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What is the Niskannan model?
I. Niskannan model
197 1 year, Niskanen published Bureaucracy and Representative Government, and put forward the theory of bureaucratic budget maximization, that is, bureaucrats pursue the maximization of the total budget scale. Since then, Niskannan has revised and improved this theory twice (1975, 199 1).
1. Original model
Niskannan believes that bureaucracy has three crucial factors: (1) the nature of bureaucracy itself; (2) the relationship between the bureaucracy and the surrounding environment; (3) Maximize the motivation of bureaucrats. Bureaucracy is regarded as a non-profit organization, funded by donors' funds. In general, it is the bureaucrats with higher status who play a decisive role in the bureaucracy, and they hold the independent budget equivalent to their status. The environment of bureaucracy is dominated by the relationship between bureaucracy and its sponsors, and bureaucracy pursues budget maximization. Therefore, the bureaucracy tends to provide more output than the optimal output, that is, to provide too much government output. [1] According to a research summary (Blais &; Dion), Niskannan model has two basic assumptions. [2] The first assumption is that bureaucrats try to maximize their budgets. Niskannan believes that the following factors will enter the bureaucratic utility function: salary, allowance, reputation, power, goodwill, output, the difficulty of making changes, and the difficulty of managing bureaucrats. In his view, except for the last two factors, these factors are all positive monotone functions of the budget. Therefore, the bigger the budget, the greater the effectiveness of bureaucrats. In addition, in order to survive, bureaucrats must also maximize their budgets. The second assumption is that in most cases, bureaucrats can successfully maximize their budgets. Niskannan believes that the relationship between bureaucracy and funders is a bilateral monopoly. In this relationship, bureaucrats exchange budget allocations with sponsors for public goods and services. However, there is information asymmetry between donors and bureaucracy. Niskannan believes that "under most conditions, the relative stimulus and available information give the bureaucracy absolute monopoly power" [1](P.30). There are two main reasons for information asymmetry: (1) sponsors lack sufficient motivation to use their potential power. As Niskannan thinks, politicians are mainly concerned about their re-election, which is "rarely associated with the net income generated by the organization" [1] (page 29). (2) The sponsors lack the necessary knowledge and information about the production process of bureaucracy. Based on the above assumptions, Niskannan established his bureaucratic model of budget maximization, but he did not provide corresponding and sufficient empirical evidence to support the basic assumptions and conclusions of this model.
2. Modify the model
1974, MiG and Bilango modified Niskannan's model. They think that bureaucrats are most concerned about discretionary management, so only discretionary budget-the part where income exceeds the minimum cost-is what bureaucrats really want to maximize. However, they admit that the discretionary budget depends on the total budget [3] (page 46). Niskannan later (1975) also thought that bureaucratic utility might be a function of discretionary budget and output (total budget). [4]
In 199 1, Niskannan once again suggested some modifications to his theoretical model: First of all, he thought, "My previous assumption that bureaucracies are committed to maximizing their budgets … should be completely abandoned and accepted" [5] (page 28). Therefore, it is common for bureaucrats who pursue the maximization of surplus, but it is a special case for bureaucrats who pursue the maximization of output (total budget) [5](P.22). In other words, his previous model of bureaucratic budget maximization is no longer a universally applicable theory, but only a theory of bureaucratic behavior under special circumstances. Secondly, he also gave up another previous assumption that political patrons are "a sample of an impartial legislature, but they are negative when evaluating the recommendations of the bureaucracy" [5] (page 22). Niskannan realized that congressional committees and other budget review bodies were not passive. Moreover, in the process of budget review, political sponsors usually try to induce additional information, and there are often various bargains between bureaucrats and sponsors. Just as Miller and Moi (Miller &; Moe, 1983) further pointed out that political donors usually have some skillful bargaining skills, which can affect the budget results. In Romer and Rosenthal (Romer &; Rosenthal, 1979), Niskannan (199 1) further discussed the scope of budget bargaining. However, he still retains the basic framework of his theory, and Niskannan insists that the core elements of his theory of bureaucratic behavior are still valid after reflection.
