Lesson 3: Domestic Politics and Elections Flashcards
Douglass North’s definition of institutions
Institutions are the constraints that structure political, economic and social interaction. They consist of both informal constraints and formal rules
Informal constraints (North)
sanctions, taboos, customs, traditions, codes of conduct
Formal rules (North)
constitutions,
laws,
property rights
What do political institutions consist of and do?
- Electoral rules
- Parliamentary system vs. presidential system
- Direct democracy vs. representative democracy
=> Impact on outcome
=> Generate incentives
Persson and Tabellini model
Image
Roles of elections
- Elections aggregate voters conflicting preferences
- Elections aggregate dispersed information about the correct political decision
- Elections help to select good politicians → Prevent adverse selection
- Elections prevent elected politicians with reelection concern form doing bad things
→ Prevent moral hazard
Assumptions on the roles of elections
Idealized situation:
- Perfect information
- Rational individuals
- By aggregating preferences you reach an efficient outcome
Drawbacks of elections
- Politicians may choose actions that are popular but not optimal for socieity
- Politicians may choose actions with short time horizons
- Majority elections may lead to a constant discrimination against minorities
Drawbacks of elections
- Politicians may choose actions that are popular but not optimal for socieity
Example: Re-elections and government fiscal policy
- Politicians may choose actions with short time horizons
- Majority elections may lead to discrimination against minorities
How do institutions relate to each other?
Horizontal separation of powers
Vertical separation of powers
• Central state
• Federal units
Constitutions define the relationship between these institutions
Horizontal separation of powers
- Legislative
- Executive
- Judiciary
- (People)
Endogeneity of institutions
Strategic interaction between actors with nonidentical preferences may affect the design of institutions
Political actors know that institutions may change their payoffs
Acemoglu’s notion
Acemoglu: In a democracy, the payoffs are higher for the people, whereas leaders have a lower payoff
Chile 1958 example
Baland & Robinson article
Chile: Previously every party produced their own ballots, so it was obvious who people were voting for.
After 1958 it was changed and people could use whatever ballot they wanted to
Hypothesis: Before secret ballots, landlords controlled political behavior of workers (strong patron-client relation) → landlords forced workers to vote right-wing whereas workers preferences would be left-wing
Result: After secret ballot was introduced, proportion of inquilinos (renters) who voted right-wing fell
Chile 1958 example
Baland & Robinson article
Chile: Previously every party produced their own ballots, so it was obvious who people were voting for.
After 1958 it was changed and people could use whatever ballot they wanted to
Hypothesis: Before secret ballots, landlords controlled political behavior of workers (strong patron-client relation) → landlords forced workers to vote right-wing whereas workers preferences would be left-wing
Result: After secret ballot was introduced, proportion of inquilinos (renters) who voted right-wing fell
CH naturalization decisions example
- Effect of institutional settings on naturalization decisions
- Direct vs appointed = subjective vs objective
- Representative: depending on ruling party
- Direct vs representative/appointed: no consequences for voters vs accountability for representatives
o Not only institutions determine the outcome, but also the setting (e.g. of urban municipalities tending to be more representative & liberal vs rural that tend to vote direct, more conservative)
Hangartner and Hainmueller (2012)
Explore the effects
of different institutional settings on naturalization
decisions:
• Direct democracy: All eligible citizens can vote on the naturalization of persons
• Representative democracy: The executive or legislative branch decides on naturalization
• Appointed commission: Decision is taken by an appointed naturalization commission.
Institutional constraint: Federal Court rules out direct democracy as a decision-making mode in 2003
Result: Highest naturalization rate with an appointed commission, while direct democracy was the lowest.
Representative democracy in between
Hangartner and Hainmueller (2012)
Explore the effects
of different institutional settings on naturalization
decisions:
• Direct democracy: All eligible citizens can vote on the naturalization of persons
• Representative democracy: The executive or legislative branch decides on naturalization
• Appointed commission: Decision is taken by an appointed naturalization commission.
Institutional constraint: Federal Court rules out direct democracy as a decision-making mode in 2003
Result: Highest naturalization rate with an appointed commission, while direct democracy was the lowest.
Representative democracy in between
RQ:
1) What are domestic institutions?
Humanly devised constraints that structure political, economic and social interaction (Douglass North definition).
RQ:
2) What is the role of elections?
- Aggregate different voter preferences and dispersed information, prevent moral hazard, prevent adverse selection.
RQ:
3) How do institutions affect policy?
- Yes, they shape the behavior of voters and politicians.
RQ:
3) How do institutions affect policy?
They shape the behavior of voters and politicians.
Environmental policy making and elections example
List & Sturm (2006) paper
- Politicians maximize their vote share when taking the position of the median voter (Downs 1957)
Policy-making is multidimensional:
- Frontline policy issues
- Secondary policy issues
- Most voters are unaffected by secondary policy, but some may be substantially affected (heterogeneity of voter preferences)
- Politicians have an incentive not to take the median position in issues to capture voters affected by secondary policies
- Lame ducks: No incentive of re-election, so there’s no incentive to cater to secondary issues
Results of the List & Sturm (2006) paper
- 1st line (lame duck and brown state): Increased envir. spending relatively to prior term
- 2nd line (lame duck and green state): Decrease envir. spending
- 3rd line (lame duck and margin and brown): High margin = less environ. spending
- 4th line (lame duck, margin and green state): Increase in spending
List & Sturm (2006) hypotheses
- Term limits generate differences in secondary policy
- Effect of term limits depends on composition of electorate
- Political competition should enhance the effect of term limits
List & Sturm (2006) hypotheses
- Term limits generate differences in secondary policy
- Effect of term limits depends on composition of electorate
- Political competition should enhance the effect of term limits
