Ostrom's Challenge to Public Choice
What is left unexplained by the formal rational choice approach? In “Epistemic Choice and Public Choice,” Ostrom (1993) considered how these sorts of limits to modeling human behavior within given rules, actions, and beliefs impact on the economic analysis of politics. He assessed the prospects of the public choice research program as he then saw it. On his account, public choice made substantial contributions to understanding collective choice through the application of neoclassical economic analysis to nonmarket situations (cf. Ostrom and Ostrom 1971, 205). It showed that a simple account of empirical or theoretical “market failures” was insufficient to show that a government alternative was more efficient or inevitably preferable to voluntary exchange. In order to know whether government or market institutions are superior for a particular case requires a more systematic comparison of institutions where behavioral assumptions can be clarified.
At the same time, public choice throws up some problems of its own, notably a conceptual ambiguity with regard to rationality. Are all human decisions rational by definition or do rational actors possess some empirically falsifiable characteristics, such as a tendency to selfishness (Kogelmann 2015)? How can actors commit to, or carry out, actions that, on most plausible definitions, diverge significantly from their self-interest, such as self-sacrifice (Sen 1977)?
This sort of behavior is more relevant in collective-decision settings, where publicly shared values are at stake. Such situations stretch the assumptions of rational action as applied classically to market exchange. One result of this is that it is has proved relatively easy for skeptics of public choice methodology to dismiss its insights as an irrelevant, abstract, and implausibly cynical way of modeling political actors (Dunleavy 2002).
Ostrom notes that these limits to public choice are known and acknowledged among its founding theorists. Buchanan and Vanberg (1991), for example, expound on the non-economizing aspects of individual production and exchange behavior. When discussing an idealized constitutional framework, Buchanan (2001, 184) presumes actors have social values and motivations that extend far beyond any narrow selfish conception of individual welfare. Nevertheless, thinking around these issues has taken place on what Ostrom calls the “periphery” of the public choice research program because it lies outside the relative comfort of thin formal modeling and statistical empirical testing that make up a great deal of public choice research, as well as the dominant quantitative approaches of contemporary political science.
In response to these sorts of challenges, Ostrom asks theorists to consider more thoroughly the assumptions underlying the logic of public choice, a program he calls “epistemic choice.” He suggests that the capacity for individuals to engage in collective choice depends on their ability to generate and share information about themselves, and subsequently frame and influence each other’s individual desires and capacities. He calls for an exploration of how human beings are capable of transforming their understanding of the world such that their observable “interests” that guide action can be transformed as well, noting the significance of “the Austrian emphasis upon the information-generating aspects of free trade in the presence of stable monetized exchange relationships” (V. Ostrom 1993, 169) for this endeavor. RPE is one answer to this challenge.