Second, the theoretical debate.
Among the economic theories about bureaucratic behavior, Niskannan model is probably the most controversial. The theoretical controversy about this model is not only in the field of economics, but also in the field of political science and public management. Theoretically speaking, Niskannan model not only won support, but also attracted criticism. This model is considered as "the most outstanding work on the role of bureaucracy put forward by an economist" (Mitchel, 1974), "the most exquisite and comprehensive theoretical analysis on bureaucratic behavior" (Miller, 1977), and "the first time in public * * *(Muller, 6577) (1) Recently, pallas and Tien thought that "this model gives a scientific explanation to the ancient and widely spread concept of bureaucratic inefficiency" [2](P.6).
However, the Niskannan model has also been severely criticized. There is a criticism that the premise assumption of Niskannan model is untrue, especially the assumption that the maximization of bureaucratic utility will lead them to pursue the maximization of budget and the description of the bargaining between bureaucrats and their funders (Margolis,1975; Rogowski, 1978). Organizational analysts believe that the essence of government bureaucracy determines that it is impossible for us to derive bureaucratic behavior characteristics from maximizing personal utility (see Thompson, 198 1). Pareton and Wintober (Breton &; Wintrobe, 1982) thinks that, similar to Coase theorem, competitive rent-seeking among bureaucrats within a bureaucracy will make the motivation of maximizing budget disappear (pages 94-99). Conybear (1984) points out that Niskannan's conclusion is only valid for those bureaucracies that can implement perfect price discrimination in their relations with political sponsors. When this situation does not exist, bureaucracy may produce less than private enterprises (page 479). (2) In this part, we mainly analyze three theories that pose great challenges to Niskannan model.
1. Tang Liwei model
1 9 9 1 year, Tang Laiwei pointed out in his book The Choice of People, Officials and Officials that Niskannan's model has a fatal weakness, that is, it assumes that all bureaucracies are the same. It is under this assumption that Niskannan simplified the complicated bureaucracy and extended his observed bureaucratic budget behavior from one bureaucracy to all bureaucracies. It is on the basis of these criticisms that Tang Laiwei constructed his "bureaucratic reform model" and introduced the complex factors of bureaucracy into the bureaucratic economic model.
Tang Liwei pointed out that the theory of bureaucratic budget behavior must start with the budget analysis of public bureaucrats, identify and analyze the budget types and budget composition of bureaucrats. He pointed out that the budget of public officials' organizations consists of four types: core budget, bureaucratic budget, project budget and super-project budget. For different bureaucratic mechanisms, the relative norms of core budget, bureaucratic budget and project budget are different [11] (P.183). Due to the different budgeting organizations, bureaucratic mechanisms can be divided into five main types [11] (pp.183-190): supply or production mechanism, control mechanism, transfer payment mechanism, combination mechanism and control mechanism. Whether bureaucrats pursue budget maximization depends on three conditions: bureaucratic rank and budget type, institutions involved, and time change [11] (P.191). Tang Laiwei believes that the growth of various components in the total budget will have different effects on bureaucratic effectiveness. At the same time, he pointed out that even if rational bureaucrats are mainly concerned with the maximization of their core budget and bureaucratic budget, this motivation is strongest mainly in those organizations that have close relations between core budget, bureaucratic budget and project budget, such as supply organizations. [1 1] (page 193)
On this basis, Tang Laiwei believes that Niskannan model is not accurate as a model of bureaucratic budget decision-making. The model does not analyze the complexity of the budget composition of bureaucracy, nor does it analyze the complexity of bureaucracy, thus simplifying the budget decision-making of bureaucracy (senior and junior bureaucrats). In Tang Liwei's view, bureaucrats, especially senior bureaucrats, do not necessarily pursue budget maximization [1 1](P.208). So, what do senior bureaucrats pursue? Tang Laiwei further established his "bureaucratic remolding model". The model holds that the employment system in the public sector makes the welfare of senior bureaucrats closely related to their job characteristics rather than economic benefits. In the "bureaucratic remodeling model", senior bureaucrats are most interested in maximizing their status and quality of work. Specifically, senior officials are most interested in their policy advisory functions. Therefore, when they are faced with extensive spending cuts, in order to protect themselves and their institutions and enable them to focus on their favorite policy consulting functions, they will transform their bureaucracy into smaller institutions. This means that in some cases, senior bureaucrats will take the initiative to choose budget minimization instead of budget maximization. [1 1] (pp. 200-209) In short, in Tang Liwei's view, senior bureaucrats who pursue the maximization of personal utility can achieve the maximization of utility by changing the nature of their institutions, that is, by reshaping the bureaucracy rather than maximizing the budget.
