The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Preface
• The Reason of Rules
• 1.: The Constitutional Imperative
• I.: Introduction
• II.: Reasons For Rules
• III.: Rules of Games
• IV.: Rules of the Road
• V.: Rules of the Market Order
• VI.: Rules of Political Order
• VII.: The Importance of Rules
• 2.: The Contractarian Vision
• I.: Introduction
• II.: Noncontractarian Constitutionalism
• III.: Individuals As Sources of Value
• IV.: Contract and Exchange
• V.: Politics In the Exchange Perspective
• VI.: Unanimity As the Contractual Ideal
• VII.: Agreement On Rules and the Veils of Ignorance and Uncertainty
• VIII.: Conclusions
• 3.: The Myth of Benevolence *
• I.: Introduction
• II.: Private Good and Public Good
• III.: Science, Truth, and Politics
• IV.: The Authoritarian Imperative
• V.: Majoritarian Democracy In the Noncontractarian Paradigm
• VI.: The Aim of Politics
• 4.: Modeling the Individual For Constitutional Analysis
• I.: Introduction
• II.: Homo Economicus In Politics: the Argument For Symmetry
• III.: Science and the Empiricist Defense
• IV.: A Methodological Defense of the Differential Interest Model of Behavior
• V.: Social Evaluation and Quasi-risk Aversion
• VI.: Gresham’s Law In Politics
• VII.: Summary
• 5.: Time, Temptation, and the Constrained Future *
• Preface
• Part 1.: Individual Private Choice
• I.: Introduction
• II.: The Ultimate Z ’s
• III.: Preferences For Preferences
• IV.: Past, Present, and Future
• Part 2.: Individual Public Choice
• I.: Introduction
• II.: Society With a History
• III.: Temporal Interdependence
• IV.: An Illustration
• V.: Moral Rules And/or Constitutional Commitment
• 6.: Politics Without Rules, I: Time and Nonconstrained Collective Action
• I.: Introduction
• II.: The Social Discount Rate
• III.: The High-tax Trap
• IV.: The Inflation Trap
• V.: The Public-debt Trap
• VI.: Other Examples
• VII.: Conclusions
• 7.: Rules and Justice
• I.: Introduction
• II.: Just Conduct and the Notion of Desert
• III.: Justice and Promise Keeping
• IV.: Justice Among Rules
• V.: Just Rules, Agreed-on Rules, and Just Conduct
• VI.: Conclusions
• 8.: Politics Without Rules, II: Distributive Justice and Distributive Politics
• I.: Introduction
• II.: Distributive Justice: the Conventional View
• III.: The Constitutional Perspective and Institutional Incidence
• IV.: The Incidence of Unrestricted Majoritarianism
• V.: Tax Rules and Distribution Under Majority Rule
• VI.: Direct Constitutionalism and Distributive Justice
• VII.: Summary
• 9.: Is Constitutional Revolution Possible In Democracy?
• I.: Introduction
• II.: Pareto-superior Change and Wicksellian Unanimity
• III.: Distributional Limits and Prospective Rules
• IV.: Status Quo Entitlements and Distributional Envy
• V.: Constitutional Change and Free Riders
• VI.: The Role of Norms
• VII.: Toward a Civic Religion

II.

Homo economicus in Politics: The Argument for Symmetry

On the basis of elementary methodological principle it would seem that the same model of human behavior should be applied across different institutions or different sets of rules. The initial burden of proof must surely rest with anyone who proposes to introduce differing behavioral assumptions in different institutional settings. If, for example, different models of human behavior were used in economic (market) and political contexts, there would be no way of isolating the effects of changing the institutions from the effects of changing the behavioral assumptions. Hence, to insist that the basic behavioral model remain invariant over institutions is to do no more than apply the ceteris paribus device in focusing on the question at issue.

If an individual in a market setting is to be presumed to exercise any power he possesses (within the limits of market rules) so as to maximize his net wealth, then an individual in a corresponding political setting must also be presumed to exercise any power he possesses (within the limits of political rules) in precisely the same way. If political agents do not exercise discretionary power in a manner analogous to market agents, then this result must follow because the rules of the political game constrain the exercise of power in ways the rules of the market do not, which is to say that the constraints are not comparable in the two settings. Otherwise, there must be an error in analysis or observation. No other conclusion is logically possible, given the invariance of the behavioral model across institutions.

This procedure does not, of course, rule out the possibility that actual behavior in differing institutional contexts will be different. What it does exclude is the introduction of behavioral difference as an analytic assumption. If behavioral differences are attributable to differences in rules, it must be possible to link the rules in some way to the behavioral patterns they generate, without resort to separate fundamental models of behavior, which can do nothing but guarantee emptiness in any attempted institutional comparison.

We propose to analyze behavior as economists generally do, that is, in terms of the choices among alternative courses of action faced by individual agents. The conceptual apparatus here involves a radical separation between means and ends—between opportunity sets and preferences. “Explanations” of outcomes are advanced with reference to the relative prices or costs of the options (and of changes in those prices) rather than to the preferences of the agents. In this sense, for the economist, the only differences in institutions that are relevant for explaining behavioral differences are the differences in the prices of the alternatives. Pure differences in preferences (that is, differences that cannot ultimately be traced to differences in relative prices) wrought by institutional change cannot be brought within the explanatory power of the economist.6

The analytic approach that relates preference shifts to institutional differences skirts dangerously close to, and may be indistinguishable from, the use of models wholly different from those mentioned earlier. Such an approach might suggest that individuals assume roles that are institution-dependent, that in politics, for example, persons take on character roles as “statesmen,” whereas in the market they take on character roles as “possessive profit seekers.” In ignoring this whole approach and the literature in which it has been developed, we realize that we are limiting our realm of discourse and dialogue. But the analytic presumptions in support of behavioral symmetry at the most basic level seem so strong that the onus of proof must lie with those who would advance the institution-dependent behavioral model.

The symmetry argument may seem elementary and self-evident, but its acceptance surely carries us part of the way toward the use of Homo economicus in politics, at least among those economists who remain content to adhere to such a behavioral model in their analyses of markets. In a more general sense, of course, the symmetry argument does nothing to establish Homo economicus as the appropriate model of human behavior. Alternative models may be introduced. The symmetry argument suggests only that whatever model of behavior is used, that model should be applied across all institutions. The argument insists that it is illegitimate to restrict Homo economicus to the domain of market behavior while employing widely different models of behavior in nonmarket settings, without any coherent explanation of how such a behavioral shift comes about.

[6. ]For an ingenious attempt to bring what appear to be our preference shifts into the relative-price explanatory framework, see George Stigler and Gary Becker, “De Gustibus Non Est Disputandum,” American Economic Review 67 (March 1977): 76-90.