Public choice as an academic enterprise retrospectively viewed again

American Journal of Economics and Sociology, The, Jan, 2004 by Eugenia F. Toma

Dick Wagner's paper views the public choice enterprise from the perspective of someone who was both a graduate student at the University of Virginia and a professor at Virginia Tech and George Mason. My comments are given retrospectively from the point of view of a graduate student at Virginia Tech during the high productivity years of the public choice enterprise. I want to describe briefly the culture of the public choice enterprise at Virginia Tech from the perspective of a graduate student, and then switch to broader concerns.

First, students worked, and worked hard. We did this partially because in Blacksburg there was little else to do. The isolation was also important in promoting a sense of community among students and faculty. With little extracurricular opportunity, it was relatively low cost to center our lives around the academic enterprise offered by the Center of Public Choice.

Even for the students, the atmosphere offered by that enterprise was exciting. We knew we were in the midst of something intellectually important. I think a powerful statement is that we found graduate school to be interesting. Most students from higher ranked institutions were, of are, unable to say the same. Some of this was because of the teaching style, which Dick Wagner aptly characterizes as puzzles and papers. Questions were posed to students and were answered in the form of papers. We wrote and wrote and wrote and we learned how to think about interesting questions in the process.

The demands placed upon us as students occurred in a supportive environment. I recall the week when I had no clue how to begin to interpret the question that Professor Buchanan asked us to address in our paper. I confessed this confusion in writing and while I certainly did not receive an A that week, I was not permanently penalized. I was provided constructive guidance, along with an admission that it was not entirely clear even to him at the moment. We moved forward. The faculty wanted us to be successful. All in all, graduate school at Virginia Tech in the 1970s was a place where one learned to think and was perhaps as pleasant an experience as earning a Ph.D. could ever be.

To switch to the broader analytical perspective, Professor Wagner raises the individual versus institution question and concludes that two-thirds or even four-fifths of the success of the public choice enterprise at Virginia Tech must be attributed to the Buchanan-Tullock team. There is no question but that the team of Buchanan and Tullock created positive externalities for all around them. If I might put this in a slightly different context for a moment, we all can recognize these peer externalities as they apply to a teaching-learning environment. We teach two sections of the same class in the same semester and generate two distinctly different products because of the composition of the students in those classes. Peers clearly influence learning, and our productivity can be enhanced or diminished by the colleagues around us.

At the elementary and secondary level, there is reason to believe that we can internalize these peer externalities in structuring learning enterprises. There is conceptually a club-like institutional arrangement that can be imagined in which the peer externalities would be internalized through pricing of entrance into the institution. Higher ability students could be subsidized as a means of attracting them into an institution. Lower ability students then learn from the affiliation with the high ability students.

For higher education, the exercise is somewhat more complicated. Here we are talking not only about learning among students, or the consumer side of the enterprise, but about research, or the production side of the enterprise. It is not too difficult to imagine an incentive scheme in the form of salaries that motivates individuals to behave optimally in the face of externalities in the production of knowledge. The problem is, however, that the incentive of institutions to create these incentives depends upon their ability to capture the benefits from the cascades that may stem from these research enterprises. While the external benefits from certain scientific research enterprises can be internalized in the form of patents and licenses, basic knowledge such as that exemplified by the public choice enterprise is more amorphous and has a higher cost for the institution to capture.

The highly productive public choice enterprise at Virginia Tech was certainly among the successes of the institution in the 1970s, but why the university responded favorably to a social science success is not so clear. It is especially interesting to think about this success in today's environment for higher education. Clearly, higher education is changing and I dare say that we cannot visualize today some of the changes that are likely to occur over the next 20 years. Higher education, like other enterprises, is becoming increasingly competitive, which means that universities will more likely build according to their comparative advantages. I think the implication for enterprises such as that which existed at Virginia Tech in the 1970s is a positive one. The presence of a team such as Buchanan and Tullock would see even greater success in today's environment than it saw 25 to 30 years earlier. The team yielded gains to the institution in a quite distinctive fashion. While the externalities may have been flowing to other institutions and the benefits difficult to internalize, those who understand the academic enterprise would surely recognize the tremendous value of these teams to an academic institution.