2. Criticism of wortmann and Mel
Niskannan model is implicitly established under the framework of a principal-agent theory. It also follows two basic assumptions of principal-agent theory: information asymmetry and target conflict. The former thinks that the agent has more information than the principal. The latter thinks that the agent and the principal are in conflict with each other in their goals. Recently, however, political scientists wortmann and Meyer (Waterman &; Meier, 1998) profoundly pointed out that a fundamental problem of the traditional principal-agent theory is that the degree of target conflict and information distribution between the principal and the agent are regarded as constants rather than variables. This principal-agent theory is very problematic for analyzing the relationship between political clients and bureaucracies. Because, in the political field, due to the existence of multiple principals and multiple agents and the particularity of policy issues, the degree of target conflict and information distribution between political principals and bureaucratic agents are variables but not constant: sometimes political principals and bureaucratic agents have the same goals, sometimes political principals have more information than bureaucratic agents, and sometimes political principals and bureaucratic agents have insufficient information. [12] These situations are completely unknown to the classical principal-agent theory.
Figure 1 Principal-agent relationship in political field
Target conflict
Agent information level
Very few
many
Customer information level
many
Grace system
Initiative alliance
Very few
A huge political slogan
Politics (such as abortion policy)
Classical principal-agent relationship
be united in one's aims
Agent information level
Very few
many
Customer information level
many
Plato's Republic
Strategy subsystem
Very few
theocracy
Bottom line mechanism
According to wortmann and Mayer, when the degree of target conflict and information distribution between political principals and bureaucratic agents are variables rather than constants, there are eight different principal-agent relationships in the political field (Figure 1). Obviously, among the eight principal-agent relationships identified by wortmann and Meyer in the political field, the classic principal-agent relationship used in Niskannan model is only one of them, namely, the principal-agent relationship with asymmetric information and conflicting goals. Therefore, Niskannan model can only explain the budget behavior of bureaucrats in this principal-agent relationship at most, but can't explain the budget behavior of bureaucrats in the other seven principal-agent relationships. Although wortmann and Meyer's criticism is not directed at Niskannan model itself, it poses a direct threat to Niskannan model.
