IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v30y2002i6p481-508.html
   My bibliography  Save this article

The Welfare State as a Fiscal Commons: Problems of Incentives Versus Problems of Cognition

Author

Listed:
  • Keith Jakee

    (RMIT University, Melbourne, Australia)

  • Stephen Turner

    (Stockholm University)

Abstract

A mounting empirical literature clearly indicates that the core programs of the welfare state are unsustainable in their present form. The proximate cause of this growing fiscal instability is a demographic imbalance between younger contributors and older beneficiaries. The authors argue, however, that the ultimate cause is the institutional structure of the welfare state itself. Specifically, if its fiscal institutions are modeled as a common-pool resource, the tools and analysis emerging from the growing literature on common pools can be used. Such an analysis suggests that the apparent nonsustainability of current welfare state programs is rooted in the failure to resolve two distinct problems in institutional design. The first problem concerns how to limit the scope of opportunism among rational self-interested individuals. The second problem concerns how to limit the adverse effects of the knowledge problem among boundedly rational individual actors.

Suggested Citation

  • Keith Jakee & Stephen Turner, 2002. "The Welfare State as a Fiscal Commons: Problems of Incentives Versus Problems of Cognition," Public Finance Review, , vol. 30(6), pages 481-508, November.
    • Handle: RePEc:sae:pubfin:v:30:y:2002:i:6:p:481-508
    DOI: 10.1177/109114202237999
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114202237999
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114202237999?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lomborg,Bjørn, 2001. "The Skeptical Environmentalist," Cambridge Books, Cambridge University Press, number 9780521010689, September.
    2. Johnson, Ronald N & Libecap, Gary D, 1982. "Contracting Problems and Regulation: The Case of the Fishery," American Economic Review, American Economic Association, vol. 72(5), pages 1005-1022, December.
    3. Libecap, Gary D & Johnson, Ronald N, 1980. "Legislating Commons: The Navajo Tribal Council and the Navajo Range," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 69-86, January.
    4. Roy Gardner & Elinor Ostrom & James M. Walker, 1990. "The Nature of Common-Pool Resource Problems," Rationality and Society, , vol. 2(3), pages 335-358, July.
    5. Arthur T. Denzau & Douglass C. North, 1994. "Shared Mental Models: Ideologies and Institutions," Kyklos, Wiley Blackwell, vol. 47(1), pages 3-31, February.
    6. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
    7. Ostrom, Elinor & Walker, James & Gardner, Roy, 1992. "Covenants with and without a Sword: Self-Governance Is Possible," American Political Science Review, Cambridge University Press, vol. 86(2), pages 404-417, June.
    8. Mueller,Dennis C. (ed.), 1997. "Perspectives on Public Choice," Cambridge Books, Cambridge University Press, number 9780521553773, September.
    9. Buchanan, James M & Yoon, Yong J, 2001. "Majoritarian Management of the Commons," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 396-405, July.
    10. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
    11. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    12. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1993. "Generational accounts and lifetime tax rates, 1900-1991," Economic Review, Federal Reserve Bank of Cleveland, vol. 29(Q I), pages 2-13.
    13. Barr, Nicholas, 1992. "Economic theory and the welfare state : a survey and interpretation," LSE Research Online Documents on Economics 279, London School of Economics and Political Science, LSE Library.
    14. Karen I. Vaughn & Richard E. Wagner, 1992. "Public Debt Controversies: An Essay in Reconciliation," Kyklos, Wiley Blackwell, vol. 45(1), pages 37-49, February.
    15. Mr. Alfredo Cuevas & Mr. George A Mackenzie & Mr. Philip R. Gerson, 1997. "Pension Regimes and Saving," IMF Occasional Papers 1997/006, International Monetary Fund.
    16. E. Ostrom, 2010. "A Behavioral Approach to the Rational Choice Theory of Collective Action Presidential Address, American political Science Association, 1997," Public administration issues, Higher School of Economics, issue 1, pages 5-52.
    17. James M. Buchanan, 1954. "Individual Choice in Voting and the Market," Journal of Political Economy, University of Chicago Press, vol. 62(4), pages 334-334.
    18. Simon, Herbert A., 1984. "On the behavioral and rational foundations of economic dynamics," Journal of Economic Behavior & Organization, Elsevier, vol. 5(1), pages 35-55, March.
