Direct Democracy Paradox: State Fiscal Policies in the United States and the Threat of Direct Initiatives

Many studies have argued that the initiative process in U.S. state governments strengthened the proximity between the citizens' preferences and policy output. In contrast, this study hypothesizes that the direct initiative process weakens, rather than strengthens, the link between citizen preferences and state fiscal policy. Governments respond to the threat of initiatives but only those of conservative agendas. The results show that while the level and the progressivity of tax rates in the states without direct initiatives are influenced by citizen preferences, those in states with direct initiatives are more conservative than those without direct initiatives and the former are insulated from the influence of the citizen preferences.     

Vetoing and inaugurating policy like others do: evidence on spatial interactions in voter initiatives

A sizeable literature studies strategic interactions between governments. In this paper, we ask whether, in the presence of direct democratic institutions, voters’ actions in vetoing a decision or inaugurating a policy by a binding initiative in their jurisdiction have spillover effects on the actions of voters in neighboring jurisdictions. We collect (and make available) data on 3300 initiatives in German towns from 2002 to 2014 and match these to panel data on the towns’ sociodemographic and fiscal characteristics. We apply an instrumental variables approach and find that a jurisdiction’s probability of hosting an initiative is positively driven by the neighbors’ direct democratic activity. The size of the estimated average effect peaks around a 20 km neighborhood—where a standard deviation change of neighbors’ activity increases the probability of hosting an initiative by 5 percentage points—then gradually declines and fades away after around 60 km. This effect is driven by spillovers in similar policy areas and by successful initiatives, and is stronger in towns with relatively more information flows (measured by newspaper consumption and commuter flows).     

Informing the Electorate? How Party Cues and Policy Information Affect Public Opinion about Initiatives

Citizens in representative democracies receive party endorsements and policy information when choosing candidates or making policy decisions via the initiative process. What effects do these sources of information have on public opinion? We address this important question by conducting survey experiments where citizens express opinions about initiatives in a real‐world electoral context. We manipulate whether they receive party cues, policy information, both, or neither type of information. We find that citizens do not simply ignore policy information when they are also exposed to party cues. Rather, citizens respond by shifting their opinions away from their party's positions when policy information provides a compelling reason for doing so. These results challenge the prominent claim in public opinion research that citizens blindly follow their party when also exposed to policy information. They also suggest that efforts to inform the electorate can influence opinions, provided that citizens actually receive the information being disseminated.     

How Do Interest Groups Seek Access to Committees?

Concerns that interest groups use their financial resources to distort the democratic process are long‐standing. Surprisingly, though, firms spend little money on political campaigns, and roughly 95% of publicly traded firms in the United States have never contributed to a political campaign. Do interest groups seek political access through their modest contributions, or are these contributions only a minor and forgettable part of the political process? In this article, we present comprehensive evidence that interest groups are extremely sophisticated in the way they make campaign contributions. We collect a new data set on U.S. state legislative committee assignments and legislator procedural powers from 1988 to 2014, merged with campaign finance data, in order to analyze over 440,000 candidate–committee observations across 99 legislatures. Using a series of difference‐in‐differences designs based on changes in individual legislators' positions in the legislature, we not only show that interest groups seek out committee members, but we also show that they value what we call indirect access. When a legislator gains procedural powers, interest groups reallocate considerable amounts of money to her. The results reveal how interest groups in a wide range of democratic settings seek to influence the policy process not only by seeking direct access to policy makers but by seeking indirect access to legislative procedure as well.     

Initiatives and government expenditures

This paper demonstrates that provisions for initiatives have important effects on government spending. Provisions for initiatives encourage legislatures to approve any proposal which might attract substantial popular support. If these proposals are more likely to advocate increases than reductions in expenditures, the presence of initiative provisions will increase total expenditures. Direct government expenditures per capita are significantly higher in both states and municipalities which permit initiatives.The Project in State and Local Government Finance of the National Bureau of Economic Research supported the research presented in this paper. Only I am responsible for the content.     