3. Wilson's point of view
Wilson (1989) thinks in his masterpiece Bureaucracy that there are often other goals more important than budget for bureaucracy. He pointed out that although there are many "imperialist bureaucracies" in reality, which are all managed and led by expansion-oriented administrative officials, there are also many administrative officials who are cautious and skeptical about the budget growth of the institutions. [ 13](p . 180- 18 1)
Wilson (1989) thinks that organizational maintenance is the special duty of administrative officials. Organizational maintenance refers to the resources necessary for the continuous operation of various organizations. However, different from commercial organizations, for a government bureaucracy, the maintenance of the organization needs not only the inflow of funds (budget allocation) and labor (employees), but also the inflow of political support. In some cases, the maintenance of bureaucracy needs to effectively eliminate or deal with threats from challengers. At this time, political support is very important [13] (p.181). The theoretical assumption of maximizing bureaucratic budget ignores the fact that bureaucrats and bureaucracies often have to weigh more budgets and institutional autonomy. He believes that other things being equal, for bureaucrats and bureaucrats, the more the budget, the better. However, the crux of the matter is that these other conditions are not constant. One of the most important variables is the autonomy of the bureaucracy. According to Selznick (1957), autonomy refers to the independent conditions that allow a group to form and maintain its unique characteristics and identity. [13] (page 182)
Wilson (1989) thinks that in the government, in many cases, the bureaucracy can't get more budget and maintain the autonomy of the organization. Increasing the budget may reduce the autonomy of the bureaucracy. In this case, budget maximization can no longer be the main goal of bureaucrats and bureaucrats. As Wilson pointed out, for the administrative leader of the government, the increase of his organization's autonomy will reduce the cost of organization maintenance. Because this increase in autonomy will reduce the number of external stakeholders (competitors of bureaucracy) and increase the opportunities for institutional managers to develop a consistent sense of mission. Therefore, in Wilson's view, Niskannan's popular bureaucratic budget maximization model is an overly simple theoretical assumption. For bureaucracy, autonomy is at least as important as budgetary resources, because autonomy will determine the cost of an institution to obtain and use resources. Only when the autonomy of the bureaucracy is determined can the organization seek more budgetary resources or expand its jurisdiction. [ 13](P. 18 1)
These three theories show that Niskannan's bureaucratic behavior economic model greatly simplifies the complexity of the real world in order to realize strict reasoning in economics. Although it looks beautiful and logical in theoretical derivation, it also excludes many "unabsorbable data" of this beautiful model from the theoretical model.
Third, empirical research.
In 1975, Niskannan noticed that there was no direct test of the oversupply hypothesis in his theory of bureaucratic budget maximization. By using the variable "bureaucratic integration", Niskannan provides a time series test of bureaucratic funds. He found that in some cases, when the bureaucracies are united, they can get a larger budget than when they are separated, and regarded this discovery as evidence that the increase of budget scale will lead to the increase of bureaucratic power and output [4](P. PP. 640-643). Since the publication of the book Bureaucracy and Representative Government, many empirical tests on Niskannan model have been accumulated in the fields of economics, political science and public management, mainly focusing on its assumptions, conclusions and implications. The following summarizes the main results of these empirical studies.
1. Budget scale and bureaucratic welfare
The central assumption of Niskannan model is that bureaucracy can benefit from increased budget. Jung (Young, 199 1) summarizes the empirical research in this field and analyzes the relationship between budget scale and bureaucratic career. [15] He questioned whether we have any evidence to support the hypothesis of Niskannan model: in a bureaucracy whose expansion speed exceeds the conventional growth, bureaucrats can get higher salary growth and faster position promotion. Many empirical studies (Dunsire,1987; Grandjean， 198 1； Johnson & Johnson company Libecap， 1987， 1989； Jack, 1987) has not found any hypothesis that can support the increase of bureaucratic salary with the growth of the organization. Another assumption related to Niskannan model is that the increase of budget may provide more promotion opportunities for bureaucrats. However, many empirical research results do not support this hypothesis (Pempel,1984; Hector Luo,1977; Brower, 1987). These empirical studies show that at the top of the bureaucracy, the promotion of positions mainly depends on the approval of politicians.
In short, as Jung said, "The current research believes that the expansion of bureaucracy has nothing to do with the career prospects of officials. The view that civil servants working in bureaucracies with fast budget growth will be able to get higher salary growth and faster promotion has not been strongly supported by experience "[15] (page 52). He further pointed out that although several studies have found that there is a positive correlation between institutional growth and career promotion, "these are small in general and do not show consistency among different departments" [15] (page 52).
2. Bureaucratic tactics
Niskannan model assumes that the strategy adopted by bureaucracy is usually consistent with the budget maximization model. Lynn (199 1) analyzes and determines the extent to which bureaucrats seek to maximize their budgets through qualitative evidence obtained from case studies. He found that "in a specific and often faced environment, bureaucrats are indeed seeking to maximize the discretionary resources they can control." Occasionally, they also seek to maximize the budget "[2 1](P.8 1). However, it is difficult to determine the preconditions of budget maximization behavior. Lynn believes that "bureaucrats, at least those who manage complex organizations, will choose those strategies that can maximize their utility among a series of strategies with different costs and benefits" [2 1](P.8 1). Lynn's research means that bureaucrats' choice of budget maximization strategy is accidental.
