Public Choice & Welfare (research)

Course goals

Learning objectives
At the end of the course the student is able to:

• Apply knowledge and understandings of how governments (should) function;
• Understand the difference between the welfare economics approach and the public choice approach and is able to identify them;
• Critically appraise different theories of government action and learn how they are translated into economic models.
• Develop their own theoretical reasoning with a public choice approach

Content

How can economic understanding make a real difference? Governments can increase the well-being of people by choosing the right policies. In this course we study and evaluate public sector behaviour. Which choices and decisions do public authorities make and according to which criteria? How do they set taxes? How and on which basis do they allocate government expenditure?

We analyse government choices from two perspectives. First, from a welfare economic perspective, where the government intervenes in the market economy whenever there are serious market failures such as the presence of externalities (e.g. environmental damage) and public goods (e.g. infrastructure). Second, we study government behaviour from the perspective of public choice, which criticises the welfare economic approach as being too abstract. Even if we are able to specify optimal policies, there is no guarantee that real-world decision-making institutions will bring them about, the public choice approach argues. Instead of assuming a benevolent social planner that effectuates the optimal policies, the public choice approach focuses on how actual policy choices are made, focusing on rent-seeking and lobbying by interest groups and the behaviour of voters and policy-makers (think about Frank Underwood in the TV series House of Cards, is he really focused on improving the welfare of citizens?). The public choice perspective assumes self-interested rational behaviour of politicians, civil servants and voters. It places more emphasis on modelling the policy process and argues that this, like the market mechanism, has identifiable sources of failure.

This course is highly recommended for students who aspire to work in a (semi-)public organisation, in politics or with a consultancy firm that deals with public institutions or the government. The course is also interesting for students who show an interest in economic theory in general.
Students who consider the master ‘Economic Policy’ are advised to follow this course.
 
Academic skills
This course focuses on the following academic skills:

• Analytical skills
  • Being able to solve problems (identifying the problem, devising a path towards the solution, following this path, verifying the outcome), independently and for complex problems.
  • Being able to identify, interpret and critically evaluate the main line of reasoning, independently and for complex problems.
• Communication skills
  • Being able to write a comprehensive paper on an academic level, in a correct and clear manner, in groups.
• Information processing
  • Knowledge of potential sources for literature and the skills to explore these independently for a comprehensive research project.
  • Being able to detect plagiarism and being able to avoid any kind of plagiarism.
• Academic Research
  • Being able to identify the main research question.
  • Being able to execute a research design.
  • Being able to search and select (additional) sources for the research.
  • Being able to apply theoretical concepts in research.
  • Being able to use correct references (APA style).
  • Being able to draw clear and correct conclusions.
• Academic reasoning 
• For independent multidisciplinary economic problems/questions:
  • Thinking conceptually, thinking in terms of theory.
  • Asking critical questions, having a curiosity-driven and critical attitude.
  • Analysing questions from different perspectives.
  • Identifying links between problems.

Effort requirements
Participation in 80% of the meetings (i.e. having studied the literature, prepared the exercises and active participation).

In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN. Separate or spare codes are usually not available.