For public administration scholars, rational choice can be simply thought of as
neoclassical economic theory applied to the public sector. It seeks to build a bridge
between microeconomics and politics by viewing the actions of citizens, politicians,
and public servants as analogous to the actions of self-interested producers
and consumers (Buchanan ). This analogy not only makes it possible to conceive
of the public sector in market terms but also makes available to public administration
scholars a well-developed set of theoretical tools from economics.
The terminology for these tools varies (they are sometimes called political economy
or welfare economics), but they are best known and most widely applied as
rational or public choice.
The intellectual roots of rational choice date back at least to the work of Adam
Smith, whose The Wealth of Nations (first published in ) is the intellectual
rock on which neoclassical economic theory is constructed. Smith’s great insight
was that people acting in pursuit of their own self-interest could, through the
mechanism of the “invisible hand,” produce collective benefits that profited all
society. For example, businessmen might be motivated only by a desire to enrich
themselves, but their ability to turn a profit depends upon producing cheaper,
better-quality goods than their competitors. Higher-quality goods at lower prices
benefit everyone. If this is true, it implies that social order and collective benefits
can be produced by market mechanisms rather than by the strong centralized
hand of government. These basic elements—the self-interested actor, competition
among producers, and a relatively unregulated market—are the hallmarks of neoclassical
economic thought and central to rational choice theory. Although Smith
did not construct a theory of public administration, he was fully cognizant of the
 
For public administration scholars, rational choice can be simply thought of as
neoclassical economic theory applied to the public sector. It seeks to build a bridge
between microeconomics and politics by viewing the actions of citizens, politicians,
and public servants as analogous to the actions of self-interested producers
and consumers (Buchanan ). This analogy not only makes it possible to conceive
of the public sector in market terms but also makes available to public administration
scholars a well-developed set of theoretical tools from economics.
The terminology for these tools varies (they are sometimes called political economy
or welfare economics), but they are best known and most widely applied as
rational or public choice.
The intellectual roots of rational choice date back at least to the work of Adam
Smith, whose The Wealth of Nations (first published in ) is the intellectual
rock on which neoclassical economic theory is constructed. Smith’s great insight
was that people acting in pursuit of their own self-interest could, through the
mechanism of the “invisible hand,” produce collective benefits that profited all
society. For example, businessmen might be motivated only by a desire to enrich
themselves, but their ability to turn a profit depends upon producing cheaper,
better-quality goods than their competitors. Higher-quality goods at lower prices
benefit everyone. If this is true, it implies that social order and collective benefits
can be produced by market mechanisms rather than by the strong centralized
hand of government. These basic elements—the self-interested actor, competition
among producers, and a relatively unregulated market—are the hallmarks of neoclassical
economic thought and central to rational choice theory. Although Smith
did not construct a theory of public administration, he was fully cognizant of the
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