Campbell and Lowe (Campbell &; Naulls, 199 1) Through in-depth interviews with senior officials of central government agencies in the United States, Britain and Canada, the degree of government departments' budget maximization tendency was confirmed. Their empirical research attempts to analyze how the orientation of budget maximization is related to officials' views on their roles and occupations. They found that officials who maximize the budget are usually those who agree with the value of public services and are very focused on professional fields. They also found that those officials who concentrate on allocating resources through bureaucracy tend to maximize, while those officials who look at their career from the perspective of personal utility are minimalists, not maximizers. At the same time, they also found that the views on budget maximization vary with the location of the government and officials. In every country surveyed, officials' consideration of budget maximization will be very different in different periods. For example, this difference exists in the Carter and Reagan administrations. Officials in the former period have higher evaluation of budget maximization than officials in the latter period. [22](P. 1 13).
3. Failure of powerful bureaucracy and legislature
Niskannan model also assumes that the bureaucracy not only wants to maximize the budget, but also has enough power to achieve this goal. Some empirical studies have tested the power of bureaucracy in the budget game. Aucoin (199 1) focuses on the budget process, especially the various budget constraint procedures established by politicians to control the bureaucracy. He summed up all kinds of institutional efforts made by politicians who tried to limit expenditures in the budget process. These budgetary constraints include: (1) strengthening the ability of central government agencies to review, control and reorganize public expenditure; (2) Various methods to make constraints effective in the budget process; (3) Efforts to reform public sector management aim at making efficiency the standard pursued by public managers [23](P. 120). He believes that the shift of the focus of budget constraints from the central organization to various expenditure departments is actually accompanied by the enhancement of political control and the use of various means to make budget constraints effective. He finally came to the conclusion that bureaucrats are only subordinate officials in the budget process. "Their influence in basic budget decision-making is minimal, and with the concentration of power, this influence becomes greater, which is the characteristic of various efforts to limit expenditure" [23](P. 138).
Some researchers believe that Niskannan model is not so much a bureaucratic trick as a theory of legislative failure [24](P. 16 1). In other words, because the bureaucracy has an overwhelming advantage over the legislature in information, they have different positions in bargaining, and the pattern of monopoly between the two sides has turned into a discriminatory single monopoly manipulated by the bureaucracy. However, if the legislature has more information, its bargaining power will be improved accordingly. Crain et al. (1985) used quantitative analysis to test this argument. They assume that the extent to which clients can obtain information about the operation of bureaucracy depends on the division of labor within the legislature. They assume that the greater the division of labor and occupation, the greater the advantage of the legislature in supervising the bureaucracy, and the smaller the size of the government. However, they also speculate that this relationship may develop in the opposite direction. The existence of more committees in the legislature will enable legislators to better reflect the interests of interest groups and will also lead to greater government. This study also seems to support the Niskannan model's assumption that the legislature fails. ④
4. Bureaucratic behavior and budgetary results
Niskannan model holds that bureaucratic budget maximization behavior has great influence on budget results. This relationship is mainly reflected in the following three hypotheses: oversupply hypothesis, inefficiency hypothesis and public sector growth hypothesis.
