Median Voter Model

Definition

Health Economics

  • This is a theorem in public choice theory that states that the median voter determines the rate of output chosen for public goods that are publicly produced (or privately produced but publicly financed). In the diagram there are five demand curves for a community of five taxpayers, who each pay the same amount of tax but have different demands for the good (in this case 'health care'). Public output decisions are taken by simple majority vote. The marginal tax rate (exogenously given) is indicated by MT and the demand curves, D 1, D 2, etc. are the marginal value curves for the five voters. At the given marginal tax rate, voter 1's preferred output is Q 1, voter 2's is Q 2, etc. If Q 1 is proposed, only voter 1 will support it, the others all preferring larger output rates. If Q 2 is proposed, voters 3, 4 and 5 will outvote voters 1 and 2, preferring more. If Q 4 is proposed voters 1, 2 and 3 will outvote voters 4 and 5 and voters 1, 2, 3 and 4 will outvote voter 5 in opposing output rate Q 5. The rate that commands the majority is Q 3, which just happens to be voter 3's preferred rate and voter 3 is the median voter.
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