202 8: Rational Choice Th eory and Irrational Behavior
make a defi nitive claim that his or her conception of the civic good is the correct
one. So, although Niskanen recognized that some public servants might be public
spirited, he believed they were unlikely to be particularly eff ective in advancing
the public interest. In fact, argued Niskanen, “it is impossible for any one bu-
reaucrat to act in the public interest, because of the limits on his information and
the confl icting interests of others, regardless of his personal motivations” (39).
In contrast, the rational bureaucrat is well positioned to act on behalf of his own
interests. All he needs to know are his own preferences.
Niskanen thus viewed a bureaucracy as a rough equivalent of a business in
which budget maximization substitutes for profi t maximization. Niskanen cre-
ated a market analogy where bureaucracies are monopoly producers of public
services, and legislators are monopsonist buyers. Bureaucrats seek to maximize
their budgets by “selling” a certain level of public services to legislators. For any
given bureaucracy, a subgroup of legislators will have powerful incentives to se-
cure high levels of the service produced. Th ese incentives are largely electoral—
bureaucracies provide contracts, jobs, and services that benefi t constituents and
for which legislators can claim credit. A market with monopoly producers and a
handful of dominant buyers has predictable outcomes: ineffi ciency in production
and supply outpacing demand (1971, 227). To combat this inherent dysfunction
in public service production, Niskanen suggested that the fi nancing of public ser-
vices be restricted to the lowest level of government possible, and that budget
decisions be required to muster a two-thirds vote in a legislature (227–229). Th e
idea was to reduce the infl uence of monopoly buyers and to better connect the
supply of public services to demand by putting producers as close as possible to
consumers.
Coming as they did in the late 1960s and early 1970s, the work of such schol-
ars as Tullock, Downs, and Niskanen struck a chord not just because their the-
oretical approach was novel (to public administration), but also because their
conclusions fi t with widely held conceptions of bureaucracy. As the public sector
expanded in the decades aft er World War II, people began to question the cost
and effi ciency of public services. Th e ineff ective, ineffi cient bureaucracy of pop-
ular perception gained intellectual confi rmation in these works. Th e prescriptive
conclusions—less bureaucracy, less centralization, and more competition in the
production of public services—may have turned administrative orthodoxy on its
head, but they found a ready audience in policy circles. Yet as public adminis-
tration scholars from the more orthodox schools were quick to point out, these
works were almost purely theoretical, and their prescriptive conclusions rested
on untested assumptions and anecdotal evidence.
Th e work of Tullock, Downs, and Niskanen generated a good deal of research
seeking to take rational choice beyond calculations of abstract utility functions.
Th e more data-driven research helped support some of the theoretical underpin-
nings of rational choice, but it also made clear that economic theory had diffi cul-
ties digesting the public sector. Empirical counters to works, such as Niskanen’s