European Journal of Political EconomyŽ .Vol. 13 1997 197–200

Book review

Keith Dowding and Desmond King, eds., Preferences, Institutions, and RationalŽ .Choice Clarendon Press, Oxford, 1995 .

The editors of this volume are concerned to advance an ‘institutional rationalchoice’ approach to political science. In their joint introduction, a rough sketch ofthis new approach is given. Starting from the shortcomings of orthodox ‘first

Žprinciples rational choice’ which apparently comprises the whole of social choice.theory and much of public choice theory , Keith Dowding and Desmond King

Ž .point out that institutional rational choice may overcome these deficiencies by 1Žoffering causal explanations of empirical political phenomena instead of merely

. Ž .examining the logical properties of possible social worlds , 2 focusing on theŽcauses and consequences of institutional change instead of assuming a fixed

. Ž .institutional environment or ignoring institutional constraints altogether , 3 ana-Žlyzing the social generation of individual motivations thus abandoning the

. Ž .assumption of exogenous preferences , 4 admitting the relevance of non-egoisticŽindividual preferences thus breaking with the classical model of homo economi-

.cus .Having thus outlined their methodological programme, the editors invite the

reader to see how institutional rational choice may be fruitfully applied to adiverse range of topics. To the reader accepting this invitation it will come as asurprise that the ten papers collected in this volume conspicuously lack themethodological unity which was promised in the introduction. There are, it is true,

Ž .five essays chapters 2, 3, 4, 7, 9 which explicitly or at least implicitly try todevelop the approach of institutional rational choice. The five remaining contribu-tions, however, either firmly stick to the orthodox rational choice approachŽ .chapters 5, 8, 10 or for some other reason fall short of the editors’ intentionsŽ .chapters 6, 11 .

ŽAmong the authors of the first group of papers, Alan Carling ‘The Paradox of. ŽVoting and the Theory of Social Evolution’ and Keith Dowding ‘Interpreting

.Formal Coalition Theory’ mainly deal with foundational issues of institutionalrational choice. Carling uses the well-known problem of explaining the rationalityof voting to argue against the orthodox rational choice analysis of democratic

0176-2680r97r$17.00 Published by Elsevier Science B.V.Ž .PII S0176-2680 96 00040-7

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institutions. He is concerned to show that the standard parametric treatment of thevoting act rests on inconsistent theoretical premisses, while a more appropriatestrategic approach does not offer a way out of the problem either since it fails togenerate any determinate prediction whatsoever. Siding with those who derive thevoting act from an individual sense of duty, Carling concludes that the only way tosupply a rational choice explanation of voting is to give an institutional account ofthe rise and spread of democratic political values.

Since the fundamental distinction between first principles rational choice andinstitutional rational choice had only rather cursorily been drawn in the editors’introduction, the reader is pleased to see Dowding in his own chapter elaboratingupon this contrast which now reappears as the methodological distinction between‘structural’ and ‘causal’ explanations of coalition-formation. It is Dowding’scontention that the orthodox approach of formal coalition theory, resting as it doeson fairly general assumptions about both individual preferences and institutionalconstraints, is confined to the structural type of explanation which merely enablesus to identify a set of logically possible results of bargaining processes. If wewant, however, to generate a causal explanation of empirical bargaining results,we must, so the argument runs, resort to the institutional approach which requiresus to specify in detail a variety of factors including the actors’ preferences, therules of negotiation and the relevant time constraints.

Both Carling and Dowding seem to be aware of the problem that an institu-tional approach developed along their lines may obliterate the theoretical core ofthe rational choice programme itself. In admitting a wide range of non-consequen-

Ž .tialist reasons for action such as a sense of duty , it might well be possible that aninstitutional theorist’s rational explanations are no longer in any reasonable sense

Ž .to be recognized as rational choice explanations p. 32 . Apart from the problemof unduly stretching the concept of rational action, the institutional approach facesthe danger of sacrificing the generality of orthodox rational choice theories, thusblurring the methodological contrast between explaining an event and understand-

Ž .ing it in the sense of Weber . The recommended type of explanation, after all, ‘‘isŽ .that in which biographers, historians, and journalists standardly engage’’ p. 50 .

The reader who wants to know how a substantive theory of politics might looklike which fruitfully combines the traditional logic of rational choice with aninstitutional perspective is best advised to consult the contribution by Patrick

ŽDunleavy and Helen Margetts ‘The Rational Basis for Belief in the Democratic.Myth’ . Among the achievements of this fine piece of analysis there is a thorough

critique of the stark contrast recently drawn by Brennan and Lomasky between thechoice situation of individual consumers in a product market, on the one hand, andthe choice situation of individual voters in a political election, on the other.Disaggregating the concepts of instrumental and expressive benefits respectively,Dunleavy and Margetts offer a rich model of individual voting decisions whichincorporates Brennan and Lomasky’s model as an austere special case. In applyingtheir model to an institutional analysis of the so-called paradox of voting,

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Dunleavy and Margetts argue convincingly that the analytically convenient con-cept of individual pivotality lacks any real empirical significance. Moreover, theysucceed in showing that systems of multi-level or multi-component electionsprovide strong incentives for rational individuals to cast their vote continually.