    19. Bruce Caldwell, 1997. "Hayek and Socialism," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1856-1890, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jody W. Lipford & Bruce Yandle, 2014. "Grazing the State and Local Fiscal Commons," Public Finance Review, , vol. 42(4), pages 466-486, July.
    2. Richard E. Wagner, 2012. "Deficits, Debt, and Democracy," Books, Edward Elgar Publishing, number 14477.
    3. Trent J. MacDonald, 2019. "The Political Economy of Non-Territorial Exit," Books, Edward Elgar Publishing, number 18871.
    4. ., 2019. "Economic theory of non-territorial unbundling," Chapters, in: The Political Economy of Non-Territorial Exit, chapter 1, pages 14-38, Edward Elgar Publishing.
    5. Ringa Raudla, 2010. "Governing budgetary commons: what can we learn from Elinor Ostrom?," European Journal of Law and Economics, Springer, vol. 30(3), pages 201-221, December.
    6. Jody W. Lipford, 2022. "The Distribution of Transfers and Taxes: Incentives and Implications for the US Deficit and Debt," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 37(Winter 20), pages 1-20.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    2. Roger D. Congleton, 2022. "Behavioral economics and the Virginia school of political economy: overlaps and complementarities," Public Choice, Springer, vol. 191(3), pages 387-404, June.
    3. Josten, Stefan Dietrich & Truger, Achim, 2003. "The political economy of growth and distribution: A theoretical critique," WSI Working Papers 111, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    4. Bo Rothstein, 2001. "The Universal Welfare State As A Social Dilemma," Rationality and Society, , vol. 13(2), pages 213-233, May.
    5. Steven C. Hackett, 1992. "Heterogeneity and the Provision of Governance for Common-Pool Resources," Journal of Theoretical Politics, , vol. 4(3), pages 325-342, July.
    6. Jakee, Keith & Sun, Guang-Zhen, 2005. "External habit formation and dependency in the welfare state," European Journal of Political Economy, Elsevier, vol. 21(1), pages 83-98, March.
    7. Angelsen, Arild & Naime, Julia, 2024. "The mixed impacts of peer punishments on common-pool resources: Multi-country experimental evidence," World Development, Elsevier, vol. 181(C).
    8. Didier Blanchet, 1996. "La référence assurantielle en matière de protection sociale : apports et limites," Économie et Statistique, Programme National Persée, vol. 291(1), pages 33-45.
    9. DeCaro, Daniel, 2021. "Codebook For Analyzing Content And Function Of Communication In Social-Ecological Dilemma Experiments," SocArXiv 856hm, Center for Open Science.
    10. Röttgers, Dirk, 2016. "Conditional cooperation, context and why strong rules work — A Namibian common-pool resource experiment," Ecological Economics, Elsevier, vol. 129(C), pages 21-31.
    11. Fiori Stefano, 2005. "The emergence of instructions : some open problems in Hayek's theory," CESMEP Working Papers 200504, University of Turin.
    12. Kuhn, Andreas, 2011. "In the eye of the beholder: Subjective inequality measures and individuals' assessment of market justice," European Journal of Political Economy, Elsevier, vol. 27(4), pages 625-641.
    13. Murray, Christopher J. L. & Acharya, Arnab K., 1997. "Understanding DALYs," Journal of Health Economics, Elsevier, vol. 16(6), pages 703-730, December.
    14. Alois Stutzer & Lorenz Goette & Michael Zehnder, 2011. "Active Decisions and Prosocial Behaviour: a Field Experiment on Blood Donation," Economic Journal, Royal Economic Society, vol. 121(556), pages 476-493, November.
    15. Adelaide Duarte & Marta Simões & João Sousa Andrade, 2014. "Estado Social, Quantis, Não-Linearidades e Desempenho Económico: Uma Avaliação Empírica," GEMF Working Papers 2014-21, GEMF, Faculty of Economics, University of Coimbra.
    16. Henk Folmer & Olof Johansson-Stenman, 2011. "Does Environmental Economics Produce Aeroplanes Without Engines? On the Need for an Environmental Social Science," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(3), pages 337-361, March.
    17. Andersen, Torben M., 2004. "Challenges to the Scandinavian welfare model," European Journal of Political Economy, Elsevier, vol. 20(3), pages 743-754, September.
    18. Alves, C. & Guizzo, D., 2022. "Economic Theory and Policy Today: Lessons from Barbara Wootton and the Creation of the British Welfare State," Cambridge Working Papers in Economics 2246, Faculty of Economics, University of Cambridge.
    19. Chiara Carini & Ericka Costa & Maurizio Carpita & Michele Andreaus, 2012. "The Italian Social Cooperatives in 2008: A Portrait Using Descriptive and Principal Component Analysis," Euricse Working Papers 1235, Euricse (European Research Institute on Cooperative and Social Enterprises).
    20. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:30:y:2002:i:6:p:481-508. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.