Skip to main content
SpringerLink
Log in

Complex externalities, pandemics, and public choice

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

The conventional wisdom guiding pandemic policy is that the complexity of externalities justifies a centralized government response and suppression of economic freedom. We argue that public choice offers a compelling argument that the opposite is the case: complex global public health crises justify polycentric responses and protection of economic freedom. We show this by considering three distinct themes in the public choice analysis of pandemics. The first theme is that government failures are ubiquitous during pandemics. The second is that polycentric governance institutions are more appropriate than monocentric ones to address pandemic externalities. The third is that while economic freedom may make controlling pandemics more challenging in the short run, in the longer run, economic freedom is what ultimately contributes to a more robust response to pandemics through technological innovation and wealth creation. Together, public choice provides what we call a liberal political economy of pandemics in which polycentricity and economic freedom are appropriate institutions to deal with complex, novel externalities.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Albrecht, B. C., Hendrickson, J. R., & Salter, A. W. (2022). Evolution, uncertainty, and the asymptotic efficiency of policy. Public Choice, 192(1–2), 169–188.

    Article  Google Scholar 

  • Albrecht, B. C., & Rajagopalan, S. (2023). Inframarginal externalities: COVID-19, vaccines, and universal mandates. Public Choice, 195(1–2), 55–72.

    Article  Google Scholar 

  • Aligica, P. D., Boettke, P. J., & Tarko, V. (2019). Public governance and the classical-liberal perspective: Political economy foundations. Oxford University Press.

    Book  Google Scholar 

  • Anderson, T. L., & Leonard, B. (2016). Institutions and the Wealth of Indian Nations. In T. L. Anderson (Ed.), Unlocking the Wealth of Indian Nations (pp. 3–17). Stanford University Press.

    Google Scholar 

  • Benson, B. L. (1989). The spontaneous evolution of commercial law. Southern Economic Journal, 55(3), 644–661.

    Article  Google Scholar 

  • Besley, T., & Stern, N. (2020). The economics of lockdown. Fiscal Studies, 41(3), 493–513.

    Article  Google Scholar 

  • Blomquist, W. A., & Schröder, N. J. S. (2019). Seeing polycentrically. In A. Thiel, D. E. Garrick, & W. A. Blomquist (Eds.), Governing complexity: Analyzing and applying polycentricity (p. 45). Cambridge University Press.

    Chapter  Google Scholar 

  • Boettke, P. J., Coyne, C. J., & Leeson, P. T. (2011). Quasimarket failure. Public Choice, 149(1–2), 209–224.

    Article  Google Scholar 

  • Boettke, P. J., Palagashvili, L., & Lemke, J. (2013). Riding in cars with boys: Elinor Ostrom’s adventures with the police. Journal of Institutional Economics, 9(4), 407–425.

    Article  Google Scholar 

  • Boettke, P., & Powell, B. (2021). The political economy of the COVID-19 pandemic. Southern Economic Journal, 87(4), 1090–1106.

    Article  Google Scholar 

  • Buchanan, J. M. (1978). Cost and Choice: An Inquiry in Economic Theory. University of Chicago Press.

    Google Scholar 

  • Buchanan, J. M. (1984). Politics without romance: A sketch of positive public choice theory and its normative implications. In J. M. Buchanan & R. D. Tollison (Eds.), The theory of public choice II (pp. 11–22). University of Michigan Press.

    Google Scholar 

  • Candela, R. A., & Geloso, V. (2019). Why consider the lighthouse a public good? International Review of Law and Economics, 60, 105852.

    Article  Google Scholar 

  • Candela, R. A., & Geloso, V. (2021). Economic freedom, pandemics, and robust political economy. Southern Economic Journal, 87(4), 1250–1266.

    Article  Google Scholar 

  • Candela, R. A., & Geloso, V. (2018). The lightship in economics. Public Choice, 176(3–4), 479–506.

    Article  Google Scholar 

  • Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3, 1–44.

