What branch of economics applies economic analysis to political decision-making?

The branch of economics that applies economic analysis to political decision-making is public choice theory.

Public choice treats voters, politicians, bureaucrats, and interest groups as decision-makers whose incentives can be analyzed with tools such as microeconomics, game theory, and rational-choice models. Rather than assuming that governments automatically maximize an objective “public interest,” it asks how individual incentives and political institutions shape collective outcomes.

The field has roots in nineteenth-century work by Knut Wicksell and developed into a modern research program through scholars including Duncan Black, James Buchanan, and Gordon Tullock. Buchanan and Tullock’s 1962 book The Calculus of Consent helped establish constitutional and collective-choice analysis. Buchanan received the 1986 Nobel Memorial Prize in Economic Sciences for work on the contractual and constitutional foundations of economic and political decision-making.

Public choice is often used to explain government failure, rent-seeking, concentrated special interests, pork-barrel spending, and bureaucratic incentives. It is related to political economy, but public choice is the more precise answer to this wording. Social choice theory focuses more specifically on how individual preferences or votes are aggregated, while public choice emphasizes incentives and behavior within political institutions.