Skip to main content
SpringerLink
Log in

Rents from in-kind subsidy: “Charity” in the public sector

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

Public choice analysis usually focuses attention on the behaviour of self-interested individuals but this paper considers rent seeking when some taxpayers are motivated by altruism. Redistribution policies initiated by self-interested rent seekers require taxpayer approval. Even if taxpayers are fully informed, their resistance to inefficient schemes is reduced when public sector schemes are the only means available to pursue altruistic goals. Altruism serves to broaden the scope within which rent seekers may operate. A discussion of international “tied” aid illustrates the impact which rent seeking can exert on public sector “charity.”

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Arrow, K.J. (1963). Uncertainty and the welfare economics of medical care. American Economic Review 53(5): 941–973.

    Google Scholar 

  • Babcock, B.A., Carter, C.A. and Schmitz, A. (1990). The political economy of US wheat legislation. Economic Inquiry 28: 335–353.

    Google Scholar 

  • Becker, G.S. (1983). A theory of competition among pressure groups for political influence. Quarterly Journal of Economics XCVIII: 374–400.

    Google Scholar 

  • Becker, G.S. (1985). Public policies, pressure groups and dead weight costs. Journal of Public Economics 28: 329–347.

    Google Scholar 

  • Bhagwati, J.N. and Srinivason, T.N. (1980). Revenue seeking: A generalisation of the theory of tariffs. Journal of Political Economy 90: 1069–1087.

    Google Scholar 

  • Boone, P. (1994). Politics and the effectiveness of foreign aid. Working Paper 1267. London: Centre for Economic Performance, London School of Economics.

    Google Scholar 

  • Brander, J.A. and Spencer, B.J. (1985). Export subsidies and international market rivalry. Journal of International Economics 18: 83–100.

    Google Scholar 

  • Brennan, G. and Pincus, J.M. (1983). Government expenditure growth and resource allocation: The nebulous connection. Oxford Economic Papers 35: 351–365.

    Google Scholar 

  • Brennan, G. and Lomasky, L. (1993). Democracy and decision: The pure theory of electoral preference. Cambridge: Cambridge University Press.

    Google Scholar 

  • Browning, E.K. (1975). The externality argument for in-kind transfers: Some critical remarks. Kyklos 28: 526–544.

    Google Scholar 

  • Burnell, P. (1991). Charity, politics and the third world. London: Harvester, Wheatsheaf.

    Google Scholar 

  • Byatt, I. (1983). Byatt Report on subsidies to British export credits. World Economy 7: 163–178.

    Google Scholar 

  • Coate, S., Johnson, S. and Zeckhauser, R. (1994). Pecuniary redistribution through in-kind programs. Journal of Public Economics 55: 19–40.

    Google Scholar 

  • Coate, S. (1995). Altruism, the Samaritan's Dilemma, and government transfer policy. American Economic Review 85 (March): 46–57.

    Google Scholar 

  • Collard, D. (1978). Altruism and economy, Oxford: Martin Robertson.

    Google Scholar 

  • Cowen, T. and Lee, D. (1992). The usefulness of inefficient procurement. Defence Economics 3(3): 219–227.

    Google Scholar 

  • Cowen, T., Glazer, A. and McMillan, H. (1994). Rent seeking can promote the provision of public goods. Economics and Politics 6(2): 131–146.

    Google Scholar 

  • Cullis, J.G. and Jones, P.R. (1993). The economics of bureaucracy. In N. Gemmell (Ed.), The growth of the public sector: Theories and international evidence, 86–102. Aldershot: Edward Elgar.

    Google Scholar 

  • Culyer, A.J. (1971). Medical care and the economics of giving. Economica 38: 537–539.

    Google Scholar 

  • Culyer, A.J. (1989). The normative economics of health care finance and provision. Oxford Review of Economic Policy 5: 34–58.

    Google Scholar 

  • Daly, G. and Giertz, F. (1972). Welfare economics and welfare reform. American Economic Review 62 (March): 131–138.

    Google Scholar 

  • De Tocqueville, A. (1835). Democracy in America. Reprint edn. Oxford: Oxford University Press.

    Google Scholar 

  • Dobson, S., Maddala, G.S. and Miller, E. (1995). Microeconomics. London: McGraw-Hill.

    Google Scholar 

  • Dolbear, F.T. (1967). On the theory of optimal externality. American Economic Review 57(1): 90–103.

    Google Scholar 

  • Dunleavy, P. (1991). Democracy, bureaucracy and public choice: Economic explanations in political science. London: Harvester, Wheatsheaf.

    Google Scholar 

  • Eckstein, H.H. (1960). Pressure group politics: The case of the British Medical Association. London: George Allen and Unwin.

    Google Scholar 

  • Feldman, R. and Dowd, B. (1991). A new estimate of the welfare loss of excess health insurance. American Economic Review 81: 193–200.

    Google Scholar 

  • Frey, B.S. (1984). International political economics. Oxford: Basil Blackwell.

    Google Scholar 

  • Gardner, B. (1987). Causes of US farm commodity programs. Journal of Political Economy 95: 290–311.

    Google Scholar 

  • Guttman, J.M., Nitzan, S. and Spiegel, U. (1992). Rent seeking and social investment in taste change. Economics and Politics 4(1): 31–42.

    Google Scholar 

  • Hayter, T. and Watson, C. (1985). Aid rhetoric and reality. London: Pluto Press.

    Google Scholar 

  • Hirschleifer, J. (1984). Price theory and applications. 3rd edition. Englewood Cliffs, New Jersey: Prentice Hall.

