Evolution, uncertainty, and the asymptotic efficiency of policy
Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
7-1-2022
Abstract
Politics, like any social system, involves selection mechanisms. This paper presents a model of politics as an evolutionary process. Our model yields three main results. First, the political process selects for efficient policies in the long run. We call that attribute asymptotic efficiency. Second, bargaining amongst interest groups bounds the inefficiencies that can exist in the short run. Potential inefficiency declines when organizing interest groups becomes less costly. Finally, policies that appear to be inefficient in a static analysis can be efficient once economists consider the dynamic nature of political decisions. We argue that viewing the political process as a selection mechanism allows political economists to use efficiency as a criterion for positive economic analysis. In our approach, applied political economy involves looking for relevant costs that make the policy efficient. However, our approach does not rob political economists of the ability to make meaningful normative statements; it only constrains the type of statements made.
Journal Title
Public Choice
Journal ISSN
00485829
Volume
192
Issue
1-2
First Page
169
Last Page
188
Digital Object Identifier (DOI)
10.1007/s11127-022-00978-2