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| The authors introduce methodologically individualistic concept of what a state ought to be. individuals are different in terms of interests for reasons other than ignorance. this concept can only form predictions about the structural characteristics of group choice, nothing more. | The authors introduce a methodologically-individualistic concept of what a state ought to be. * Individuals have different interests for reasons other than ignorance. * Individuals make rational decisions about '''consent''' based on expected costs and benefits. * This concept can only form predictions about the structural characteristics of group choice, nothing more. |
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| The authors are specifically interested in studying what group decisions result in public/collective action, as opposed to leaving decisions for individual action. Furthermore, how group decisions are made. | The authors are specifically interested in studying what group decisions result in public/collective action, as opposed to leaving decisions for individual action. Furthermore, how such group decisions are made. |
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| What is meant by consent? * Assume that constitutional rules are founded with unanimity. Assume that individuals consent to such rules on the basis of rational expectations. * In order to assess that latter assumption, we need a common understanding of how a change in constitutional rules leads to an expected change in group decisions, so that individuals can possibly rationalize consent. More to follow... The state is merely an artifact of the consent process used to create constitutional rules, and then of the decision making process that procedes within those rules. Therefore the state can be changed, and if the above assumption can be accepted, it ''ought'' to be changed to improve collective welfare. * Society doesn't realistically form constitutional rules from nothing. Most societies have standing rules and norms. But holding again that the state can be changed, and taking the above assumption again, these societies can be improved in the exact same sense. |
Society doesn't realistically form constitutional rules from nothing. Most societies have standing rules and norms, if not a standing constitution. Not an issue; a state is merely an artifact of decision making. It can be changed, and it ''ought'' to be changed to improve collective welfare. |
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| == Consent == What is meant by '''consent'''? * Assume that constitutional rules are founded with '''unanimity'''. * Assume that individuals make a rational decision about consenting to constitutional rules. * In order to assess this, we need a common understanding of how a change in ''constitutional rules'' leads to an expected change in ''group decisions'', so that individuals can possibly make a rational decision. |
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| rationality with collective action public goods and services are complicated because there is fundamentally just one transaction in the market, whereas private economic activity can be studied to validate the law of demand. on some level a law of public demand must be assumed. furthermore group decision making imposes uncertainty and a loss of control over individuals. there is no direct consequence. real societies are a continuous repeating game however. individuals' knowledge about the status quo is informed by the status quo. it is individuals' knowledge of proposals to change public goods and services that present a real challenge. more to follow... |
== Decision Making Costs == |
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| Competition is the reason we don't expect '''bargaining''' in economic markets. * As in, bluffing and posturing over private preferences. * Rational actors working with marginal costs and marginal gains would not invest resources into behavior that reduces overall profit. * Bargaining imposes a cost on at least one actor, reducing their incentive to participate in any transaction. Over repeated rounds of bargaining either true incentives would be revealed or the ''damaged'' actors would abandon the deal. To avoid the latter, the ''damaging'' actors will eventually abandon bargaining positions. |
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| cost approach to group decisions: the goal is removal of externality costs. there is an expected cost (costs of interdependence) to participating in group decision making about those externalities. this takes the form of decision making costs and of externalities imposed by a group decision that isn't optimal for an individual. if there were no such costs, externalities would be settled by individuals coordinating through agreements. if a negative externality is significant, action will be taken. will it be individual or collective? the prediction is that as decision making costs increase, collective action becomes the more efficient option. more generally, tullock is trying to formulate a theory about this cost approach in terms of g (expected costs of collective action), a (of individual action), and b (of individual coordinated action). by simplifying individuals' cost-benefit analyses to these factors, it is supposed that actionable inferences can be gathered. and by studying real interactions with measurable factors, with this theoretic lens, it is supposed that the theory can be tested. |
Political decisions are rarely like this. Typically there is no option to 'walk away'. Actors are forced into repeated bargaining, creating significant '''decision making costs'''. The expected costs grow with the number of people involved. There is an alternative: collective action based on non-unanimous consent. |