    Article  Google Scholar 

  • Congleton, R. D. (2023). Federalism and pandemic policies: Variety as the spice of life. Public Choice, 195(1–2), 73–100.

    Google Scholar 

  • Cowen, N., & Schliesser, E. (2023). Novel externalities. Public Choice.

  • Cowen, T. (1992). Law as a public good: The economics of anarchy. Economics and Philosophy, 8(02), 249–267.

    Article  Google Scholar 

  • Crepelle, A., Fegley, T. J., & Murtazashvili, I. (2022). Military societies: Self-governance and criminal justice in Indian country. Public Choice. https://doi.org/10.1007/s11127-022-01004-1

    Article  Google Scholar 

  • Demsetz, H. (1969). Information and efficiency: Another viewpoint. Journal of Law and Economics, 12(1), 1–22.

    Article  Google Scholar 

  • Denzau, A. T., & North, D. C. (1994). Shared mental models: Ideologies and institutions. Kyklos, 47(1), 3–31.

    Article  Google Scholar 

  • Devine, D., Gaskell, J., Jennings, W., & Stoker, G. (2021). Trust and the coronavirus pandemic: What are the consequences of and for trust? An early review of the literature. Political Studies Review, 19(2), 274–285.

    Article  Google Scholar 

  • Eichenbaum, M. S., Rebelo, S., & Trabandt, M. (2021). The macroeconomics of epidemics. The Review of Financial Studies, 34(11), 5149–5187.

    Article  Google Scholar 

  • Friedman, D. (1984). Efficient institutions for the private enforcement of law. The Journal of Legal Studies, 13(2), 379–397.

    Article  Google Scholar 

  • Frolov, D. (2022). Crafting of cognitive institutions for overcoming the COVID-19 pandemic. Journal of Institutional Economics, 18(6), 953–959.

    Article  Google Scholar 

  • Furton, G. L. (2023). The pox of politics: Troesken’s tradeoff reexamined. Public Choice, 195(1–2), 169–191.

    Article  Google Scholar 

  • Furton, G. L., Rizzo, M. J., & Harper, D. A. (2023). The political economy of public health. Public Choice, 195(1–2), 1–3.

    Google Scholar 

  • Gadarian, S. K., Goodman, S. W., & Pepinsky, T. B. (2021). Partisanship, health behavior, and policy attitudes in the early stages of the COVID-19 pandemic. PLoS ONE, 16(4), e0249596.

    Article  Google Scholar 

  • Galiani, S. (2022). Pandemic economics. Journal of Economic Behavior & Organization, 193, 269–275.

    Article  Google Scholar 

  • Gallagher, S. (2013). The socially extended mind. Cognitive Systems Research, 25(1), 4–12.

  • Geloso, V., Hyde, K., & Murtazashvili, I. (2022). Pandemics, economic freedom, and institutional trade-offs. European Journal of Law and Economics, 54, 37–61.

    Article  Google Scholar 

  • Geloso, V., & Leeson, P. T. (2020). Are anarcho-capitalists insane? Medieval Icelandic conflict institutions in comparative perspective. Revue D’économie Politique, 130(6), 957–974.

    Article  Google Scholar 

  • Geloso, V., & March, R. J. (2021). Rent seeking for madness: The political economy of mental asylums in the United States, 1870 to 1910. Public Choice, 189(3), 375–404.

    Article  Google Scholar 

  • Geloso, V., & Murtazashvili, I. (2021). Can governments deal with pandemics? Cosmos + Taxis, 9(5+6), 54–63.

    Google Scholar 

  • Goodman, N. P., Coyne, C. J., & Devereaux, A. (2021). Infectious diseases and government growth. The Independent Review, 25(4), 537–550.

    Google Scholar 

  • Goolsbee, A., & Syverson, C. (2021). Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020. Journal of Public Economics, 193, 104311.

    Article  Google Scholar 

  • Hebert, D. J., & Curry, M. D. (2022). Optimal lockdowns. Public Choice, 193(3), 263–274.

    Article  Google Scholar 

  • Higgs, R. (1987). Crisis and Leviathan: Critical episodes in the growth of American Government. Oxford University Press.

