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In a World with Many Targets, One-Dimensional Target Indicators Will Always Be Bypassed

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  • Gert G. Wagner

Abstract

It is striking that economists in particular firmly believe in the benefits of rule-binding, even though this belief runs counter to the standard assumption of economic theory that we humans are self-interested and therefore extremely resourceful when it comes to circumventing inconvenient government regulations, e.g. taxes. In Public Choice Theory, politicians are even assumed to have nothing but self-interest as their guiding motive for action. Why then, in this world of thought, should ultra-self-interested politicians of all people adhere to simple rules such as the debt brake instead of bypass them, if – as is also assumed in this model world – all that matters to them is short-term electoral success, for which government debt can be helpful.

Suggested Citation

  • Gert G. Wagner, 2021. "In a World with Many Targets, One-Dimensional Target Indicators Will Always Be Bypassed," Discussion Papers of DIW Berlin 1982, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1982
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    More about this item

    Keywords

    Rule-binding; Champbell; Goodhart’s Law; Hobbes;
    All these keywords.

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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