Ch05 PUBLIC CHOICE AND THE POLITICAL PROCESS（课件）- 《财政金融英文版》同步教学（人民大学版）

PUBLIC CHOICE AND THE POLITICAL PROCESS C h a p t e r 5 Political Equilibrium Public choice – one made through political interaction of many people according to established rules Political equilibrium – an agreement on the level of production of one or more public goods, given the specified rule for making the collective choice and the distribution of tax shares among individuals Tax shares – preannounced levies assigned to citizens; equal to a portion of the unit cost of a good proposed to be provided by government Elections and Voting Economic analysis assumes that people evaluate government goods in the same way as market goods and vote in favor of a proposal only if they will be made better off by its passage. The most-preferred political outcome is the quantity of the government-supplied good corresponding to the point at which the person’s tax share is exactly equal to the marginal benefit of the good. Elections and Voting Elections and Voting Many citizens choose not to vote because: The cost of time and effort to vote outweighs the perceived benefit. They believe that their votes do not make any difference. They may see little or no difference between the alternatives considered in the election. They have scanty information. Rational ignorance – lack of information about public issues that results because the marginal cost of obtaining the information exceeds the apparent marginal benefits of doing so Determinants of Political Equilibrium Public choice rule; the proportion of yes votes in relation to the number of votes required for approval of the issue Average and marginal costs of the public good Information available to voters on the cost and benefit associated with the issue Distribution of tax shares among voters and the way in which extra taxes vary with extra output of the good provided Distribution of benefits among voters Political Equilibrium Under Majority Rule An example: Under simple majority rule, citizens must decide on the quantity of a p