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| considering consent of constitutional rules now: an inverse relationship exists between the expected externality cost component of the costs of interdependence and the number of individuals' consent required to make a group decision. if unanimity were the constitutional rule, an individual would veto all decisions that impose such a cost on themselves--the expected cost is 0. if any single individual were authorized to make group decisions, the expected cost would be higher. if a specific individual held the sole authority, then that individual would expect no costs, while all others would expect some. but it likely would not be as high as the 'any single individual' constitutional rule. a correlated relationship exists between the expected decision making cost component of the costs of interdependence and the number of individuals' consent required to make a group decision. if unanimity were the constitutional rule, all individuals must be bargained with, and in many cases they must be convinced to take less public goods or services. a single decision maker takes all decision making costs on themselves, sparing all others. it is expected that individuals will consent to constitutional rules based on a cost-benefit analysis on these lines. more specifically, based on the minimization of the sums of these two cost components, in terms of number of individuals' consent required. reality does not follow the structure of a game with a setup 'constitutional rule' phase and then repeated 'decision' phases. individuals find themselves in the middle of a repeating game with recurring opportunities to propose and consider rule changes. if individuals think along the lines of this theory, they target an overall personal minimization that considers all matters that are up for group decisions. |
== Consent to Group Decision Making == |
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| if all individuals can predict the matters that are up for group decisions, and if all individuals expect that they balance out 'losses' with 'wins' in terms of the optimality of group decisions, then constitutional rules should trend towards the societal minimization of those costs. from any starting point, individuals will consent to rule changes that move towards their personal minimization. the individual minimizations are expected to look like a societal minimization. (essentially an assumption of independence between group decisions.) a 'selfish' individual thus acts much like a 'selfless' individual. social cleavages make this prediction less useful. a majority group with consistent interests can and will impose rules and group decisions upon a minority group. (potentially an admission that this theory does not recommend such a constitution for such nations? potentially a hypothesis that dissolving social cleavages makes such a consitution more viable?) another side note: majority rule is arbitrary, just one out of many possibilities, and we likely have over fixated on that threshold. |
Individual decisions about consenting to group decision making will revolve on rational expectations of the outcomes. But public goods and services are difficult to rationalize. * A law of public demand must be ''assumed''. There is fundamentally just one transaction in the market, whereas private economic activity can be studied to validate a law of demand. * Group decision making imposes uncertainty, loss of control, loss of direct consequences, etc. These all weaken an individual's ability to make rational decisions. * Mitigating factors: real societies are a continuous repeating game. Individuals have the status quo as a reference point to form expectations. * Even if individuals can predict what group decision will be made on a topic, can they predict the topics that will be subject to group decisions? Given an expectation of the outcome, there is also an expected cost. Group decisions that are suboptimal for the individual impose an externality cost on the individual. The authors model group decisions using a '''cost''' approach and a '''gains''' approach, to the same end. In the '''cost''' approach, the goal of individuals is to remove externality costs. * If a negative externality is significant, action will be taken. Will it be individual or collective (i.e. group decision)? * ''Coordinated individual action'' and ''collective action based on unanimity'' are fairly similar. Compared to coordination, a group decision is made based on expectations, may have been bargained over, and is binding. * If there were no decision making costs, externalities would be tackled by coordinated individuals always. No reason to risk a suboptimal group decision, or no reason to continue participating after an inoptimal group decision is reached. * As decision making costs increase, they may exceed the expected cost from group decisions, making collective action rationally preferable. * A general theory is formulated about this cost approach in terms of ''g'' (expected costs of collective action), ''a'' (of individual action), and ''b'' (of individual coordinated action). This theory should be testable and falsifiable. In the '''gains''' approach, the goal of individuals is to maximize net gains. * This relies on expected benefits from group decision making, and comparing the marginal expected benefits to the marginal decision making costs. By either approach, the outcome of a group decision is ''not'' expected to be optimal. Individuals can still rationally consent to a group decision given decision making costs, and there is no requirement of Pareto optimality. |
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| altogether, constitutional rules can be based on unanimous consent, and group decisions can be made, without all decisions being pareto optimal. the expectation for suboptimal decisions was factored into the consent. | == Consent to Constitutional Rules == Constitutional rules are the most fundamental group decisions that determine how group decisions can be made. They determine the '''costs of interdependence''', which itself is composed of decision making costs and externality costs imposed ''by'' inoptimal group decisions. The most important constitutional rule is ''how many people are needed to make a group decision?'' The number of people needed is ''n'', somewhere between 1 and the total population ''N''. An inverse relationship exists between the expected externality cost component of the costs of interdependence and the ''n''. * If unanimity is the constitutional rule (''n''=''N''), an individual would veto all personally inoptimal decisions. There is no expected cost. * If every individual were authorized to make group decisions (one form of ''n''=1), there would be some expected cost imposed by all other individuals' decisions. * If absolute dictatorship is the constitutional rule (another form of ''n''=1), the expected cost would be higher. * The dictator expects no costs, while all other individuals expect some. But it likely would not be as high as the 'every single individual' constitutional rule. A correlated relationship exists between the expected decision making cost component of the costs of interdependence and ''n''. * If unanimity is the constitutional rule, all individuals must be bargained with. * In any scheme where ''n''=1, that individual assumes all decision making costs. Individuals