    Google Scholar 

  • Kahn, M. E. (2022). Going remote: How the flexible work economy can improve our lives and our cities. University of California Press.

    Book  Google Scholar 

  • Koppl, R. (2018). Expert Failure. Cambridge University Press.

  • Koppl, R. (2023). Public health and expert failure. Public Choice, 195(1–2), 101–124.

    Google Scholar 

  • Koyama, M. (2021). Epidemic disease and the state: Is there a tradeoff between public health and liberty? Public Choice, 195(1–2), 145–167.

    Google Scholar 

  • Leeson, P. T. (2006). Efficient anarchy. Public Choice, 130(1–2), 41–53.

    Google Scholar 

  • Leeson, P. T. (2014). Pirates, prisoners, and preliterates: Anarchic context and the private enforcement of law. European Journal of Law and Economics, 37, 365–379.

    Article  Google Scholar 

  • Leeson, P. T. (2020). Logic is a harsh mistress: Welfare economics for economists. Journal of Institutional Economics, 16(2), 145–150.

    Article  Google Scholar 

  • Leeson, P. T., & Coyne, C. J. (2012). Sassywood. Journal of Comparative Economics, 40(4), 608–620.

    Article  Google Scholar 

  • Leeson, P. T., & Rouanet, L. (2021). Externality and COVID-19. Southern Economic Journal, 87(4), 1107–1118.

    Article  Google Scholar 

  • Leeson, P. T., & Suarez, P. A. (2015). Superstition and self-governance. In New thinking in Austrian political economy (pp. 47–66). Emerald Group Publishing Limited.

  • Leeson, P. T., & Thompson, H. A. (2023). Public choice and public health. Public Choice, 195, 5–41.

    Article  Google Scholar 

  • Li, H. (2020). Communication for coproduction: Increasing information credibility to fight the coronavirus. The American Review of Public Administration, 50(6–7), 692–697.

    Article  Google Scholar 

  • Makridis, C. A., & McLaughlin, P. A. (2021). Never letting a crisis go to waste and the ratcheting effect of regulation: Evidence from the COVID-19 pandemic. New York University Journal of Law & Liberty, 15(3), 606–627.

    Google Scholar 

  • McCloskey, D. N. (2019). Why Liberalism works: How true liberal values produce a freer, more equal, prosperous World for all. Yale University Press.

    Book  Google Scholar 

  • McGinnis, M. D. (2011). An introduction to IAD and the language of the Ostrom workshop: A simple guide to a complex framework. Policy Studies Journal, 39(1), 169–183.

    Article  Google Scholar 

  • Miozzi, V. J., & Powell, B. (2022). Measuring economic freedom during the Covid-19 pandemic. Journal of Institutional Economics, 1–22.

  • Mourão, P. R. (2007). The economics of illusion. A discussion based on fiscal illusion. Journal of Public Finance and Public Choice, 25(1), 67–86.

    Article  Google Scholar 

  • Mulligan, C. B. (2023). Beyond Pigou: Externalities and civil society in the supply–demand framework. Public Choice, 1–18.

  • Murphy, J., Devereaux, A., Goodman, N. P., & Koppl, R. (2021). Expert failure and pandemics: On adapting to life with pandemics. Cosmos+ Taxis, 9(5–6).

  • Olson, M. (1965). The logic of collective action: Public goods and the theory of groups. Harvard University Press.

    Google Scholar 

  • Ostrom, E. (2000). Collective action and the evolution of social norms. Journal of Economic Perspectives, 14(3), 137–158.

    Article  Google Scholar 

  • Ostrom, E., Parks, R. B., & Whitaker, G. P. (1973). Do we really want to consolidate urban police forces? A reappraisal of some old assertions. Public Administration Review, 33(5), 423–432.

    Article  Google Scholar 

  • Ostrom, V. (1994). The Meaning of American Federalism: Constituting a Self-governing Society. Institute for Contemporary Studies.

