Front Page Titles (by Subject) Costs and Decision-Making: The Authoritarian Model - Cost and Choice: An Inquiry in Economic Theory, Vol. 6 of the Collected Works
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Costs and Decision-Making: The Authoritarian Model - James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory, Vol. 6 of the Collected Works 
The Collected Works of James M. Buchanan, Foreword by Geoffrey Brennan, Hartmut Kliemt, and Robert D. Tollison, 20 vols. (Indianapolis: Liberty Fund, 1999-2002). Vol. 6 Cost and Choice: An Inquiry in Economic Theory.
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Costs and Decision-Making: The Authoritarian Model
Choice-influencing costs of public goods differ with the location of effective decision-making power in the collectivity. Even in the most naive of democratic models in which the decision-maker is assumed to be both the prospective taxpayer and the prospective beneficiary in some “representative” sense, genuine opportunity costs must include the individual’s evaluation of enjoyments foregone by others. The fact of collective decision requires this. It is clear that when more complex models of decision-making are introduced, this nonpersonal aspect of costs becomes more significant. To illustrate this, we may shift attention to the nondemocratic extreme of the spectrum and examine an authoritarian decision-structure.
Assume that all decisions for the collectivity are made by a single person who has dictatorial powers. Limiting analysis to public finance, what are the choice-influencing costs in such a setting? What are the obstacles to the dictator’s decision on the levy of a tax to finance a specific governmental outlay? In the limit, he will not personally bear any share of the prospective tax to be imposed. The “costs” that might be avoided by a decision not to impose the tax are, therefore, exclusively represented in the dictator’s evaluation of the enjoyments which others than himself might secure in the absence of the tax. In such a decision context as this, it seems almost meaningless to use anticipated outlay or payment as an indirect representation of that cost which influences choice. As mentioned above, cost-benefit analysis may produce wildly inaccurate estimates even in the most unsophisticated of democratic models, because the collective aspects of both costs and benefits are ignored. The results of such analysis are not, however, without some relevance. By contrast, cost-benefit analysis of the orthodox variety when applied to the authoritarian model becomes absurd since no part of the anticipated outlay, as measured, is expected to be borne by the man who makes the choice.