 Public Choice theory emerged in 1950s, gained popularity in 1980s.  James Buchanan, (winner of the Nobel Prize in Economic Science, 1986, for work in Public Choice) and Gordon Tullock are credited with being the primary developers of Public Choice Theory. Their book, Calculus of Consent, published in 1962, is still considered the classic piece on this subject.

 PCT explains how public decisions are made. It involves the interaction of the voting public, the politicians, the bureaucracy and political action committees.  Public choice seeks to understand and predict the behaviour of politicians and bureaucrats by utilising analytical techniques developed from economics, based on rational choice.

In other words, public choice is an application of neoclassical economic tools to explain political behaviour Chief assumption is that political actors, like economic ones, act rationally to maximize their utility (satisfaction) and that the only political actor that counts is the individual. In public choice, individuals, interest groups, bureaucrats, and politicians are assumed to seek their own self interest as in the market place. Decisions made depend on the costs and benefits of an action taken whereby each group attempts to maximise their own net benefits. Benefits can take the form of monetary or non-monetary rewards and can include ideologies, goals, and cultural values. The seeking of self interest by bureaucrats and politicians, and collective action by the various interest groups in turn result in the adoption of a particular stance in the specification of institutions and property rights.

It permits the understanding of "political failure", in a similar fashion to the concept of “market failure” developed by classical economics. Politics is its main emphasis. The most important contribution of Public Choice Theory is that it recognizes that politicians are motivated by self interest -- just like you and me. "Public choice," ill-named because the only choices it recognizes are essentially private, is both a branch of microeconomics and an ideologically-laden view of democratic politics.

Public choice takes the same principles that economists use to analyze people's actions in the marketplace and applies them to people's actions in collective decision making. Economists who study behavior in the private marketplace assume that people are motivated mainly by self-interest. Although most people base some of their actions on their concern for others, the dominant motive in people's actions in the marketplace—whether they are employers, employees, or consumers—is a concern for themselves. Public choice economists make the same assumption— that although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest-choosing the course of action which is to their best advantage.

 there is no such thing as the "public interest" over and beyond the interests of individual citizens,  the pursuit of self interest magically promotes the common interest when we are dealing with private goods, but it usually does not when we are dealing with public goods (fishing in ocean).  Concern should be to mobilize citizens to help them make local public choices consistent with their own resources.

 Analysts find that whereas self-interest leads to benign results in the marketplace, it produces nothing but pathology in political decisions.  These pathological patterns represent different kinds of "free-riding" and "rent- seeking" by voters, bureaucrats, politicians, and recipients of public funds.

This approach is based on the assumption that individuals pursue their own aims and act according to their preferences Because individual preferences and the free choice of individuals are central to the public choice approach, its benchmark for political institutions is whether a free individual would willingly agree to such structures and to their outcomes (Buchanan and Tullock, 1962; Buchanan, 1975).

 1) People act to maximize utility in their public capacities as well as their private ones.  This means that voters are assumed to make choices that are expected to maximize benefits to them or minimize costs. Equally importantly, agents of government are expected to behave similarly.  2) In response to incentives, people may engage in rent-seeking behavior.  Rent-seeking is the economic term used to describe attempts by individuals to use the political process to obtain gains for themselves at the expense of others. 

 Examples of rent-seeking include lobbying for preferential tax treatment, protection from competition, subsidies, industry specific tariffs, and so forth.  Rent-seeking is economically inefficient, but according to public choice theory it is an inevitable by-product of human organization if constitutional and governmental arrangements permit the power of the state to be used to harm some and benefit others.

3) Positivism The most characteristic feature of this approach is its "positivism (what it is)," the deliberate absence of a normative or "what should be" policy stance. The whole concept of economic efficiency, is based on an analysis of the behavior of persons in market-like interactions, essentially a positive theory of market exchanges. Pol Science discipline offers no underlying model or theory of how men actually behave in their various public-choice capacities, it is normative.

4) Constitutional Democratic Government: Public Choice theorists attempt to examine the system of government in which the people governed define their government by means of a constitution a constitution that sets rules and institutions which offer the framework within which social relationships take place, both private exchanges and collective choices. Particular policy measures are made within the constitutional framework, within a specified legal order, within specified rules for making collective choices.

5) analyzing political or governmental decision making (nonmarket decision making) in terms of models derived from the choice behavior of individuals. We look at the choices confronting persons as they behave in their public choice capacities, as voters or nonvoters, as participants or nonparticipants in pressure groups, as employees of governmental units, as decision makers in bureaucracies, as working politicians, and in many other capacities.

One of the chief underpinnings of public choice theory is the lack of incentives for voters to monitor government effectively Thus constitutional government, voting, political manipulations by the politicians, rent seeking by the people, Realities of Collectives (Public Choice scholars examine the options involved with solving the many social dilemmas resulting from living in groups or collectives) are different aspects of public choice theory

Public-choice scholars made a number of reform proposals. Their main issues were the invention of constitutional safeguards against exploitation (political exploitation can be assumed if the sum of taxes an individual pays is greater than the value of public goods he or she receives) and the invention of a polycentric administrative system (in contrast to the monocentric system ). In such a polycentric administrative system, the provision and the production of services are separated. Private vendors and public vendors compete for production contracts.

The size of production units and public consumption units (jurisdictions) are not necessarily identical. Such a system would function best if it was highly decentralized. Thus, a polycentric system would use transparent financing systems such as user charges, vouchers for public goods, and opportunities for citizens (as consumers) to make choices (Ostrom, 1973, 1977; Savas, 1982).

In a polycentric system a lot of individuals would make decisions according to their personal preferences and knowledge; there would not be a single (and usually distant) decision center, but many of them (Hayek, 1960, 1969). Every component of public-choice theory—the methodology, the ethical benchmarks, and the recommendations—directly conflicts with classical and neoclassical public administration. Vincent and Elinor Ostrom presented this as a new approach to public administration and found some supporters (Ostrom and Ostrom, 1971).

Public choice came along and provided analyses of the behavior of persons acting politically, whether voters, politicians or bureaucrats. These analyses exposed the essentially false comparisons that were then informing so much of both scientific and public opinion. In a very real sense, public choice became a set of theories of governmental failures, as an offset to the theories of market failures that had previously emerged from theoretical welfare economics

Critics argue that people acting politically—for example, as voters or as legislators—do not behave as they do in markets. Individuals are differently motivated when they are choosing “for the public” rather than for themselves in private choice capacities. The public choice theorist should, of course, acknowledge that the strength and predictive power of the strict economic model of behavior is somewhat mitigated as the shift is made from private market to collective choice. Persons in political roles may, indeed, act to a degree in terms of what they consider to be the general interest.