Review: Analyzing Politics: Rationality, Behavior and Institutions

My colleague lent me this book to read as a means of understanding one of our courses: “Decision Making Processes”. (The 1997 first edition is by Shepsle and Bonchek — who was a PhD candidate — but the 2010 second edition is only by Shepsle, who is the main author.)

Since I was trying to orient my understanding(s) to the book rather than read in detail or learn new concepts, I skimmed sometimes and skipped Part IV (political institutions), so my “review” is more like a set of reactions.

I think this book is really useful as a primer on political economy, i.e., the ways in which power and wealth are re-distributed. The book does this by building on “rational man,” to look into group choice (voting), cooperation and collective action (participating), and institutions (rules that oblige, restrict or permit).

Shepsle’s definition of “politics” is broad, as it should be (p 13):

For the purposes of our discussion, I will take politics to be utterly indistinguishable from the phenomena of group life generally. It consists of individuals interacting, maneuvering, dissembling, strategizing, cooperating, and much else besides, as they pursue whatever it is they pursue in group life.

We are all embedded in many groups in which such “small-p politics” are important — just as we are embedded in many “commons” — and most of those commons are governed (top down but more importantly peer-to-peer) by these politics.

This book is very strong at characterizing situations and explaining strategies that may (not) work in them. Special interest groups, for example, may be easier to defeat if they can be isolated (or isolate themselves)  into small groups that do not join together to oppose the majority. This strategy can work with an indirect reform. A tax on carbon imports, for example, will raise opposition from foreign oil firms but not domestic oil firms. With the subsequent fall in competition, and thus higher prices, the goal (lower carbon consumption) will be met, even as domestic firms get bigger profits, which can be taxed as such.

I’ve been a fan of zero-based budgeting for decades, but I do agree that there’s a weakness if agencies get to propose entirely new budgets every year and legislators do not bother to question every line item. Inertia is more efficient in such cases of asymmetric information (and effort).

What is public interest? Who gets to identify it? This summary (p 193) is worth a read

Group decision making may depend upon individual preferences and may reflect individual preferences, but it depends upon and reflects much more besides. First, as I have mentioned throughout these chapters, individual preferences do not announce themselves. They are not transparent or self-evident. Rather, they depend upon the disposition of each individual to reveal preferences sincerely or strategically. Second, even if the disposition to report preferences honestly or not were of no consequence, the fact remains that there are many procedures by which to reveal preferences and combine them into social outcomes — procedures that produce profoundly different social outcomes.
To these considerations I must add one more: Collectivities are unlike individuals in the sense that their “preferences” rarely add up in a coherent fashion. For nearly any method of group decision making that we would find minimally acceptable on grounds of fairness, the group outcome often violates the central notion of coherence (transitivity). In important ways, the actual outcome of group choice is arbitrary. So much depends upon the frictions of institutional minutiae — the order of voting, who gets to make motions, and who gets to decide when enough motions have been made.
We might even become dubious about the idea of a public interest. A public has no identifiable interest if its preferences are either incoherent or overly idiosyncratic. [snip] We must understand, when we judge a political outcome, that it is often the result of split- second coordination by some temporary majority that exhibited coherence for a nanosecond before “morphing” into some new political entity – hardly a firm foundation on which to build a philosophy of public interest.

Small groups struggle with cooperation; large groups struggle with collective action. Where is the line between small and large? It’s defined by the Dunbar number (around 140 people), which means that cooperation can emerge when people “know each other,” but not when the group gets too big. In those cases of collective action, other incentives and institutions are required.

Political entrepreneurs can help overcome collective action problems (e.g., everyone free rides). They are needed if smaller groups want to grow in numbers and influence. One way to motivate people in these groups is to favor “experiential behavior” (a consumption activity) over “instrumental behavior” (an investment activity), since consumption (e.g., going to a political rally) provides a direct benefit that investment (e.g., what’s the chance my attendance will make a difference in the polls?) cannot. Thus, we have a social or psychological answer to the paradox of voting.

I strongly recommend this book to any one interested in (academic) social sciences as well as (reality) political dynamics. A good complement would be Buchanan and Tullock’s Calculus of Consent. FIVE STARS.

Here are all my reviews.

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

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