The text below is Slade Mendenhall’s ECON 410 Public Choice Final Exam. Check out his course material and website here. Great stuff!
Instructions: Below are questions based on the topics that we have covered this semester. They are interpretive in nature, so while you should demonstrate knowledge of what was covered in the course, answers that simply restate theoretical points mentioned in lectures and readings will be marked down accordingly. I want to see your applications of ideas to issues. I expect at least two double-spaced pages of answers per question. Question #1 is mandatory, and you may choose any three to answer from the remaining options below the line. Your responses must be emailed to me by the end of our assigned final exam by 1:15 pm on December 13th. Best of luck!
Question #1 (Mandatory)
George Stigler argued in his famous article, “Law or Economics?,” that “every durable social institution or practice is efficient, or it would not persist over time.” Choose one political institution, practice, or policy which has proven durable over time and with which you disagree and explain how it is efficient according to Stigler’s conception of efficiency. In your answer, you must demonstrate a firm understanding of what Stigler means and how it applies to the issue you choose.
Multiple theories have been presented for the origins of states in human history, including, most notably, the “strongman hypothesis,” the “hydraulic hypothesis,” and the “conquest theory.” How do these arguments parallel certain modern justifications for states over anarchy and justifications for state intervention into markets? Give examples.
Social scientists studying voting behavior have offered theories of instrumental voting, expressive voting, and (in the case of Bryan Caplan) rational irrationality. In terms of whom voters intend to benefit with their vote, there are theories of self-interested, group interested, sociotropic, and ideological voting. Drawing on both theory and the evidence that we discussed in class, present your best argument for the course and results of the 2016 presidential elections. To quote the title of Hillary Clinton’s memoir on the process, tell me your version of “What Happened.”
Choose your favorite model in the field of Behavioral Political Economy from among those that we discussed in class. Apply it to a recent national issue (say, in the last two years). Discuss the ability of that model to explain the events and popular or institutional responses that you observe relative to the explanatory power of more conventional economic and public choice theories that do not rely upon behavioral assumptions.
Does the U.S. federal model effectively promote political competition, or is competition among state governments to the benefit of citizens too utopian an idea? In your answer, you must demonstrate knowledge of the arguments for both sides and make a strong case for one or the other using evidence drawn from history, current events, or empirical sources.
Friedrich Hayek and many other economists have argued for the superiority of emergent common law and evolved rules over legislation, which, they argue, is not formed according to considerations of what is efficient from the standpoint of interested parties. Transpose this dichotomy—of evolved decision making rules versus rules passed down by authorities—to a different context. Explain an instance outside of law in which rules are discovered through trial and error and make an argument for whether, in that context, the rules which emerge through discovery are superior to rules dictated by an authority.
You have been invited to debate a U.S. senator on the challenges faced by American political institutions and the U.S. economy. The senator, a former businessman, is known for touting his corporate experience and “business acumen.” He has made his opening statement, in which he argued that America needs is to 1) elect more businessmen to public office, 2) appoint more former businessmen to lead executive branch departments, and 3) run government like a corporation. Using what you learned about bureaucratic versus private incentives, offer the most comprehensive response that you can to his proposals.
A noted economist proposes a constitutional amendment in which Congress can no longer raise the federal government’s debt ceiling (the upper limit on the national debt) without a majority of all state governments’ approval (either the governors or state legislatures or both). Analyze the possible effects of such a rule, along with any unintended consequences that might result from it. In consideration of those effects, argue for or against the amendment.
In recent years, several U.S. states have begun to research the use of digital technology to monitor when cars enter and exit public highways in order to charge drivers for their use of highways. Suppose that a local politician is introducing legislation to bring such a model to your state. Drivers would be charged $0 to enter the highway but would be charged a small, variable rate per mile driven. The politician claims that it will help to resolve the state’s growing traffic congestion problems. How does this alter the nature of the highways as a public good? Does it transform them into a private good? A club good? Something else? Which narrow interests might lobby for such a policy change? Which might lobby against it? What unintended consequences might result? (For full credit, you must address all of these questions.)
In the words of Gordon Tullock, “What’s so bad about dictatorship?” Writing from an economic standpoint (rather than ethical or ideological) and drawing upon any concepts you have gleaned from this semester, present your best argument.