Public Choice and Public Law: Readings and Commentary.

• Author: Farber, Daniel A.

Public Choice and Public Law: Readings and Commentary. By Maxwell L. Stearns. Cincinnati: Anderson Publishing Co. 1997. Pp. xxxvii, 1035. $54.95.

Although not the first book on public choice for a legal audience,(1) Max Stearns's Public Choice and Public Law(2) is the first full-scale textbook for law school use.(3) An ambitious undertaking by a rising young scholar, the book provides law students with a comprehensive introduction to public choice.

Public choice -- essentially, the application of economic reasoning to political institutions -- has become a significant aspect of public law scholarship. Indeed, in his Foreword, Saul Levmore hails public choice as "[t]he most exciting intellectual development in law schools in the last decade" (p. xi). Be that as it may, the publication of the first textbook surely marks an important stage in the development of a subject. It is an apt occasion to evaluate the ways in which public choice can best contribute to legal education and scholarship.

Our goal in this review, consequently, is not merely to assess the Stearns book, but to see what light it sheds on this broader question. In Part I of the review, we accompany Stearns on a tour of public choice and public law. The book provides a good cross section of the major writings of legal scholars interested in public choice. For readers familiar with the field, Part I provides an opportunity to examine Stearns's organization and choice of readings. For others, it provides a primer on the topic. Building on Stearns's materials in Part II, we offer some thoughts about how public choice can best inform legal scholarship. A similar debate about the utility of public choice has been raging in political science,(4) and we believe that this debate has generated some useful insights about the possible contributions of public choice to understanding legal issues. Indeed, some of the leading public choice scholars in political science have now revamped their claims for the theory as a result of this debate.(5) Legal academics such as Stearns have not yet had time to absorb these developments and thus may be asking more from public choice theory than its best practitioners believe it can realistically offer. Finally, in Part III, we consider' how public choice can contribute to the education of law students. One of the questions raised in Levmore's Foreword is the extent to which public choice should be integrated into existing courses, as opposed to receiving a separate place in the curriculum (pp. xiv-xv). Our own view, unlike Levmore's, is that public choice is likely to be most useful when integrated into existing courses, but that materials like Stearns's can serve a beneficial function for more advanced students.

1. PUBLIC CHOICE AND PUBLIC LAW: A GUIDED TOUR

   Instead of using a casebook format, Public Choice and Public Law offers a series of lengthy excerpts from scholarly articles, almost all from law reviews, followed by extensive notes and explanatory text by the author. Unlike the snippets of articles that most law-school casebooks offer, the substantial portions of original works provided by Stearns give authors a fair chance to elaborate their views in their own words. Stearns's notes explore the readings in detail, with citations to a broad segment of the scholarly literature.(6) By following Stearns through his tour of public choice, we can get a good sense of the current state of legal scholarship in the field.

   The book is divided into three segments: Chapter One introduces the use of rational choice models of political institutions; Chapter Two covers social choice theory deriving from Arrow's Theorem; and Chapter Three surveys selected applications to public law. We follow that organization in this section.

   1. Rational Choice Models

      As Stearns points out in his Preface, public choice is not a monolithic field (pp. xvii-xviii). It derives from three different academic movements, each with a separate home base: the Chicago School, which emphasized the tendency for the regulatory process to be coopted by special interests; the Rochester school, which stressed "the arbitrariness and unpredictability of governmental outcomes, at least if the preferences of the legislators or their constituents are employed as a baseline"; and the Virginia School, which studied how constitutional frameworks could shape the future development of public policy (pp. xviii-xix). Further, some public choice models are based on standard microeconomics, while others are based on game theory or on the work of Kenneth Arrow and his followers (pp. xix-xx). Not surprisingly given the field's complex origins, even its name is unsettled: public choice, social choice, rational choice, and positive political theory have each been favored at one time or another by various authors.(7)

      What holds this diverse movement together is a common methodology based on the concept of rational decisionmaking: simply put, political actors, like economic ones, make rational decisions designed to maximize the achievement of their preferences. This maximization assumption makes it possible to use mathematical techniques of various kinds, many of them borrowed from economics, to model political behavior. Less formally, it allows the application of economic insights to political behavior. These economic insights can result in powerful conclusions about the political system.

      One such economic insight concerns the possibility of free riding. A rational person would avoid investing in the production of a benefit if virtually the same benefit could be enjoyed without the investment. This simple point has manifold implications in economics, ranging from the instability of cartels -- because individual members of the cartel have an incentive to cheat -- to the inadequate market supply for public goods such as clean air -- because individuals prefer to enjoy the clean air without having to pay for the pollution control equipment. It also has a powerful analogy in politics, first pointed out by Mancur Olson.(8) A legislative enactment may benefit everyone in a group, perhaps everyone in the country, but each can enjoy a statute's benefits without having contributed to the lobbying effort. Hence, there is a temptation to free ride and let other people pay the price to pass the new legislation. As it turns out, the free-riding problem is inversely related to the size of the group -- for example, when the issue is air pollution, it is much easier to mobilize a handful of car companies than the urban population. (Group size is crucial for two reasons: (1) given the same total benefit to the group, size is inversely related to the magnitude of any individual's stake; and (2) size increases transaction costs.) The result is a skew in politics giving greater influence to special interests -- relatively concentrated groups with high individual stakes -- than to the diffuse interests of taxpayers, consumers, and citizens generally. Given two groups with roughly equal but opposing interests, the smaller group has an innate advantage.

      The key to this argument is that political actors behave rationally in the sense that they maximize their expected personal welfare, taking into account both the costs and benefits of political activities. Clearly, there are possible alternatives to this view: people may attempt to optimize outcomes but suffer from systematic cognitive defects; their conflicting, incoherent, or unstable goals may make optimizing impossible; strong emotional currents may render them incapable of thinking rationally about consequences; or they may behave rationally in some noninstrumentalist sense -- for example, by following a Kantian ethical edict. Notwithstanding these potential alternatives, public choice theory rests on the premise that instrumental rationality is an effective, basis for predicting political behavior, if not an entirely realistic psychological model.

      Given its centrality to public choice, the rationality assumption clearly warrants careful examination, and Stearns begins Chapter One with a group of articles debating its validity. At one extreme, Judge Abner Mikva rejects the premise of self-interested welfare maximization in politics, remarking that even in the notoriously venal Illinois legislature he had found examples of public-regarding conduct.(9) At the other extreme, Michael DeBow and Dwight Lee provide a thoughtful defense of the assumption that "people will allocate their limited means ... to maximize their personal satisfaction."(10) In the middle, the book includes excerpts from our own work, arguing that both ideology and self-interest play a role in the political system.(11)

      Voting provides one of the greatest challenges to the rationality assumption. It is not clear that voting can be usefully explained as an effort to maximize the achievement of some goal. Recall that the temptation to free ride increases with the size of the group, and here the group consists of the entire electorate. An individual vote has almost no chance of influencing a national election. Indeed, it would hardly be worth the trouble of standing in a voting line on the minuscule chance of casting the single decisive vote in a Presidential election! Of course, it is possible that people simply like to vote, that voting is a form of personal consumption, with pulling the lever in the voting booth playing much the same role as jiggling the joystick in a video game. But this expiration seems distinctly unhelpful: it does little more than pronounce that people vote because it is something they want to do.

      Stearns discusses several possible methods of saving the "consumption" explanation from tautology. One possibility is that people vote on the gamble that other people will choose to stay home, thereby increasing the likelihood that they will cast the decisive vote. On the other hand, individuals may vote as a signal to others that there is no point in...