Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency and equity. At its most basic level, public economics provides a framework for thinking about whether or not the government should participate in economics markets and to what extent its role should be. In order to do so, microeconomic theory is utilized to assess whether the private market is likely to provide efficient outcomes in the absence of governmental interference. Inherently, this study involves the analysis of government taxation and expenditures. This subject encompasses a host of topics including market failures, externalities, and the creation and implementation of government policy. Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve social welfare.
Broad methods and topics include:
- the theory and application of public finance
- analysis and design of public policy
- distributional effects of taxation and government expenditures
- analysis of market failure and government failure.
Emphasis is on analytical and scientific methods and normative-ethical analysis, as distinguished from ideology. Examples of topics covered are tax incidence, optimal taxation, and the theory of public goods.
Read more about Public Economics: Subject Range, Public Goods, Cost-benefit Analysis, See Also
Famous quotes containing the words public and/or economics:
“I ask whether the mere eating of human flesh so very far exceeds in barbarity that custom which only a few years since was practised in enlightened England:Ma convicted traitor, perhaps a man found guilty of honesty, patriotism, and suchlike heinous crimes, had his head lopped off with a huge axe, his bowels dragged out and thrown into a fire; while his body, carved into four quarters, was with his head exposed upon pikes, and permitted to rot and fester among the public haunts of men!”
—Herman Melville (1819–1891)
“There is no such thing as a free lunch.”
—Anonymous.
An axiom from economics popular in the 1960s, the words have no known source, though have been dated to the 1840s, when they were used in saloons where snacks were offered to customers. Ascribed to an Italian immigrant outside Grand Central Station, New York, in Alistair Cooke’s America (epilogue, 1973)