Subjective Political Economy

Allen, DWE and C Berg 2017. ‘Subjective Political Economy’, New Perspectives on Political Economy, vol. 13, no 1-2, pp. 19-40

22 Pages Posted: 26 Jun 2016 Last revised: 19 Feb 2018

See all articles by Darcy W E Allen

Darcy W E Allen

RMIT University

Chris Berg

RMIT University - School of Economics, Finance and Marketing

Date Written: June 21, 2016

Abstract

We extend the Institutional Possibility Frontier (IPF) — a theoretical framework depicting the institutional trade-offs between the dual costs of dictatorship and disorder (Djankov et al. 2003) — by incorporating the notion of subjective costs. The costs of institutional choice are not objectively determined or chosen by society; they are subjective to the political actor that perceives them. Our methodologically individualist approach provides a new, highly adaptable extension of the IPF enabling examination of the political bargaining process between dispersed actors, the bounds and evolution of institutional innovation and discovery, and follower-leader dynamics in long-run institutional changes. Our new Subjective Institutional Possibility Frontier (SIPF) helps to integrate ideas into the economics of political systems, creating the foundations for a more subjective political economy.

Keywords: Institutional Possibility Frontier, Political Economy, Subjective Costs, Austrian Economics, New Comparative Economics

JEL Classification: B53, K00, P50, P10, P40

Suggested Citation

Allen, Darcy and Berg, Chris, Subjective Political Economy (June 21, 2016). Allen, DWE and C Berg 2017. ‘Subjective Political Economy’, New Perspectives on Political Economy, vol. 13, no 1-2, pp. 19-40. Available at SSRN: https://ssrn.com/abstract=2799032 or http://dx.doi.org/10.2139/ssrn.2799032

Darcy Allen

RMIT University ( email )

440 Elizabeth Street
Melbourne, 3000
Australia

Chris Berg (Contact Author)

RMIT University - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

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