Assumptions of the model
From the perspective of public choice theory, Niskanen (1971) argued that bureaucrats, like market actors, pursue self-interest. Whereas Downs (1967) classified bureaucrats' varied motives, Niskanen simplified by noting that goals such as salary, perquisites, reputation and power mostly grow with budget size. He modeled the relationship between bureau and legislature as a bilateral monopoly. The bureau monopolizes information on production costs, while the legislature sees only the total budget, creating information asymmetry.
Oversupply and policy implications
Niskanen argued that this information advantage lets bureaucrats obtain the largest budget the legislature will accept, so services can be oversupplied up to twice the efficient level. Niskanen (1975) extended this to relations between bureaucrats and politicians. The model supported arguments about government failure and rent-seeking and became a theoretical basis for New Public Management reforms such as privatization, competition and performance management.
Revisions and critiques
Migué and Bélanger (1974) revised the model, arguing that bureaucrats seek discretionary surplus rather than total budget, and Niskanen later partly accepted this. Moe (1984) used principal-agent theory to stress the many tools legislatures use to control bureaucrats. Dunleavy (1991) proposed the 'bureau-shaping model', arguing that senior officials care more about reshaping the nature of their work than about budgets. Blais and Dion's (1991) volume concluded that evidence shows bureaucrats prefer budget growth, but evidence of maximization is weak. The model is regarded as a classic economic analysis of bureaucracy.
FAQ
- What is the budget-maximizing bureaucrat model in simple terms?
- Bureaucrats gain more as their agency's budget grows, so they push budgets up, making government bigger than needed.
- What is the bureau-shaping model?
- Dunleavy's model, arguing that senior officials prefer reshaping their agencies into more pleasant, prestigious units over increasing budgets.
Sources reviewed: 2026-10-26
References
- Niskanen, W. A. (1971). Bureaucracy and representative government. Aldine-Atherton. The founding book.
- Niskanen, W. A. (1975). Bureaucrats and politicians. Journal of Law and Economics, 18(3), 617–643. Extension to politicians.
- Migué, J.-L., & Bélanger, G. (1974). Toward a general theory of managerial discretion. Public Choice, 17, 27–47. Discretionary budget.
- Downs, A. (1967). Inside bureaucracy. Little, Brown. Types of bureaucrats.
- Moe, T. M. (1984). The new economics of organization. American Journal of Political Science, 28(4), 739–777. Principal-agent turn.
- Dunleavy, P. (1991). Democracy, bureaucracy and public choice: Economic explanations in political science. Harvester Wheatsheaf. Bureau-shaping model.
- Blais, A., & Dion, S. (Eds.). (1991). The budget-maximizing bureaucrat: Appraisals and evidence. University of Pittsburgh Press. Evidence collection.