The two remaining contributions of the first group deal with rather specialissues and may best be interpreted as preliminary studies on a full-blown institu-tional analysis of the content and generation of individual preferences. In his

Ž .stimulating article ‘Railway Regulation as a Test-bed of Rational Choice’ , IainMcLean uses an historical event – the passage of the British Regulation ofRailways Act 1844 – to evaluate the merits of seven alternative modes ofexplanation which he derives from four different schools of political economy.Based on an examination of both Gladstone’s tactics and MPs’ voting behavior,his main conclusion is that orthodox public choice theory is mistaken in excluding

Ž .the subjectively perceived public interest as a potentially dominant motive ofŽpolitical actors. In their joint paper ‘The Buck in Your Bank is not a Vote for

Free Trade: Financial Intermediation and Trade Preferences in the United States.and Germany’ , Cheryl Schonhardt-Bailey and Andrew Bailey focus on alternative

types of financial intermediaries in exploring the formation as well as thecollective articulation of individual investors’ trade-policy preferences. Since theauthors are liable to swamp a number of distinct theoretical questions with a hostof institutional details, the main thrust of their argument is not easily ascertained.In their own words, they essentially argue that ‘‘poorly defined property rights –in particular resulting from institutional intermediation – distort the politicalmanifestation of conflicts of economic interest between gainers and losers from

Ž .trade policy’’ p. 184 .Turning now to the second group mentioned above, it is hard to see how its

three essays, each of them being deeply rooted in the orthodox rational choiceapproach, might be reconciled with the editors’ aspirations. Thus, there can be nodoubt at all that the crude unemployment game developed by Desmond King and

ŽHugh Ward ‘Working for Benefits: Rational Choice and Work–Welfare Pro-.grammes’ in order to explain recent activities of conservative governments is a

‘first principles’ exercise par excellence. The same is also true of Hugh Ward’sŽ .further chapter ‘The Internal Balance of Power and Relative Economic Decline’

which otherwise deserves major interest. Starting from a game-theoretic model ofnational economic growth which draws upon Niou and Ordeshook’s study of theinternational balance of power, Ward tries hard to corroborate his claim that theformal argument underlying Olson’s well-known account of economic perfor-mance is badly flawed. Since his extensive data analysis, however, shows thatthere is empirical support for both the balance-of-power model and Olson’sbargaining model, Ward’s conclusion that the former seems to be theoretically

Ž .superior to the latter p. 238 is yet to be established. An attempt to show thatapparently irrational collective decisions may be interpreted as rational responses

Žto extreme situations comes from Michael Nicholson ‘Rational Decision in

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.International Crises: A Rationalization’ . Building on an analysis of individualdecisions which introduces stress-reducing activities into the standard definition ofinstrumental rationality, Nicholson proposes a Harsanyi-type model of groupdecision-making that takes minimization of the psychic cost of disagreement to bean essential aspect of rational collective action. Unfortunately, the argument basedon this model is difficult to grasp, since on his way the author not only relies upona new basic distinction between primary and secondary individual preferences but

Ž .also seems to have completely forgotten his original notation pp. 171–175 .The last group comprises two rather disappointing contributions. Moshe Maor’s

‘Party Competition in Interlinked Political Markets: The European Union and itsMember States’ is a strange misnomer because neither the general concept ofinterlinked political markets nor its supranational specification in terms of theEuropean Union is seriously attended to. Rather than focusing on these subjects or,for that matter, on party competition in general, Maor is in fact interested in thepatterns of co-operation between government and opposition. While these patternsdo, of course, depend on both the national and the international connectedness ofpolitical markets, the author simply affirms this dependence without furtherexploring it. Besides, Maor’s game-theoretic treatment of government-opposition

Ž .interaction suffers from a number of misleading passages pp. 122–124 . In theŽ .concluding chapter ‘Rationality, Revolution, and Reassurance’ , Mark Wickham-

Jones aims at providing a reconstructed rational choice account of revolutionarybehavior by successively relaxing some restrictive assumptions used in orthodoxrational choice theories. Far from developing a new model, however, Wickham-Jones essentially gives a critical survey of recent literature on the subject. Whilethereby gathering a lot of material which no institutional account of rationalrevolutionary action can ignore, he resolutely declines to put the various piecestogether: ‘‘The extent to which different elements of the revised account operate

Ž .depends upon the institutions which exist in the society concerned’’ p. 261 . Toput questions like that to one side is certainly an amazing strategy for a theoristwho has devoted himself to an institutionalist programme.

On the whole, the contributions of this volume do not live up to the expecta-w xtions raised by the editors. While the ten papers may indeed show that ‘‘ r ational

Ž .choice has no thematic limitations’’ p. 16 , they are far from demonstrating ‘‘theŽ .strength of a common methodology’’ p. vii . In view of the volume’s method-

ological heterogeneity, it must rather be considered an open question whether ornot the institutional approach sketched by Dowding and King can provide a

Ž .‘‘coherent methodology’’ p. 16 at all. This general objection notwithstanding,the reader interested in rational choice will find a few special articles which arehighly illuminating in their own right.

Johannes SchmidtUniversitat Bamberg¨

BambergGermany