In search of rational government: What political preference function studies measure and assume

Political preference function (PPF) studies assume that policy-making can be described by a mathematical problem in which a rational government maximizes a function of interest groups’ welfares. The purpose of my paper is to explain in-depth ramifications of PPF study assumptions and methodology. PPF studies that attempt to measure interest group political power do so by measuring marginal rates of transformation along a Pareto frontier. One can estimate political power with a PPF only if observed policies are Pareto-efficient, which may depend on the assumed number of interest groups and policy instruments. Marginal rates of transformation need not reveal anything meaningful about interest group political power, and may incorrectly measure the direction of transfers.