What does "public choice theory" examine?

Public choice theory examines how economic principles can be applied to understand political behavior. It analyzes the motivations and actions of politicians, voters, and bureaucrats as they navigate the political landscape, emphasizing that these actors often act in their own self-interest, similar to consumers and producers in the market. This approach helps in understanding phenomena such as voting behavior, lobbying, and the formation of public policies.

By focusing on the incentives and constraints faced by individuals in political settings, public choice theory provides insights into why certain policies are adopted and how government decisions can sometimes lead to outcomes that differ from what is socially optimal. This application of economic reasoning to the realm of politics allows for a clearer understanding of how resources are allocated and how government actions can impact societal welfare.