The Voter's Blunt Tool
AbstractWhen do voters win? Democracies have appealing properties, but failures of democracies to produce policies that benefit the voter abound. What conditions determine the success of the unorganized voter who only possess a blunt tool-- the vote-- versus an organized special interest group or firm? In this paper we derive with minimal assumptions conditions under which a democracy will produce policies that favor the voter. The model predictions are consistent with Besley, Persson and Sturm (2010), who show that increasing political competition leads to policies that benefit the voter. In addition, we show that increasing office holding benefits, decreasing potential rents to firms and increasing the salience of policy also leads to policies that benefit the voter. We find a positive interaction between the effect of political competition and office holding benefits. We support the model with data from the United States and find empirical evidence that increasing governors' salary decreased taxes paid by individuals through income tax relative to corporate tax, and increasing Governor salary increased minimum wages.
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Bibliographic InfoPaper provided by Stanford University, Graduate School of Business in its series Research Papers with number 2115.
Date of creation: Aug 2012
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-CDM-2012-09-30 (Collective Decision-Making)
- NEP-POL-2012-09-30 (Positive Political Economics)
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