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Nobel Economist James M. Buchanan, 1919-2013

James M. Buchanan, a great economist and great man, died today in Blacksburg, Virginia, at age 93.

He and Gordon Tullock are the creators of Public Choice theory, which argues that tools of economics should be used to study politics.

Before Buchanan and Tullock, the following would be a standard exercise of an economics researcher: The researcher would identify a “market failure” in a particular activity. For instance, he might show that, because a factory emits pollutants, it produces more than the socially optimal amount of output. The standard solution of the researcher would then be to argue that a bureaucrat should be given the power to regulate the output of the factory.

Buchanan and Tullock pointed out that such research ignores standard economic tools when analyzing the bureaucrat. That is, economists would typically assume that the bureaucrat would ignore his own interests and work only for the public good. Buchanan and Tullock argued that if economists applied their own tools to the bureaucrat—and assumed that, like any other economic actor, he has personal motives that may differ from that which is optimal for society—then they’d realize that other problems arise from giving such power to the bureaucrat. For instance, he might accept bribes or succumb to laziness. Either could cause him not to enforce the optimal level of regulation.

Just as previous economists had demonstrated “market failures,” Buchanan and Tullock demonstrated that the typical solution to a market failure could cause a “government failure.” As they argued, when you apply economic tools to government actors, you see that the government solutions can end up being worse than the market failures.

Buchanan has a long body of scholarly work that continues to influence not just economists but also political scientists, including me.

Buchanan helped found the Journal of Public Choice, where I and lots of other economists and political scientists occasionally publish articles. He also helped establish the Public Choice Society, a group of a few hundred scholars who meet at an annual conference each Spring. Moreover, he helped to establish the Public Choice Center, a group of economists at George Mason University who devote much of their research to studying public choice problems. The group includes some highly respected scholars, including Tyler Cowen, Alex Tabarrok, Don Boudreaux, Bryan Caplan, Robin Hanson, Thomas Stratmann, and several others, including Gordon Tullock, who is an emeritus scholar of the Center.

Born in Murfreesboro, Tennessee, Buchanan lived most of his life in Virginia. Those who knew him were quick to call him a southern gentleman.

One of the greatest honors of my life was once when I was compared to him. At a meeting of the Public Choice Society, an audience member kept interrupting a speaker. The chair of the session was a young professor who was obviously uncomfortable about the interruptions but unsure what to do about them. After one interruption, I spoke up, “Many panels don’t allow comments from the audience until all of the speakers have made their presentations. Could we get a ruling from the chair?” The chair said that he agreed with me, and the interrupter stopped. After the panel, Mark Crain, who, at the time, was a scholar at the Public Choice Center, told me, “You’re like James Buchanan. He absolutely hates rudeness like that.” 

“You’re like James Buchanan” – it’s difficult for a scholar to receive a higher compliment.