Democracy, Interest Groups, and the Price of Votes

The chief contribution of economics toward improving understanding of the way the world works is probably the theory of price. This theory has proven to be a robust tool for explaining how human behaviorresponds tochanges in constraints facing individuals. Price theory may not be the most glamorous or technically demanding body of theory in economics, but it is likely the most fundamental. Economists may differ significantly in the composition of their intellectual capital stock, but all economists by definition have a basic understanding of the role of prices in economic affairs. One ofthe most important recent extensions of basic price theory has been the development of the economic analysis of politics. The modern economics of politics is founded on the assumption that political actors are rational, self-interested maximizers, who respond to relative prices of resources and outputs—albeit often prices that are implicit and not publicly known—in the same way that private decisionmakers do in ordinary market exchange. But curiously, the economics of politics has neglected a resource that is ofvital importance for understanding political decisionmaking and policy determination and that (at least in the modern setting) is unpriced—the vote. Although economists have devoted a good deal of attention to the process of voting, there has been little effort devoted to explaining why votes are unpriced, or what the implications ofthis absence ofmarket pricing are for political outcomes. The