Beating the Clock: Strategic Management under the Threat of Direct Democracy

This article explores public sector responsiveness to voter‐led initiatives, specifically, the degree to which public managers attempt to lock in resources before they are constrained by a particular initiative. The authors posit that such behavior, which they term “beating the clock,” is a function of the potential impact of the proposed initiative, the degree to which managers can react to the initiative's central issues, and the perceived likelihood of passage. Although scholars have explored different responses to voter‐led initiatives, this particular form of strategic behavior has yet to be studied. Using longitudinal data on public debt issuance, hypotheses are tested in the context of a reform proposed through the initiative process in Colorado in 2010. Results show that the number of debt issues increased by roughly 150 percent in advance of a potentially binding election, indicating the ability to preempt formal initiative efforts in certain policy areas.     

Mobilizing Interests: Group Participation and Competition in Direct Democracy Elections

We examine group mobilization in direct democracy elections by assessing the conditions under which interests will actively support or oppose ballot measures. Motivating our analysis is that the decision to mobilize is driven by the costs and benefits of group participation, a calculus shaped by issue characteristics, state political institutions, and the electoral context. Using data from initiative and referendum measures appearing on statewide ballots from 2003 to 2008, we find that ballot measures involving social and tax issues are likely to produce competition among groups and increase the overall number of groups involved. In addition, we find that group competition and levels of mobilization increased in response to how difficult it would be for the legislature to undo the change brought about from passage of a ballot measure. Lastly, group competition and levels of mobilization increased for ballot measures appearing in nonpresidential election years and for ballot measures featuring a close election. Taken together, our results suggest that groups engage strategically in direct democracy elections to pursue a mix of policy and political goals.     

Policy Diffusion: The Issue‐Definition Stage

We put forward a new approach to studying issue definition within the context of policy diffusion. Most studies of policy diffusion—which is the process by which policymaking in one government affects policymaking in other governments—have focused on policy adoptions. We shift the focus to an important but neglected aspect of this process: the issue‐definition stage. We use topic models to estimate how policies are framed during this stage and how these frames are predicted by prior policy adoptions. Focusing on smoking restriction in U.S. states, our analysis draws upon an original data set of over 52,000 paragraphs from newspapers covering 49 states between 1996 and 2013. We find that frames regarding the policy's concrete implications are predicted by prior adoptions in other states, whereas frames regarding its normative justifications are not. Our approach and findings open the way for a new perspective to studying policy diffusion in many different areas.     

Assigning priority to environmental policy interventions in a heterogeneous world

Failure to consider costs as well as benefits is common in many policy initiatives and analyses, particularly in the environmental arena. Economists and other policy scientists have demonstrated that integrating both cost and benefit information explicitly into the policy process can be vital to ensuring that scarce funds go as far as they can toward achieving policy objectives. The costs of acquiring and analyzing such information, however, can be substantial. The objective of this paper is to help policy analysts and practitioners identify the conditions under which integrating cost and benefit information is likely to be vital to effective decisionmaking, and the conditions under which failing to use both cost and benefit data would result in little, if any, loss in efficiency. These points are illustrated through a conceptual discussion and an empirical analysis of a conservation initiative in the United States. © 2003 by the Association for Public Policy Analysis and Management.     

Policy decisiveness and responses to speculative attacks in developed countries

Why are some countries able to defend their currencies when there are speculative attacks, while others fail to do so and devalue their currencies? This article suggests that intragovernment factors as well as government‐legislature relations should be considered because many of the policy responses to speculative attacks do not require legislative acquiescence, so that intragovernment attributes will have more substantial effects on the policy responses than those of government‐legislature relations. This article suggests that cleavages within government and its instability have a negative effect on decisiveness. Data regarding speculative attacks in developed countries from the 1970s to the 1990s and the Heckman selection model show that governments with many veto players and with less durability have had difficulty in defending their currencies in the face of speculative attacks. The article also finds that governmental institutional effects can be constrained by central bank independence. The effects become substantially smaller and statistically insignificant when central banks are very independent. The overall results imply that policy indecisiveness induced by some political factors makes governments less able to adopt a new policy equilibrium that is necessary to respond to an exogenous shock such as speculative attack.     

