EconEdLink

Government Failures/Public-Choice Analysis

In a civics textbook, a democratically elected government makes decisions according to the will of (a majority of) the people. In the real world, government failure may occur so that government decisions do not represent the majority. Public-choice analysis is the branch of economics that studies how political decisions are actually made. When analyzing government policies, it is useful to examine the incentives of the participants in the government decision making.