For example, if Lilith Quirkenstone, a working class woman barely able to make it from one paycheck to the next, purchases a basket of goods that generates the highest level of satisfaction given her limited income, then she is maximizing utility. However, if Mona Mallard, owner and President of Mona Mallard Duct Tape Industries contacts her long-time friend, Victor Thurgood, who also happens to be Mayor of Shady Valley and frequent recipient of campaign contributions, and requests that he overturn a new environmental regulation that might hurt her bottom line, then she is rent seeking.

The difference rests not so much with the motivation as with the ability to influence the process so that as much "rent" is extracted from the process as possible.

Economic Rent

The modern study of economics recognizes the importance of land as a factor of production and that rent is an important factor payment to compensate for the opportunity cost of using land. The phrase "economic rent" is holdover from this early view and is used in reference to a payment received by a resource over above the opportunity cost.

Economic rent is almost synonymous with the term profit. If there is a difference, profit is the revenue received over and above the opportunity costs of all resources combined, and economic rent is the revenue received over and above the opportunity cost of one resource.

People are said to be rent seeking when they try to get revenue (or other benefits) over and above their opportunity cost, the minimum they would be willing to accept.

Utility Maximization

Because choices have consequences, utility maximization is really all about weighing benefits and costs. Choices are based on comparing the benefits generated with the opportunity costs foregone. The decision to consume a Hot Bananarama Ice Cream Sundae is based on a comparison of the satisfaction obtained with the satisfaction foregone by NOT consuming other goods that were NOT purchased with the income used for the sundae. The decision to enjoy a sunset is based on a comparison of the satisfaction obtained with the satisfaction foregone by NOT spending time pursuing other activities.

Public Choice Inefficiency

The inefficiency, however, arises not from the rent-seeking motivation, but from the ability to achieve success. Motivated by the maximization of utility, elected politicians are well-known rent seekers. They tend to be more successful in this pursuit than others because their leadership positions provide greater abilities.

Special interest groups also seek rent. And to the degree they are able to influence elections, public policies, and the actions of politicians, they too have greater abilities to acquire economic rent.