Government, Interest Groups and Policy Change

Much of the British and European literature on the role of interest groups in the policy process focuses on their participation in policy networks of various types. Possibly reflecting the original development of the policy community and policy network 'models' in the late 1970s, these approaches tend to emphasize stability and continuity – of both networks and policies. However, the 1980s and 1990s have witnessed much policy change and instability in most Western European states. In particular, some governments have adopted a more impositional policy style, and interest groups have learned to exploit the opportunities presented by a policy process which is increasingly characterized by multiple opportunity structures. This is especially the case following Europeanization of many policy sectors within the fifteen EU member states. The article focuses on the possible causes of policy change, including the importance of state power; changes in the behaviour of interest groups as they adjust to and exploit the opportunities presented by multi-arena policy-making; the impact of new policy fashions, reflecting knowledge and ideas which can act as a virus-like threat to existing policy communities.     

Public support for electoral reform: The role of electoral system experience

What affects public support for electoral reform? How does experience with different electoral systems affect people's willingness to support electoral reform? Given the salience of changes to election rules even when they are passed via the legislature and the increasing use of referenda as alternative mechanisms for change, these questions are critical to understanding when electoral reform will occur. I argue that experience (specifically, with an electoral system similar to that under consideration) affects public opinion by reducing uncertainty about the likely effects of reform and thus affects support for reform (although the direction of the effect depends on partisan bias). Moreover, I argue that experience is most important in the absence of strong party cues. I leverage subnational electoral system variation in the United Kingdom and find that experience does affect support for reform — negative experiences decrease support for reform. The results have implications for the possibility of electoral reform in the UK and beyond.     

Policy termination in mental health: The hidden agenda

Three policy termination objectives can be analyzed in the field of mental health: the move to phase-down, and in some instances close, large state institutions for the mentally disabled; the elimination in some states of indefinite involuntary commitment procedures; and the attempt to transfer responsibility for the provision of direct services from the state level to local government and/or private providers of care. Initiatives in these areas have come from the executive, the legislature, consumer organizations, and most recently from the public interest law community through the use of litigation. Termination in this field, however, has met with increasing resistance because of the failure in many instances to pair these objectives with positive program development. In some states, the result has been the dismantling of one system without the commitment of resources necessary to encourage the development of an alternative system.     

Testing the input-process-output model of public participation

The characteristics of participatory institutions can be articulated in three main dimensions: input, process and output. The common assumption is that a dependency relationship exists, with process serving as a mediator between input and output. This paper puts the model to a rare empirical test drawing on a unique dataset of 70 Spanish advisory councils. Through a combination of exploratory factor and path analyses, we analyse the dimensionality of input, process and output and investigate the direct and indirect impact of inputs on process and outputs. Our analysis provides evidence that input factors have a direct impact on the output factor transparency, but their impact on effects on policy and participant satisfaction is mediated by the process factor deliberation. Further, the capacity of the public administration to steer the advisory council (wardship) mediates negatively the impact of input variables on transparency. The analysis provides a nuanced account of how different input and process design characteristics of participatory institutions have profound direct and indirect effects on their outputs.     

Does Urban Public Housing Diminish the Social Capital and Labor Force Activity of Its Tenants?

This paper investigates the effect of urban public housing on the social capital and labor force activity of its tenants using cross‐sectional survey data from the Multi‐City Study of Urban Inequality (MSCUI). A structural equation model of the hypothesized direct and indirect effects of public housing and neighborhood disadvantage on social capital and labor force activity is specified and fitted to these data. The modeling results suggest that urban public housing is strongly associated with neighborhood disadvantage but has little or no direct effect on either social capital or labor force activity. And while public housing may have indirect effects on social capital and labor force activity through neighborhood poverty, these indirect effects appear to be small. These findings have implications for the current emphasis in urban public housing policy on moving residents into the private housing market and reducing poverty concentration. © 2001 by the Association for Public Policy Analysis and Management.     

Priming citizens to think about public participation initiatives: Does it impact their view of government?

