The economic study of politics: Insights and reflections

Abstract

Economic and political phenomena coexist in society, but are often seen as divergent spheres of human action and interaction. A theoretical manifestation of this separation is the assumption that while economic agents act in their own self-interest, political agents are motivated by the public interest. Additionally, it is commonly assumed – if only implic-itly – that political agents possess all the necessary knowledge for rational action, effectively portraying political agents as omniscient beings. Drawing on public choice theory and on the economic literature on the nature of knowledge, we review arguments that challenge the two assumptions.