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Direct Democracy and Public Policymaking

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  • Wagschal, Uwe

Abstract

What is the impact of direct democracy, e.g. referendums, on public policymaking? The study will present data for Switzerland, the United States, Australia and Germany leading to the conclusion that direct democracy is an effective, but flexible veto player against expansive spending and taxation. The level of public expenditure and taxation is significantly lower in countries that have elements of direct democracy compared to pure representative democracies. Several theoretical arguments support this finding. For example, the social discount rate of voters is lower than that of politicians. Also direct democracy is related to the benefit principle in public finance. Taxpayers want their payments to be related to public services they receive. They are therefore inclined to veto projects not reflecting their preferences. Moreover, referenda have an implicit restraining effect on governments and the mere threat can reduce their capacity to act.

Suggested Citation

  • Wagschal, Uwe, 1997. "Direct Democracy and Public Policymaking," Journal of Public Policy, Cambridge University Press, vol. 17(2), pages 223-245, May.
    • Handle: RePEc:cup:jnlpup:v:17:y:1997:i:02:p:223-245_00
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    Cited by:

    1. Phuong Nguyen-Hoang, 2012. "Fiscal effects of budget referendums: evidence from New York school districts," Public Choice, Springer, vol. 150(1), pages 77-95, January.
    2. Wagschal, Uwe & Obinger, Herbert, 1999. "Der Einfluß der Direktdemokratie auf die Sozialpolitik," Working papers of the ZeS 01/1999, University of Bremen, Centre for Social Policy Research (ZeS).
    3. Coban, Mehmet Kerem, 2021. "Power Resources and Income Inequality in Switzerland and Singapore," OSF Preprints pgd65, Center for Open Science.

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