Do elections lead to informed public decisions?

Democracies delegate substantial decision power to politicians. We analyse a model in which the electorate wants an office-motivated incumbent to design, examine and implement public policies. We show that voters can always encourage politicians to design projects. However, they cannot always induce politicians to examine projects. In fact, politicians who would examine policies without elections, say because of a concern about the public interest, may shy away from policy examination with elections.     

Who Lobbies Whom? Special Interest Politics under Alternative Electoral Systems

Why do some interest groups lobby politicians and others lobby bureaucrats? We theorize lobbying venue choices and intensity as a function of contract enforceability with policy makers, politicians, or bureaucrats. We argue that organizational structures of interest groups, in particular, whether they are centralized or decentralized, substantially affect their lobbying strategies because they are associated with different ability to monitor and enforce contracts with policy makers and punish them when they fail. We further demonstrate that the effect of centralized versus decentralized structure on venue choices is conditional on the types of electoral system: majoritarian, semiproportional (single, nontransferable vote: SNTV), or proportional representation systems. We test this argument using longitudinal survey data on lobbying which span two decades and cover around 250 interest groups in various sectors and issue areas in Japan. The results lend strong support to our argument about contract enforceability under alternative electoral systems.     

A political theory of intergovernmental grants

This paper formulates a political theory of intergovernmental grants. A model of vote-maximizing federal politicians is developed. Grants are assumed to buy the support of state voters and the ‘political capital or resources’ of state politicians and interest groups which can be used to further increase the support of state voters for the federal politician. The model is tested for 49 states. Similarity of party affiliation between federal and state politicians and the size of the Democrat majority in the state legislature increases the per capita dollar amount of grants made to a state. Likewise, increases in both the size of the state bureaucracy and union membership lead to greater grants for a state. Over time, the importance of interest groups (bureaucracy and unions) has increased relative to political groups (state politicians).     

Competition of Politicians for Incentive Contracts and Elections

When politicians are short-term oriented or future elections do not sufficiently reflect the success of past policies, democratic elections cannot motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and elections can alleviate such inefficient decision-making in politics. This mechanism still works if the public cannot commit itself to a reelection scheme or if the public is unsure about the politicians’ time preferences. In the non-commitment case, incentive contracts may need to include a golden parachute clause.     

Governance and transnational civil society: the problem of transnational rent-seeking

The expansion of transnational civil society challenges the regulatory reach of nation-states, both individually and collectively. One regulatory challenge is that transnational civil society organizations (TCSOs) can avail of opportunities to engage in, or facilitate, transnational rent-seeking in ways which benefit a small group of organizations or individuals but which impose significant social costs. This article suggests that certain roles played by TCSOs lend themselves to rent-seeking behaviour and it explores the hypothesis that TCSOs can engage in, or facilitate, transnational rent-seeking where they constitute transnational special interests and/or private transnational authorities. To this end, the article outlines a brief theoretical framework and applies it to case studies of two TCSOs, representing transnational trade associations and industry lobbies, and sports associations and regulators. While the conclusions here are tentative, the article argues for further research including refinement of the theoretical framework and empirical testing.     

The composition and interests of Russia’s business lobbies: testing Olson’s hypothesis of the “encompassing organization”

Why are some business lobbies less benign in their external effects than others? In The rise and decline of nations (New Haven: Yale University Press, 1982), Mancur Olson proposed that less-encompassing groups—i.e., those whose constituents collectively represent a relatively narrow range of interests—have a greater interest in seeking the types of subsidies, tariffs, tax loopholes, and competition-limiting regulations that, while benefiting their members, impose costs on the rest of society. By drawing on a unique pair of surveys—one targeted to managers of Russian regional lobbies, and the other addressed to managers of Russian industrial enterprises—we provide what we believe to be the most direct test of this hypothesis to date. The pattern of responses is striking. Managers of both the less encompassing lobbies and the enterprises belonging to those types of organizations display stronger preferences for narrowly targeted policy interventions. Our results, that is, strongly support Olson’s hypothesis.     

Politicians’ outside earnings and electoral competition

This paper deals with the impact of electoral competition on politicians’ outside earnings. In our framework, politicians face a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The main hypothesis is that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this hypothesis using a new dataset on outside earnings of members of the German federal assembly and find that politicians facing low competition have substantially higher outside earnings.     

Campaign contributions as a commitment device

Mancur Olson’s theory of the decline of nations is path-breaking in political economics. It has been tested cross-sectionally in numerous empirical studies. We survey the existing results briefly, with a special focus on studies using the number of lobbies as an exogenous variable. Using data from the period 1973–2006, we then present the field’s first time-series analysis of the effects of the number of interest groups on the German lobby list and macroeconomic performance, gauged in terms of economic growth and inflation. The number of interest groups (as a proxy for their influence) is shown to have an important impact on macro-variables: Interest group activity significantly leads to a decline in the growth rate and a rise in the inflation rate.     

