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Monday, November 6, 2017

Gordon Tullock Deserved the Nobel Prize

As students of economics celebrate and read up on the contributions of Thaler, they would do well to consider the work of Gordon Tullock also.

I had the great fortune to be both a student and a colleague of Gordon Tullock (1922-2014). During my student days, he was an inspiring figure in his relentless application of the economic way of thinking to all walks of life. I attended George Mason University during the early 1980s, and my cohort was blessed with the opportunity to study a methodologically diverse faculty that included Austrian economists (most notably Don Lavoie), empirical economists (e.g., Robert Tollison, Mark Crain, and Kevin Grier), formal theoretical economists (e.g., Michael Alexeev), sociological economists (e.g., Viktor Vanberg), historical economists (e.g., Joe Reid, Thomas DiLorenzo, and Jack High), historians of economics (e.g., Karen Vaughn and David Levy), public-policy economists (e.g., James Bennett), and social philosophical economists (most notably James Buchanan and Kenneth Boulding).  In some interesting way, Tullock both touched on and transcended all of them. 

Obviously, the opportunity to study with Buchanan, Boulding, and Tullock was a rare one – it’s not every day you can say your professors were a Nobel Prize-winner, the second John Bates Clark medalist, and a Distinguished Fellow of the American Economic Association. But I had that opportunity, and it was, as one might expect, amazing. For a young student who was motivated to study economics and pursue a career as an economist because he had read Ludwig von Mises and the Austrian school in general, the uniqueness of this opportunity was perhaps only matched in Vienna during the 1920s and 1930s and the London School of Economics during the 1930s and 1940s. To Buchanan, Boulding, and Tullock, Austrian economics was merely part of the common knowledge of any well-trained economist, and the ideas of Mises and F. A. Hayek were to be discussed just as one might discuss and debate the ideas of Kenneth Arrow or Paul Samuelson.


Tullock told us all that one of the only economics books he read in preparing to become an economist was Mises’s Human Action. There is obviously some exaggeration here because in 1983 Tullock reprinted Henry Simons’s Syllabus from which generations of students at the University of Chicago learned how to tackle price-theoretic puzzles. Simons’s Syllabus wasn’t a book as much as notes and problems. Tullock, though trained as a lawyer, mastered the economics lessons from that work, especially the power of price theory to explain a variety of social phenomena. Besides Mises, he was already familiar with Hayek and Karl Popper before he joined the Thomas Jefferson Center for Studies in Political Economy at the University of Virginia as a postdoc and began his collaboration with Buchanan. 

Tullock was part of a generation of thinkers who understood that while measurement could be an important aspect of science, it didn’t exhaust science. Tullock saw himself in the tradition of Mises a praxeologist who from a methodologically individualistic perspective would study human action across all social arrangements. Individuals pursue purposes and plans, and in doing so must arrange their means to obtain their ends as efficaciously as is in their power. Tullock’s subject matter was humanity in all settings, and that included not just markets, but nonmarket settings such as law, politics, and charity. Along the way, he made fundamental contributions to the theory of bureaucracy, constitutional construction, judicial decision-making, voting behavior, lobbying, scientific organization, redistribution, and even sociobiology. 

Tullock was a polymath. This is all easily gleaned through a look at his 10-volume Selected Works published by Liberty Fund and through a perusal of the table of contents of his “textbook” with Richard McKenzie, The New World of Economics (2012 [1975]), where the reader is introduced not to only basic economic reasoning in terms of scarcity, trade-offs, and choice on the margin and against given constraints, but also applications to love and marriage, life and death, and everything in between. As they write at the beginning of chapter 8 on sexual behavior (123): “If you are at all typical of readers of this book, these are the first words that you have read. We understand why you choose to start at this chapter; however, you must realize that you have skipped over some important introductory material.” No doubt, they tell us, sexual relations are complex and involve aspects of romance and love that to varying degrees produce patterns of behavior that defy scientific explanation. In fact, they even warn the reader that the attempt to fit the range of the sexual experience into economic analysis will be seriously mistaken.  Yet their analysis sheds light on the human experience. It makes sense of the seemingly senseless patterns of human decisions and relationships from the most sacred and cherished to the most mundane and trivial. Scarcity, trade-offs, and choice on the margin and against given constraints abound.

A lot can be understood simply by recognizing that individuals strive to achieve the best they can as they perceive it, rather than asserting that they achieve best outcomes in their actions. And, similarly, a lot can be understood by stressing the evolution towards a solution involved in market and social interactions rather than focusing exclusively on solution states. But the price of that understanding is predicative power in social science. Tullock, though, was part of a generation of thinkers who understood that while measurement could be an important aspect of science, it didn’t exhaust science. The problem with the plea that if something is important, measure it, is that work-a-day social scientists will start to believe that whatever they can measure is important. Tullock, unlike the next generation of scholars in economics and political economy, relied on multiple forms of evidence to illustrate and illuminate and did not restrict his work to only those questions amenable to parsimonious models and sophisticated statistical techniques. 

So yes, in his body of work we get very tight propositions about bureaucratic decision-making, voting behavior, logrolling, rent-seeking, redistribution, etc., but we also can find wisdom about the coordination problem that bureaucracies face, the social dilemma and paradox of revolution, and the problems that plague democracies, as well as succession struggles in autocratic regimes, daggers in automobile steering wheels, and incentive-compatible penalties to curb criminal behavior.

