| Abstract: | This article develops a theory of the administration and effectiveness of government programs. In the model, a bureaucrat chooses a mechanism for assigning a good to clients with uncertain qualifications. The mechanism applies a costly means test to verify the client's eligibility. A politician exercises oversight by limiting the bureaucrat's testing resources and the number of clients to be served. The model predicts the incidence of common administrative pathologies, including inefficient and politicized distribution of resources, inflexibility, program errors, and backlogs. When the politician favors marginally qualified clients, per capita spending is low and error rates are high. When the politician favors highly qualified clients, per capita spending is higher and error rates are lower. In the latter case, the bureaucrat may also use discriminatory testing, which allows the politician to target favored clients. Such targeted programs increase budgets and reduce backlogs, but they also increase error rates. |
