Democratic Reform and Opposition to Government Expenditure: Evidence from Nineteenth-Century Britain

Several theories have argued that democratic reform will lead to higher government spending. However, these theories have generally focused on expenditure on redistribution rather than expenditure on public goods. This paper presents a model predicting that democratization leads to lower government expenditure on infrastructure if the median pre-reform voter is middle class. This prediction is tested using a new panel data set of town council infrastructure spending and revenue in nineteenth-century Britain. An 1894 national reform implementing a system of "one-household–one-vote" and the secret ballot is used as the treatment event in a difference-in-difference analysis. The results show that democratic reform led to lower levels of town council spending on public goods, including water supply and other public infrastructure, relative to towns that were democratized at an earlier date. In line with the theoretical prediction, this negative effect was strongest when democratic reform transferred power from the middle class to the poor.