the free rider problem pervades all of collective choice. It necessitates the
passage of laws, the raising of taxes, and the hiring of police. It deters citizens from
becoming informed about public issues, and even from voting" (1989, 319). It is a
mark of Olson's influence on the field that the entire chapter on the logic of collective
action in Mueller's survey of rational choice theory is structured around Olson's work
and responses to it.
Beyond their own seminal contributions, the rational choice literatures spawned by
Arrow, Downs, and Olson are generally regarded as the most advanced and formida-
ble in political science. Monroe (1991,2) includes them in her account of the domains
in which rational choice theories have offered "insightful, rigorous and parsimonious
explanations." These works all feature on Ordeshook's list of the "centerpieces" of
the rational choice "revolution" (1993, 72, 87, 92). Collectively these literatures
occupy well over half of Mueller's 1989 textbook. If further evidence of the preemi-
nent position of these literatures within rational choice scholarship were needed, it
was supplied by Lalman, Oppenheimer, and Swistak in their 1993 survey of the
contributions of rational choice theory to political science. The authors explicitly
single out coalitional stability and collective action as the domains in which rational
choice theory has made its most profound contributions.
Focusing centrally on these major literatures, we claim that to date few theoretical
insights derived from rational choice theory have been subjected to serious empirical
scrutiny and survived. Many empirical tests turn out on close inspection to have been
so poorly conducted that they are useless in evaluating rational choice hypotheses.
Tests that are properly conducted tend either to disprove these hypotheses or to lend
support to propositions that are banal. Furthermore, rational choice hypotheses are
too often formulated in ways that are inherently resistant to genuine empirical testing,
raising serious questions about whether rational choice scholarship can properly be
regarded as social science. The deficiencies of existing empirical research should
concern proponents of rational choice theory more than appears to be the case. In the
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course of developing our critique, we indicate a variety of ways that rational choice
theories might be reformulated to avoid the difficulties we identify.
political phenomena, only that few nontrivial applications of these models have been
shown to withstand empirical scrutiny. It will become plain that we think there are
good reasons for skepticism of the universalist ambitions that many rational choice
theorists harbor, but we readily concede that certain rational choice applications
might be sustainable. It is our contention here, however, that to date the empirical
work that is alleged to provide support for rational choice models is deeply flawed and
that the empirical work that has been done well tends to undermine the rational choice
approach. Flawed empirical work arises not merely because of sloppiness (though, as
is the case throughout social science, there is plenty of this), but because rational
choice theorists tend to commit certain characteristic mistakes in formulating and
testing empirical hypotheses. As a consequence, impressive as many of the analytic
results of rational choice theory might be, it remains to be established that they tell us
anything new and reliable about politics. If rational choice models are to be used and
tested in a rigorous empirical fashion, their proponents will have to approach empiri-
cal questions differently. At various points throughout the book we offer specific
suggestions on how this might be accomplished.
Fifth, our focus is on rational choice theory as an explanatory enterprise in political
science. We shall have little to say about the ideological or prescriptive dimensions of
rational choice. Our argument is not without normative implications, however. Pre-
scriptive implications are sometimes drawn from explanatory rational choice argu-
ments that rest on shaky empirical ground. For instance, a substantial rational choice
literature has grown up on the phenomenon of "rent-seeking," in which monopoly
interest groups induce governments to protect their dominant positions through the
regulatory process. In fact there is mixed evidence on whether and how often rent-
seeking behavior actually occurs. Yet at the end of his otherwise even-handed review
of the rational choice literature on this subject, Mueller (1989, 245) concludes that
"the best and simplest way to avoid the rent-seeking problem is to avoid establishing
the institutions that create rents, that is, the regulations and regulatory agencies that
lead to rent-seeking."
Too often prescriptive conclusions of this kind are floated on empirically dubious
rational choice hypotheses, as when Riker and Weingast (1988, 378) argue that the
susceptibility of majority rule to manipulation justifies robust court-enforced consti-
tutional constraints on what legislatures may legitimately do, as was undertaken by
the U.S. Supreme Court during the Lochner era. Riker and Weingast point to the
analytic possibility of legislative instability in support of the proposition that "neither
the Court nor legal scholarship has provided the theoretical underpinnings for the
presumption, of the adequacy of legislative judgment and, indeed, neither has even
asked whether legislative judgment really works." It will become plain in subsequent
chapters, however, that persuasive evidence has not been adduced to sustain Riker
and Weingast's claim that the possibility of cycles is often realized in actual legisla-
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