form a rational preference for constitutional rules based on the minimization of these cost components in terms of ''n''. Subject to the limitations on individual rationality for group decisions listed above, if all individuals expect that they balance out 'losses' with 'wins', they will consent to a constitutional rule. The society's optimal constitutional rules can be determined on the basis of unanimous consent. * In reality, the interaction doesn't happen like this. Individuals are born into a society with an existing set of rules, but also with opportunities to propose and consider rule changes. * Individuals should still consent to the standing constitutional rules if they expect to balance out 'losses' with 'wins'. * Individuals should still have a rational opinion about what rule changes would be better than the status quo. * From any starting point, assuming that group decisions and individual preferences are independent, rule changes should proceed towards a societal optimality. Individuals can rationally consent to constitutional rules other than unanimity. * Majority voting (''n''=''N''/2) is arbitrary, just one out of many possibilities, and we likely have over-fixated on that threshold. Social cleavages make this prediction less useful. A majority group with consistent interests can (and will) impose rules and group decisions upon a minority group. * Especially in a context of social violence, social cleavages may lead a society to prefer a high threshold for group decision making. * This may look like representative democracy that is paralyzed into inaction. By contrast, a deeply homogenous society may prefer a low threshold. Because individuals' incentives are so similar, even though costs of interdependence are minimal, individuals also stand to gain minimally from direct participation. ---- |
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| competition is the reason we don't expect bargaining in economic markets.as in, bluffing and posturing over incentives. rational actors working with marginal costs and marginal gains would not invest their resources into behavior that reduces overall profit. or put more simply, bargaining would introduce a cost on at least one actor who would face reduced incentive to participate in any deal, and over repeated rounds of bargaining we expect that either true incentives would be revealed or the damaged actors would abandon the deal. and given that, we expect the damaging actors to eventually abandon bargaining positions. political/constitutional decisions are rarely like this. there is not typically an option to 'walk away'. actors then may be forced into numerous rounds of bargaining, creating significant costs. and the expected costs grow with the number of people whose consent is required. |
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| if non-unanimity is allowed, bargaining costs should fall. the introduction of alternatives means that damaging actors could force damaged actors away by maintaining a bargaining position, allowing deals to made that exclude them. in summary, people may be willing to consent to non-unanimous decision making even though it will introduce an externality. social cleavages, especially in a context of social violence, may lead a society to prefer a high threshold for social decision making, so high that it is unattainable given those cleavages. this would look like representative democracy thatnis paralyzed into inaction. this is perfectly rational. by contrast, a deeply homogenous social unit may prefer a low threshold, even though higher rates of participation could be acheived at a low marginal cost, simply due to the relative similarity between people's incentives. marginal benefits of participation are simply similarly low. this is also perfectly rational. |
== My thoughts == The authors seem to admit that this theory does not recommend a constitutional democracy for nations with social cleavages. Potentially a hypothesis that dissolving social cleavages make such consitutions more viable? |
The Calculus of Consent: Logical Foundations of Constitutional Democracy
The Calculus of Consent: Logical Foundations of Constitutional Democracy was written by James M. Buchanon and Gordon Tullock in 1962. It has been republished by Liberty Fund in The Selected Works of Gordon Tullock, Vol. 2 and The Selected Works of James M. Buchanon, Vol. 3 much more recently.
The authors introduce a methodologically-individualistic concept of what a state ought to be.
- Individuals have different interests for reasons other than ignorance.
Individuals make rational decisions about consent based on expected costs and benefits.
- This concept can only form predictions about the structural characteristics of group choice, nothing more.
The authors are specifically interested in studying what group decisions result in public/collective action, as opposed to leaving decisions for individual action. Furthermore, how such group decisions are made.
- The fact that a meaningful portion of total economic activity is governed by the state, and the fact that special interest groups believe that they can gain benefits from the state, both suggest that such a theory is necessary.
- There must be some economic decision making.
- Pork barrel politics is not an error of the constitutional design, it is normal behavior within it.
Society doesn't realistically form constitutional rules from nothing. Most societies have standing rules and norms, if not a standing constitution. Not an issue; a state is merely an artifact of decision making. It can be changed, and it ought to be changed to improve collective welfare.
Consent
What is meant by consent?
Assume that constitutional rules are founded with unanimity.
- Assume that individuals make a rational decision about consenting to constitutional rules.
In order to assess this, we need a common understanding of how a change in constitutional rules leads to an expected change in group decisions, so that individuals can possibly make a rational decision.
Decision Making Costs
Competition is the reason we don't expect bargaining in economic markets.
- As in, bluffing and posturing over private preferences.
- Rational actors working with marginal costs and marginal gains would not invest resources into behavior that reduces overall profit.
Bargaining imposes a cost on at least one actor, reducing their incentive to participate in any transaction. Over repeated rounds of bargaining either true incentives would be revealed or the damaged actors would abandon the deal. To avoid the latter, the damaging actors will eventually abandon bargaining positions.
