Paths and Forks or Chutes and Ladders?: Negative Feedbacks and Policy Regime Change

The literature on path dependence has emphasized positive feedback effects that make it difficult to shift from a policy regime once it is in place. This article argues that policy regimes may also have strong negative feedback effects that undermine the political, fiscal or social sustainability of an existing policy regime. The prospects for a shift in policy regime depend largely on the balance between positive and negative feedback effects; the availability of incremental reform options that can be used to patch the status quo; and the availability of politically and fiscally attractive regime transition options. The paper argues that differential survival rates of different public pension regimes in western industrial countries can be understood by the interaction of these three factors.