    Google Scholar 

  • Hochman, H.H. and Rodgers, J.D. (1969). Pareto optimal redistribution. American Economic Review 59: 542–557.

    Google Scholar 

  • Hudson, J. and Jones, P.R. (1994). The importance of the “ethical voter”: An estimate of “altruism.” European Journal of Political Economy 10: 499–509.

    Google Scholar 

  • Jepma, C. (1991). The tying of aid. Paris: OECD.

    Google Scholar 

  • Jepma, C. (1992). EC-wide untying. University of Groningen: IDE Paper.

  • Johnson, D.B. (1973). The charity market: Theory and practice. In The economics of charity. IEA Readings 12, 79–101. London: Institute of Economic Affairs.

    Google Scholar 

  • Kelman, M. (1988). On democracy bashing: A sceptical look at the theoretical and “empirical” practice of the public choice movement. Virginia Law Review 74(2): 199–273.

    Google Scholar 

  • Klein, D.B. (1994). If government is so villainous, how come government officials don't seem like villains? Economics and Philosophy 10: 91–106.

    Google Scholar 

  • Lee, D.R. (1990). The politics and pitfalls of reducing waste in the military. Defense Economics 1(2): 129–139.

    Google Scholar 

  • Leibenstein, H. (1966). Allocative efficiency versus X-efficiency. American Economic Review 56: 392–415.

    Google Scholar 

  • Marmor, T.R. and Morone, J.A. (1983). The health programs of the Kennedy-Johnson years: An overview. In T.R. Marmor, Political analysis and American medical care, 131–155. Cambridge: Cambridge University Press.

    Google Scholar 

  • Morrisey, O., Smith, B. and Horesh, E. (1992). British aid and international trade. Buckingham: Open University Press.

    Google Scholar 

  • Morrisey, O. (1993). The mixing of aid and trade policies. The World Economy 16(1): 69–84.

    Google Scholar 

  • Morrisey, O. and White, H. (1994). How concessional is tied aid? Credit Research Paper No 93/13. University of Nottingham.

  • Mueller, D. (1989). Public Choice II. Cambridge: Cambridge University Press.

    Google Scholar 

  • Nichols, A. and Zeckhauser, R. (1981). Targeting transfers through restrictions on recipients. American Economic Review 72: 372–377.

    Google Scholar 

  • Niskanen, W.A. (1971). Bureaucracy and representative government. Chicago: Aldine.

    Google Scholar 

  • Olsen, E.O. (1971). Subsidizing housing in a competitive market: Reply. American Economic Review 61 (March): 220–224.

    Google Scholar 

  • Olson, M. (1971). The logic of collective action. Cambridge, Mass.: Harvard University Press.

    Google Scholar 

  • Ricketts, M. (1987). Rent seeking, entrepreneurship, subjectivism and property rights. Journal of Institutional and Theoretical Economics 143: 457–466.

    Google Scholar 

  • Rodgers, J. (1973). Distributional externalities and the optimal form of income transfers. Public Finance Quarterly 1: 266–299.

    Google Scholar 

  • Samuels, W.J. and Mercuro, N. (1984). A critique of rent seeking theory. In D.C. Colander (Ed.), Neoclassical political economy: The analysis of rent seeking and DUP activities, 55–70. Cambridge: Mass.: Ballinger Press.

    Google Scholar 

  • Sears, D.O., Lau, R.R., Tyler, T.R. and Allen, Jr., H.M. (1980). Self interests vs symbolic politics in policy attitudes and presidential voting. American Political Science Review 74: 670–684.

    Google Scholar 

  • Stokke, O. (Ed.) (1984). European development assistance: Volume I policies and performance. Volume II third world perspectives on policies and performance. Tilburg, Oslo: The European Association of Development Research and Training Institute, The Norwegian Institute of International Affairs.

    Google Scholar 

  • Thurrow, L. (1974). Cash versus in-kind transfers. American Economic Review 64: 190–196.

    Google Scholar 

  • Tollison, R.D. and Wagner, R.E. (1991). Self interest, public interest and public health. Public Choice 69(3): 323–343.

    Google Scholar 

  • Tullock, G. (1967). The welfare costs of tariffs, monopolies and theft. Western Economic Journal 5: 224–232.

    Google Scholar 

  • Tullock, G. (1971). The charity of the uncharitable. Western Economic Journal 9 (December): 379–392.

    Google Scholar 

  • Tullock, G. (1989). The economics of special privilege and rent seeking. Boston MA: Kluwer Academic Publishers.

    Google Scholar 

  • Usher, D. (1977). The welfare economics of the socialization of commodities. Journal of Public Economics 8: 151–168.

    Google Scholar 

  • Viscusi, W.K., Vernon, J.M. and Harrington, Jr., J.E. (1992). Economics of regulation and antitrust. Lexington, Mass.: D.C. Heath and Co.

    Google Scholar 

  • Willcocks, A.J. (1967). The creation of the National Health Service. London: Routledge and Kegan Paul.

    Google Scholar 

  • Wykoff, P.G. (1990). The simple analytics of slack maximizing bureaucracy. Public Choice 67: 35–47.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Social Sciences, University of Bath, Claverton Down, BA2 7AY, Bath, U.K.

    Philip R. Jones

Authors
  1. Philip R. Jones
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

The author wishes to acknowledge the helpful comments of the Editor and of an anonymous referee. However, the author alone is responsible for any errors that may remain.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Jones, P.R. Rents from in-kind subsidy: “Charity” in the public sector. Public Choice 86, 359–378 (1996). https://doi.org/10.1007/BF00136526

Download citation

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF00136526

Keywords

Search

Navigation