- Budget-maximizing model
Budget-maximizing model is an influential new stream of
public choice theoryand rational choiceanalysis in public administrationinaugurated by William Niskanen, in 1971. It argued that rational bureaucrats will always and everywhere seek to increase their budgets in order to increase their own power, thereby contributing strongly to state growth and potentially reducing social efficiency.The Bureau-shaping modelhas been developed as a response to the Budget-maximizing model.
Niskanen's Budget Maximizing Bureaucrat
The model contemplates a bureaucrat who heads a public administration department, and who will try to maximize the department's budget, thus increasing its salary and prestige.
There is a demand for the department's services on the part of electors and voters, but, contrary to publicly managed firms, which directly offer their products and services to these electors, the department is responsible for producing the services which will then be supplied by the Legislature to the electors.
It will therefore be the legislature, or Government, the agent which defines the department's budget, depending on the quantity which it supplies. The more services the department supplies, the higher will its budget be. Therefore, the bureaucrat's objective will be to maximise the quantity of services supplied, subject to a social welfare break-even constraint. This means that the deadweight loss generated by excessive production of services must never be higher than the elector's consumer surplus (otherwise, the Legislature would notice that something was wrong with the department's activity, which would be causing social losses and not gains).
*Friedman, Lee (2002), "The Microeconomics of Public Policy Analysis", Princeton University Press, pp. 429-432
Wikimedia Foundation. 2010.
Look at other dictionaries:
Public administration — can be broadly described as the development, implementation and study of branches of government policy. Public administration is linked to pursuing the public good by enhancing civil society and social justice. Though public administration has… … Wikipedia
Public choice theory — Public choice in economic theory is the use of modern economic tools to study problems that are traditionally in the province of political science. (A more general term is political economy , an earlier name for economics that evokes its… … Wikipedia
Bureaucracy — is the structure and set of regulations in place to control activity, usually in large organizations and government. As opposed to adhocracy, it is represented by standardized procedure (rule following) that dictates the execution of most or all… … Wikipedia
William A. Niskanen — is chairman of the Cato Institute, a position he has held since 1985 following service on President Reagan s Council of Economic Advisers. He was formerly professor of economics at the University of California at Berkeley and UCLA and was an… … Wikipedia
Maximization — or maximisation can refer to: Maximization in the sense of exaggeration Entropy maximization Maximization (economics) Profit maximization Utility maximization problem Budget maximizing model Shareholder value maximization Optimization… … Wikipedia
economics — /ek euh nom iks, ee keuh /, n. 1. (used with a sing. v.) the science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind. 2. (used with a pl. v.) financial considerations;… … Universalium
Faizul Latif Chowdhury — ( bn. ফয়জুল লতিফ চৌধুরী) (born June 3 1959) is a career civil servant from Bangladeshi currently working as a diplomat. A literary figure and an economist at the same time, he works on corruption in public administration, tax policy process,… … Wikipedia
Info-gap decision theory — is a non probabilistic decision theory that seeks to optimize robustness to failure – or opportuneness for windfall – under severe uncertainty, in particular applying sensitivity analysis of the stability radius type to perturbations in… … Wikipedia
Microeconomics — The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). The graph depicts a right shift in demand… … Wikipedia
Monopoly — This article is about the economic term. For the board game, see Monopoly (game). For other uses, see Monopoly (disambiguation). Competition law Basic concepts … Wikipedia