Can we rely on the altruism of professionals or the public service ethos to deliver good quality health and education services? And how should patients, parents, and pupils behave - as grateful recipients or active consumers?This book provides new answers to these questions - a milestone in the analysis and development of public policy, from one of the leading thinkers in the field. It provides a new perspective on policy design, emphasising the importance of analysing the motivation of professionals and others who work within the public sector, and both their and public service beneficiaries' capacity for agency or independent action. It argues that the conventional assumption that public sector professionals are public-spirited altruists or 'knights' is misplaced; but so is the alternative that they are all, in David Hume's terminology, 'knaves' or self-interested egoists. We also must not assume that individual citizens are passive recipients of public services (pawns); but nor can they be untrammelled sovereigns with unrestricted choices over services and resources (queens). Instead, policies must be designed so as to give the proper balance of motivation and agency. The book illustrates how this can be done by detailed empirical examination of recent policies in health services, education, social security and taxation. It puts forwards proposals for policy reform, several of which either originated with the author or with which he has been closely associated: universal capital or 'demogrants', discriminating vouchers, matching grants for pensions and for long-term care, and hypothecated taxes.