This model of government behaviour never fitted reality, and economists
were gradually forced to think more deeply about the motivation of
governments. Today economists no longer assume that governments are
only guided by the public interest. Instead they are modelled just as are
producers and consumers—as units with their own objectives, which they
seek to maximize.
Governments undoubtedly do care about the social good to some extent,
but public officials have their own careers, self-interest, and prejudices as
well. As a result, public officials’ own needs are seldom wholly absent
from their consideration of the actions they will take. Similarly, their
definition of the public interest is likely to be influenced heavily by their
personal views of what policies are best. It is therefore often the case that
the policies supported by the public are different from the policies
advocated by policymakers.
Modelling governments as maximizers of their own welfare, and then
incorporating them into theoretical models of the working of the
economy, was a major intellectual breakthrough. One of the pioneers of
this development was the American economist James Buchanan, who was
awarded the 1986 Nobel Prize in economics for his work in this field. The
theory that he helped to develop is called public choice theory.
Public Choice Theory
Full-blown public choice theory deals with three maximizing groups.
Elected officials seek to maximize their votes. Civil servants seek to