On the Public Choice Critique of Welfare Economics

Timothy Besley and Stephen Coate

Public Choice, 2003, vol. 114, issue 3-4, 253-73

Abstract: The public choice literature urges the welfare economist to anticipate how political forces will shape the levels of new policy instruments when government intervenes in a new way. This paper argues that the welfare economist should also recognize that new interventions may impact the politically determined levels of existing policy instruments. It shows how the introduction of a new instrument can lead to shifts in political coalitions or compromises in existing areas of conflict that can produce significant changes in existing policies. Such spillover effects can provide new arguments for introducing particular policy interventions. Even a policy instrument without an obvious welfare economic rationale can change voter coalitions and shift the policy equilibrium in a welfare improving direction. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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