The hypothesis of oversupply. In Niskannan model, bureaucrats who maximize the budget tend to oversupply government output. However, the empirical research related to this hypothesis has drawn a very vague conclusion. Empirical Study on the Relationship between Professionalization and Public Expenditure (Fry&; Wrinters， 1970； Prosperity and prosperity. Haldorsen,1973; Boyne, 1985) all confirmed this hypothesis. Other empirical studies have also proved that a strong bureaucracy can obtain a higher budget and more staffing than a weak bureaucracy (Nischolson &: Topham， 197 1， 1975； Storey, 1980), thus supporting Niskannan's hypothesis. However, other empirical studies show that Niskannan's hypothesis is problematic. For example, Ruttan (1980) estimated the rate of return of public sector agricultural research funds and concluded that the rate of return of these public expenditures varied from 30% to 60% every year. Therefore, scientific research is insufficient supply rather than excessive bureaucratic output. Other empirical studies do not support Niskannan hypothesis (McGuire,1981; Wycoff, 1988).⑤
Invalid ratio assumption. Niskannan (1975) cited several studies to prove that the government spends higher production costs than private enterprises when providing the same services, such as fire fighting services, aviation services and electricity services. Since then, the inefficiency of bureaucracy has become a firm conclusion of academia and ordinary people. However, there are also situations contrary to this assumption in empirical research. Such evidence can even be found in the evidence cited by Niskannan to support his theory. ⑥
Public sector growth hypothesis. Niskannan model assumes that government expenditure exceeds the level preferred by middle voters. Dunsire (199 1) studied the case of the British Conservative government's efforts to reduce the role of the state. Specifically, according to the empirical research on British public expenditure, employment and salary during the period of 1975- 1985, he explained the policy output with Niskannan model and drew the following conclusions: (1) The public service-oriented bureaucratic model can explain the bureaucratic behavior in this period better than the budget maximization bureaucratic model; (2) There is no evidence that the Conservative government rewards bureaucrats who pursue budget maximization. [ 16]
5. discretionary budget
In 1990s, Niskannan (199 1) revised his model, claiming that bureaucrats tend to maximize the discretionary budget rather than the total budget. This is a very important revision. At present, there are still few tests on the modified Niskannan model. Bater and Krosko (Bater &; Korosec, 1996) uses the data of American city managers' decision to outsource public services to test this hypothesis. They pointed out that if the Niskannan model is effective, then city managers should avoid outsourcing some affairs in the form of contracts, because this will expose their discretionary budget and make it difficult for them to maximize their personal utility with this budget. Their regression analysis results show that the modified Niskannan model also lacks the support of empirical facts. Their research tends to support the alternative hypothesis of Niskannan model, that is, the so-called professionalism bureaucratic model. The bureaucratic model of professionalism advocates that city managers will choose the most efficient way to provide services. Of course, the limitation of their research is that they may only explain the behavior of urban managers. [26]
Four. conclusion
For Niskannan model, there are both empirical studies to support it and empirical studies to oppose it. However, most empirical studies tend to oppose this model. This means that in most cases, bureaucratic budget behavior cannot be explained by Niskannan model. It is easy to understand that there is such a conflict in the empirical research results of Niskannan model when people such as Wilson (1989), Tang Laiwei (1992) and wortmann and Meyer (1998) criticize Niskannan model in theory. Because from the perspective of budget composition and budget environment, bureaucracy is very complicated, and different bureaucracy is different. Therefore, in some cases, bureaucrats will choose to maximize the budget, but in other cases, they will choose to reduce the budget. This means that bureaucratic economics should face up to the complexity of bureaucrats and analyze under what conditions, bureaucrats will choose to maximize the budget or minimize the budget. The new generation of bureaucratic economics must abandon an unrealistic assumption implied in the traditional public choice theory, that is, assume that all bureaucracies are the same. The new bureaucratic economics must be based on a typology of bureaucratic complexity. Only in this way can public choice theory and its bureaucratic economics better explain and predict bureaucratic behavior. Therefore, we must pay full attention to and absorb the research results of politics, public administration and sociology. Because the research history of bureaucracy in these disciplines is much longer than that in economics. At this time, Professor Coase's suggestion (1978) is very important to economists: "Economists who try to work in other social sciences will lose their main advantages, and they will face competitors who know the subject better than them" [27](P.2 10).
Precautions:
① ② See Blais &; Dion (199 1, page 3- 12).
③ See Kiewiet (199 1). Some empirical studies may not be designed to directly test Niskannan model, but their results are related to Niskannan model.
④ ⑤ For the above discussion, see Kiewiet( 199 1).
⑥ See the appendix of Wolff (1988).
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