    Google Scholar 

  • Paniagua, P. (2022). Elinor Ostrom and public health. Economy and Society, 51(2), 1–24.

    Article  Google Scholar 

  • Paniagua, P., & Rayamajhee, V. (2022). Coproduction and the crafting of cognitive institutions during the COVID-19 pandemic. Journal of Institutional Economics, 18(6), 961–967.

    Article  Google Scholar 

  • Paniagua, P., & Rayamajhee, V. (2023). On the nature and structure of externalities. Public Choice, 1–22.

  • Parks, R. B., Baker, P. C., Kiser, L., Oakerson, R., Ostrom, E., Ostrom, V., et al. (1981). Consumers as coproducers of public services: Some economic and institutional considerations. Policy Studies Journal, 9(7), 1001–1011.

    Article  Google Scholar 

  • Pennington, M. (2021a). Hayek on complexity, uncertainty and pandemic response. The Review of Austrian Economics, 34(2), 203–220.

    Article  Google Scholar 

  • Pennington, M. (2021b). Foucault and Hayek on public health and the road to serfdom. Public Choice, 195(1–2), 125–143.

    Google Scholar 

  • Petracca, E., & Gallagher, S. (2020). Economic cognitive institutions. Journal of Institutional Economics, 16(6), 747–765.

    Article  Google Scholar 

  • Rayamajhee, V., Shrestha, S., & Paniagua, P. (2021). Governing nested externalities during a pandemic: Social distancing as a coproduction problem. Cosmos and Taxis, 9(5–6), 64–80.

    Google Scholar 

  • Rodriguez-Lonebear, D., Barcelo, N. E., Akee, R., & Carroll, & Stephanie, R. (2022). American Indian reservations and COVID-19: Correlates of early infection rates in the pandemic (vol 26, pg 371, 2020). Journal of Public Health Management and Practice, 28(2), 125–125.

    Article  Google Scholar 

  • Schraff, D. (2021). Political trust during the Covid-19 pandemic: Rally around the flag or lockdown effects? European Journal of Political Research, 60(4), 1007–1017.

    Article  Google Scholar 

  • Sobel, R. S., & Leeson, P. T. (2006). Government’s response to Hurricane Katrina: A public choice analysis. Public Choice, 127(1–2), 55–73.

    Article  Google Scholar 

  • Troesken, W. (2001). Race, disease, and the provision of water in American cities, 1889–1921. The Journal of Economic History, 61(3), 750–776.

    Google Scholar 

  • Troesken, W. (2004). Water, race, and disease. MIT Press.

    Book  Google Scholar 

  • Troesken, W. (2015). The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection. University of Chicago Press.

    Book  Google Scholar 

  • Tullock, G. (1975). The transitional gains trap. The Bell Journal of Economics, 6(2), 671–678.

    Article  Google Scholar 

  • Wagner, R. E. (1976). Revenue structure, fiscal illusion, and budgetary choice. Public Choice, 25, 45–61.

    Article  Google Scholar 

Download references

Acknowledgements

Many thanks to Veeshan Rayamajhee and Pablo Paniagua, the referees, and participants at the annual meetings of the Public Choice Society, Southern Economic Association, and Politics, Philosophy, and Economics Society for extremely useful comments and suggestions. Veeshan and Pablo deserve special thanks for reading many previous versions of our paper.

Author information

Authors and Affiliations

  1. Graduate School of Public and International Affairs, University of Pittsburgh, 3806 Wesley W. Posvar Hall, Pittsburgh, PA, 15260, USA

    Ilia Murtazashvili

  2. Department of Economics, College of Liberal Arts and Social Sciences, University of North Texas, 1155 Union Circle #311457, Denton, TX, 76203-5017, USA

    Yang Zhou

Authors
  1. Ilia Murtazashvili
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Yang Zhou
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Yang Zhou.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Murtazashvili, I., Zhou, Y. Complex externalities, pandemics, and public choice. Public Choice (2023). https://doi.org/10.1007/s11127-023-01104-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s11127-023-01104-6

Keywords

JEL Classification

Search

Navigation