Prior research has shown that public participation initiatives may have positive effects on how participating citizens view government. However, little is known about whether and how priming citizens to think about such initiatives influences the view of government among the larger public. Using a survey experiment, we find that the effect of priming citizens to think of a public participation initiative that includes a small group of citizens on their view of government is conditional on how proximate the service, which the initiative resolves around, is to citizens. Notably, across outcome measures we a find a negative priming effect among those for which the service is not proximate. These results are highly important, as they suggest that among the larger public, public participation initiatives—that involve few citizens—may have mixed results on the view of government, thus questioning the legitimacy of decisions reached by such initiatives.     

From Birth to School: Early Childhood Initiatives and Third‐Grade Outcomes in North Carolina

This study examines the community‐wide effects of two statewide early childhood policy initiatives in North Carolina. One initiative provides funding to improve the quality of child care services at the county level for all children between the ages of 0 to 5, and the other provides funding for preschool slots for disadvantaged four‐year‐olds. Differences across counties in the timing of the rollout and in the magnitude of the state financial investments per child provide the variation in programs needed to estimate their effects on schooling outcomes in third grade. We find robust positive effects of each program on third‐grade test scores in both reading and math. These effects can best be explained by a combination of direct benefits for participants and spillover benefits for others. Our preferred models suggest that the combined average effects on test scores of investments in both programs at 2009 funding levels are equivalent to two to four months of instruction in grade 3.     

Economists and public policy: Chicago political economy versus conventional views

Both conventional welfare economics and public choice analysis suggest that economists have an important educational role to play in the public policy process — in improving the decision-making process. In sharp contrast, information and incentive problems related to voting rules, the bureaucracy, and the legislature do not arise in CPE because these processes are all perfect agents of interest groups. Consequently, the political process is efficient and there is no scope for beneficial economic analysis as it relates to the sugar program or other public policies. That is, the polity is efficient or it would be reordered by competing interest groups to make it so. But, as Mitchell (1989: 290) stresses, the important unanswered question in CPE remains: if there is no scope for improvement how and why does change occur?The analysis here suggests that the sugar program (and similar policies) may persist not because they are beneficial to the public at large but rather because information and incentive problems in the collective choice process lead to perverse results. Consequently, economic analysts can make a positive contribution to the public policy process by providing information about the responsiveness of alternative institutional arrangements to the values and choices of individual citizens (Wiseman, 1989). The Friedmans' Tide in the Affairs of Men view holds that economic analyses are important in changing public opinion, which is an important precursor to changes in public policy.     

Legislative Capacity and Credit Risk

Legislatures differ in their institutional capacity to draft and enact policy. While strong legislatures can increase the congruence of policy outcomes to the electorate's preferences, they can also inject uncertainty into markets with their ability to alter the political economic landscape. We argue that this uncertainty will manifest in a state's ability to borrow and hypothesize a negative relationship between legislative capacity and creditworthiness. Using ratings of general obligation bonds issued by the American states over nearly two decades and data on the institutional capacity of state legislative assemblies, we find support for the claim that having a legislature that is better equipped to affect policy change increases credit risk evaluations. The results we present broaden our understanding of the importance of legislative institutions, the determinants of credit risk, and the economic implications of democratic responsiveness.     

Autonomous Local Climate Change Policy: An Analysis of the Effect of Intergovernmental Relations Among Subnational Governments

Local governments have emerged as important players in climate change governance, both at home and on the international stage. Likewise, action by states and provinces has been increasingly highlighted, particularly as national actors have moved slowly to reduce greenhouse gas emissions. But to what extent do local governments act independently from state and provincial governments in the area of climate change mitigation? Using an explicit process tracing approach, the article tests two hypotheses regarding the influence of upper level subnational governments on local policy. In Vancouver, British Columbia, Canada, a city that is a climate change leader, provincial government intervention cannot explain the results of climate change mitigation policy making. This suggests that local governments can exercise an important degree of autonomy over climate change policy, but also implies that where municipalities are less independently committed to climate action, active upper level government intervention will likely be needed.