DP9734 When Ideas Trump Interests: Preferences, World Views, and Policy Innovations

Author(s): Dani Rodrik
Publication Date: November 2013
Keyword(s): Policy Innovations, Political Economy
JEL(s): F5, P16
Programme Areas: Public Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9734

The contemporary approach to political economy is built around vested interests -- elites, lobbies, and rent-seeking groups which get their way at the expense of the general public. The role of ideas in shaping those interests is typically ignored or downplayed. Yet each of the three components of the standard optimization problem in political economy ? preferences, constraints, and choice variables ? rely on an implicit set of ideas. Once the manner in which ideas enter these frameworks is made explicit, a much richer and more convincing set of results can be obtained. In particular, new ideas about policy?or policy entrepreneurship?can exert an independent effect on equilibrium outcomes even in the absence of changes in the configuration of political power.