JultikaUniversity of Oulu repository

Abstract

This study seeks to evaluate the work and legacy of William A. Niskanen, a foundational economist of Public Choice literature on bureaucracy and political thinker, as well as to investigate the academic literature on Public Choice Theory. What topics are studied by the literature currently and what future topics could prove fruitful? This is achieved with a literature review of Niskanen’s work and of related literature.

The study finds that Niskanen’s original model of budget maximizing bureaucrat was altered in favour of discretionary budget maximization. Niskanen himself accepted this change in his later articles. Empirical research also shows that Niskanen’s model tends to be overly pessimistic about the outcomes of bureaucratic supply. Some empirical studies question the validity of the model, but others find evidence of the model working in some institutional contexts. Niskanen’s work is still considered to be foundational in public choice theory literature on bureaucracy. In addition, the study finds Niskanen’s studies on voting theory has provided better insight on the political divide in the United States. Later studies on political attitudes have shown that this division has continued to grow but did not evaluate Niskanen’s model’s validity.

Niskanen’s career in the government was also considerable. Although he described his role to be a “minor actor”, he did have major role as the acting chair of Council of Economic Advisors in the end of his career. As a public servant he served the administrations of both Democratic and Republican presidents. Although not an academic study, Niskanen’s critique of Reagan’s administration in his book Reaganomics is an insightful look into the functioning of the United States federal government, and the reasons for failures and successes of Reagan’s policies. Niskanen did continue his academic work after the career as a public servant. His articles during his presidency in Cato Institute cover a broad range of subjects from bureaucracy and voting theory to optimal tax models and constitutional law.

Niskanen remains highly sited author and his influence can be still seen in public choice literature. After his death Niskanen Center, a think tank named in his honour, further explores similar topics to its namesake. After Niskanen’s presidency, Cato Institute continues to be a major institution in the United States political sphere.