Political Conflict over Time

We study a model of electoral competition in which politicians must decide whether to initiate the provision of some public good and, afterward, how much of the public good to supply. The model illuminates how a project's implementation affects elections and, conversely, how electoral considerations influence decisions about implementation. Under well-defined conditions, politicians will either implement projects that they do not like or delay projects that, absent electoral concerns, they would support. The model further reveals how the perceived benefits of holding office can impede the production of public goods about which there is broad consensus. And depending on facts about the program's structure and the electoral landscape, a policy's implementation can either mitigate or exacerbate political conflict.     

Cooperative lobbying and endogenous trade policy

This paper considers trade policies in a small open economy in which two influential interest groups lobby the government. Since competitive lobbying leads to excessive rent-seeking expenditures, the lobbies have an incentive to cooperate. The outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups. Two important results are derived. First, if the power of competing interest groups is balanced, then cooperation leads to free trade. Second, if it is unbalanced, cooperation may, on the contrary, increase protection.     

Voters AS A Hard Budget Constraint: On the Determination of Intergovernmental Grants

Recent empirical literature has shown that the determination of intergovernmental grants is highly influenced by the political bargaining power of the recipient states. In these models federal politicians are assumed to buy the support of state voters, state politicians and state interest groups by providing grants. In this paper we provide evidence that the fiscal referendum reduces the reliance of states on matching grants received from the central government and thus the possibility of interest groups and state bureaucrats to obtain more grants. If referendums are available, voters serve as a hard budget constraint.     

Competitive Tendering in the Welfare State: Perceptions and Preferences among Local Politicians

Competitive tendering for public services has triggered a heated academic debate. In political economy, competition is claimed to improve efficiency. If this is true, why are most governments faithful to the monopoly model? Political economists suggest that public sector employees and unions influence the preferences of the elected politicians. In new institutional theory, competition is claimed to undermine democratic governance. If this is true, why do some elected governments make use of competitive tendering? In this tradition, organisational solutions are seen as expressions of autonomous values and perceptions about the outcomes of organisational solutions – not as manifestations of vote–maximising politicians subject to self–interested interest groups. When governments use competition, it is due to misconceived management fads that have temporarily penetrated long–established perceptions and value systems. These propositions have not been subjected to proper empirical testing. We have analysed extensive data about Norwegian local politicians, and found support for the notion that the perceptions of elected politicians affect their preferences for tendering for residential care services for elderly people and hospital services. But we found support for the political economy propositions as well. Party affiliation, interest group background and economic situation influence the perceptions and organisational preferences of elected politicians. Reform may be a question of political values and perceived consequences, but these values, perceptions and policy preferences are influenced by political self–interest and can be changed by exogenous economic shocks.     

Lobbying and compromise

The compromise enhancing effect of lobbying on public policy has been established in two typical settings. In the first, lobbies are assumed to act as “principals” and the setters of the policy (the candidates in a Downsian electoral competition or the elected policy maker in a citizen-candidate model of electoral competition) are conceived as “agents”. In the second setting, the proposed policies are solely determined by the lobbies who are assumed to take the dual role of “principals” in one stage of the public-policy game and ‘agents’ in its second stage. The objective of this paper is to demonstrate that in the latter setting, the compromising effect of lobbying need not exist. Our reduced-form, two-stage public-policy contest, where two interest groups compete on the approval or rejection of the policy set by a politician, is sufficient to show that the proposed and possibly implemented policy can be more extreme and less efficient than the preferred policies of the interest groups. In such situations then more than the calf (interest groups) wish to suck the cow (politician) desires to suckle thereby threatening the public well being more than the lobbying interest groups. The main result specifies the conditions that give rise to such a situation under both the perfectly and imperfectly discriminating contests.     

Lobbying and (de)centralization

This paper presents a positive theory of (de)centralization of policy decisions in an international union -defined as a supranational jurisdiction that may exercise a policy prerogative on behalf of member countries. I build a benchmark model where national lobbies can coordinate (i.e. form a trans-national lobby) at no cost and show that lobbying does not affect the fiscal regime. On the other hand, when interest groups cannot coordinate, decentralization emerges as a political equilibrium with lobbying. Policy centralization hurts national lobbies by increasing competition for influence. At a constitutional stage, interest groups induce politically motivated governments to reject centralization. Three extensions show that this result depends on the level of cross-border externalities; the voting rule at the constitutional stage; and the details of the institutional decision mechanism under centralization.     