Tullock is mostly remembered for his persistent and consistent application of homo economicus to all walks of human life (and even nonhuman societies!). And, there is no doubt that he did push those boundaries of the explanation space. But it is vital to remember that while he was a “natural economist” – maximization, equilibrium, and equilibrium from maximizing behavior – he often spoke loosely about those, so we get striving, processes, and evolution towards solutions. This is most evident in the critique of behavioral economics in New World of Economics. (2012, 417) Tullock and MacKenzie start by quoting Richard Thaler (2017 Nobel Prize winner) and his coauthor Cass Sunstein’s description of homo economicus (2008, 6) he “can think like Albert Einstein, store as much information as IBM’s Big Blue, and exercise the willpower of Mahatma Gandhi” which establishes the normative benchmark against which Thaler and Sunstein judge real-life human decision-making. They claim this depiction of man is false – in fact, obviously false – and that such a false premise cannot be the starting point of an empirically valid theory. 

In response, Tullock and MacKenzie do not resort exclusively to Milton Friedman’s defense of unrealistic assumptions and the focus on prediction. They do make that argument, but they aren’t content to simply rest their critical case on it. So they make the following arguments: Gerd Gigerenzer has demonstrated how individuals make themselves smarter by following rules of thumb, thus sidestepping the need to make complicated decisions; F. A. Hayek and others have argued that we delegate decisions to individuals not because they will make the best decisions, but because we have no way of identifying who would make better decisions; and that competitive market pressures and entrepreneurship tend to correct the consequences of errant decisions. The institutional environment – the ecology, if you will – is where the “rationality” is to be found since it frames decisions, provides feedback, and entices “correct” decisions, and disciplines “wrong” ones. Scarcity, trade-offs, choice on the margin against given constraints don’t produce perfect decisions but allow the analyst to illuminate “predictable rationality” of purposive human actors and the social relations they form given the institutional environment. Economics isn’t limited to market behavior, let alone financial interests, but encompasses all exchange activity and the various institutions within which this activity transpires.


It was up to thinkers like Buchanan and Tullock to push praxeology in the direction of law, politics, and society in the second half of the 20th century. Tullock’s work is not the caricature that many attribute to him. His work no doubt featured methodological individualism, rational choice, and exchange – just as the Public Choice Society motto proudly declares. But the meaning of those terms places him intellectually closer to Mises than to Thaler and Sunstein’s straw man. Mises explicitly rejected the caricature of homo economicus and instead insisted that economists reason from the basic assumption of homo agens, or acting, purposive man. Man is not reactive, but proactive and capable of a multiplicity of ends. Yet, Mises contended, we can have a universal science of human action that studies humanity in realms far beyond the marketplace and commercial intercourse. 

In Human Action Mises argued that economics, or catallactics, was just the most developed branch of the general science of human action, or praxeology. It was up to thinkers like Buchanan and Tullock to push praxeology in the direction of law, politics, and society in the second half of the 20th century. It is important to remember that Mises didn’t think he was inventing a new science with praxeology but instead was just developing a line of scientific and philosophical thought that traced back through the history of the discipline. That “mainline” of economic thought had become disrupted in the 20th century due to excessive aggregation and excessive formalism both of which squeezed human beings out of the sciences of man, thus requiring a reboot. Obviously, the “Austrian” reboot was the task of Murray Rothbard, Israel Kirzner, and Ludwig Lachmann in the 1960s and 1970s. But in the decade between the publication of Human Action (and Hayek’s Individualism and Economic Order) and the “Austrian” revival, the work of Armen Alchian, Buchanan, and Ronald Coase, as well as the older Austrians such as Fritz Machlup, started to resist the loss of the individual decision-maker, the decline in appreciation of the price system, and the disregard for the institutional framework in economic and social affairs. Tullock came of age as an economic thinker during the immediate post-World War II period and thus tapped into this emerging paradigm that would challenge the hegemony of the neoclassical synthesis of market-failure theory and macroeconomic demand-management theory.

I had the amazing opportunity to be at George Mason University when James Buchanan won the Nobel Prize in 1986 and then again when Vernon Smith won the Nobel Prize in 2002. It is a very heady time when one of your teachers or colleagues wins the Nobel Prize. It is the academic equivalent, I imagine, of working for the Chicago Bulls or New York Yankees when they win a world title and you know Michael Jordan or Derek Jeter. But, sadly, in both instances, I stood near Gordon Tullock as the university announced the news. This was a prize that eluded him, and in my opinion, he deserved his own prize for his various contributions to the study of human action beyond the realm of the market, that is, nonmarket decision-making – in law, politics, science, bureaucracies, nonprofits, and nature. Tullock was a trailblazer; he was always stalking taboo subjects and pushing out our intellectual boundaries.

As students of economics celebrate and read up on the contributions of Thaler, they would do well to consider the work of Gordon Tullock also. In many ways, he is both the polar opposite and a forerunner of Thaler. I hope our conversation can stimulate the exploration of how this can be true. Tullock was a relentless praxeologist, yet he was not blind to human frailties. He sought to illustrate and illuminate how alternative institutional environments either exacerbate or ameliorate those frailties.

Reprinted from Online Library of Liberty

  • Peter Boettke is a Professor of Economics and Philosophy at George Mason University and director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center. He is a member of the FEE Faculty Network.