Political decisions are rarely like this. Typically there is no option to 'walk away'. Actors are forced into repeated bargaining, creating significant decision making costs. The expected costs grow with the number of people involved.
There is an alternative: collective action based on non-unanimous consent.
Consent to Group Decision Making
Individual decisions about consenting to group decision making will revolve on rational expectations of the outcomes. But public goods and services are difficult to rationalize.
A law of public demand must be assumed. There is fundamentally just one transaction in the market, whereas private economic activity can be studied to validate a law of demand.
- Group decision making imposes uncertainty, loss of control, loss of direct consequences, etc. These all weaken an individual's ability to make rational decisions.
- Mitigating factors: real societies are a continuous repeating game. Individuals have the status quo as a reference point to form expectations.
- Even if individuals can predict what group decision will be made on a topic, can they predict the topics that will be subject to group decisions?
Given an expectation of the outcome, there is also an expected cost. Group decisions that are suboptimal for the individual impose an externality cost on the individual.
The authors model group decisions using a cost approach and a gains approach, to the same end.
In the cost approach, the goal of individuals is to remove externality costs.
- If a negative externality is significant, action will be taken. Will it be individual or collective (i.e. group decision)?
Coordinated individual action and collective action based on unanimity are fairly similar. Compared to coordination, a group decision is made based on expectations, may have been bargained over, and is binding.
- If there were no decision making costs, externalities would be tackled by coordinated individuals always. No reason to risk a suboptimal group decision, or no reason to continue participating after an inoptimal group decision is reached.
- As decision making costs increase, they may exceed the expected cost from group decisions, making collective action rationally preferable.
A general theory is formulated about this cost approach in terms of g (expected costs of collective action), a (of individual action), and b (of individual coordinated action). This theory should be testable and falsifiable.
In the gains approach, the goal of individuals is to maximize net gains.
- This relies on expected benefits from group decision making, and comparing the marginal expected benefits to the marginal decision making costs.
By either approach, the outcome of a group decision is not expected to be optimal. Individuals can still rationally consent to a group decision given decision making costs, and there is no requirement of Pareto optimality.
Consent to Constitutional Rules
Constitutional rules are the most fundamental group decisions that determine how group decisions can be made. They determine the costs of interdependence, which itself is composed of decision making costs and externality costs imposed by inoptimal group decisions.
The most important constitutional rule is how many people are needed to make a group decision? The number of people needed is n, somewhere between 1 and the total population N.
An inverse relationship exists between the expected externality cost component of the costs of interdependence and the n.
If unanimity is the constitutional rule (n=N), an individual would veto all personally inoptimal decisions. There is no expected cost.
If every individual were authorized to make group decisions (one form of n=1), there would be some expected cost imposed by all other individuals' decisions.
If absolute dictatorship is the constitutional rule (another form of n=1), the expected cost would be higher.
- The dictator expects no costs, while all other individuals expect some. But it likely would not be as high as the 'every single individual' constitutional rule.
A correlated relationship exists between the expected decision making cost component of the costs of interdependence and n.
- If unanimity is the constitutional rule, all individuals must be bargained with.
In any scheme where n=1, that individual assumes all decision making costs.
Individuals form a rational preference for constitutional rules based on the minimization of these cost components in terms of n. Subject to the limitations on individual rationality for group decisions listed above, if all individuals expect that they balance out 'losses' with 'wins', they will consent to a constitutional rule. The society's optimal constitutional rules can be determined on the basis of unanimous consent.
- In reality, the interaction doesn't happen like this. Individuals are born into a society with an existing set of rules, but also with opportunities to propose and consider rule changes.
- Individuals should still consent to the standing constitutional rules if they expect to balance out 'losses' with 'wins'.
- Individuals should still have a rational opinion about what rule changes would be better than the status quo.
- From any starting point, assuming that group decisions and individual preferences are independent, rule changes should proceed towards a societal optimality.
Individuals can rationally consent to constitutional rules other than unanimity.
Majority voting (n=N/2) is arbitrary, just one out of many possibilities, and we likely have over-fixated on that threshold.
Social cleavages make this prediction less useful. A majority group with consistent interests can (and will) impose rules and group decisions upon a minority group.
- Especially in a context of social violence, social cleavages may lead a society to prefer a high threshold for group decision making.
- This may look like representative democracy that is paralyzed into inaction.
By contrast, a deeply homogenous society may prefer a low threshold. Because individuals' incentives are so similar, even though costs of interdependence are minimal, individuals also stand to gain minimally from direct participation.
My thoughts
The authors seem to admit that this theory does not recommend a constitutional democracy for nations with social cleavages. Potentially a hypothesis that dissolving social cleavages make such consitutions more viable?