Loose Cannons or Loyal Foot Soldiers? Toward a More Complex Theory of Interest Group Advertising Strategies

Recent court decisions have encouraged new types of interest groups to become involved in election campaigns. Yet questions remain about whether interest group sponsorship of advertising affects the content of the issues being discussed. The ability of interest groups to influence the campaign agenda has implications for the extent to which politicians can be held accountable by citizens. In this research, we present a new conceptual framework for explaining variation in interest group advertising strategies and examine the factors leading different types of interest groups to be loose cannons (diverging from the issue debates among candidates) or loyal foot soldiers (matching the candidates’ issue debates). We find more evidence of loyal foot soldier behavior among new multi‐issue interest groups and among Republican groups and candidates. Fears of interest groups “hijacking” campaign agendas appear unfounded.     

Preaching to the Choir: Americans Prefer Communicating to Copartisan Elected Officials

Past work suggests that partisan attachments isolate citizens from encountering elite messages contrary to their points of view. Here, we present evidence that partisan attachments not only serve to filter the information citizens receive from political elites; they also work in the other direction, isolating politicians from encountering potentially contrary perspectives from citizens. In particular, we hypothesized that Americans prefer expressing their opinions to politicians who share their party identification and avoid contacting outpartisan politicians. Three studies—drawing on a mixture of observational, field experimental, and natural experimental approaches—support this hypothesis: Citizens prefer to “preach to the choir,” contacting legislators of the same partisan stripe. In light of evidence that contact from citizens powerfully affects politicians’ stances and priorities, these findings suggest a feedback loop that might aggravate political polarization and help explain how politicians of different parties could develop different perceptions of the same constituencies.     

On the political economy of state highway expenditures: Some evidence of the relative performance of alternative public choice models

This paper explores the extent to which the public demand for roads and/or power of special interest groups determines road expenditures at the state level using an extension of the methodology developed in Congleton and Shughart (1990). Reduced form models of median voter demand, special interest group equilibria, and a combined model are estimated using cross-sectional state data from the United States. We generally find support for the hypothesis that voting matters. The pure median voter models have a better fit than the pure special interest group models. Moreover, in our combined model, we find that variables from the median-voter model can not be dropped without significantly reducing the combined model's fit.     

Political short-termism: a possible explanation

We consider a two-period model in which politicians differ in their motivations, and show that a good politician may suboptimally provide a public good that gives an immediate payoff because if he provided one that gives a payoff only in the second term, the citizens would consider it sufficiently likely that he is a bad politician and, therefore, they would not reelect him. Quite surprisingly, such short-termism may be socially optimal: it increases the probability that the office will be held in the future by a good politician and induces a bad politician to act more in the public interest.     

Elite perceptions of mass preferences in The Netherlands; biases in cognitive responsiveness

Abstract. Several studies have shown dissimilarities between political leaders and voters in terms of political attitudes and policy preferences. Though many explanations have been offered for this phenomenon, the knowledge factor has been overlooked. The basic question of this paper is how knowledgeable politicians are of the political opinions of their voters as well as of the general public. Forty-six national Dutch politicians were asked to estimate the percentage of the public at large and of their own voters who agree with specific political statements. These estimates were then compared with the actual distribution of opinions. Though using a rather strict criterion it has been found that politicians tend to give inaccurate estimates of the public's support for various political issues. The inaccuracy does not differ between members of the government and members of parliament, but politicians of parties in office appear to perform worse than members of opposition parties. The data do not support the hypothesis about politicians' ability to correctly estimate majority and minority opinions, or to accurately localize their own voters relative to the public at large. Furthermore it is observed that politicians overestimate rather than underestimate differences in opinion between the electorate and their own voters. No difference is found in politicians'estimates of political issues which can or cannot be classified in terms of 'left' or 'right'. In addition, politicians do not judge their voters to be more right-wing than they actually are. Contrary to our hypothesis, Social-Democratic politicians are not more likely to show a 'conservative bias' in estimating their voters' preferences compared to politicians from the Christian-Democratic and Liberal parties. Finally, the relevance of our findings for political sciences as well as some normative consequences are briefly discussed.     

How much benevolence is benevolent enough?

Political agents in charge of policy under democracy confront a dilemma like that faced in ‘stag hunt’ games. The absence of an effective enforcement mechanism for punishing politicians who cater to special interests gives political agents strong reason to doubt the commitment of their fellow statesmen to the public welfare. As a result, even when policymakers are partially benevolent towards the public, they are still led to cater to special interests and society fares no better off than if politicians were strictly self-interested. Political agent benevolence is thus an all-or-nothing proposition. Unless benevolence is total, policy looks the same.