Pressure and the division of a public budget

This paper considers the division of a public budget among competing interests. The planner determines the optimal allocation by maximizing a weighted social welfare function. These weights reflect society's attitudes to different recipient groups, and are not constrained to be constant. By exerting “pressure”, the recipients can attempt to manipulate the weights and hence influence the division of the budget. The amount of resources used on pressure, and the effects on the preference weights are calculated. An important parameter in the model is the elasticity of pressure, for which an appropriate estimate is presented from the case of competition for a share of a health services budget in Norway.