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Direct Democracy, Political Delegation, and Responsibility Substitution

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  • Carlo Prato
  • Bruno Strulovici

Abstract

Can direct democracy provisions improve welfare over pure representative democracy? This paper studies how such provisions affect politicians’ incentives and selection. While direct democracy allows citizens to correct politicians’ mistakes, it also reduces the incentives of elected representatives to search for good policies. This responsibility substitution reduces citizens’ ability to screen competent politicians, when elections are the only means to address political agency problems. A lower cost of direct democracy induces a negative spiral on politicians incentives, which we characterize by a disincentive multiplier. As a consequence, introducing initiatives or lowering their cost can reduce voters’ expected utility. Moreover, when elections perform well in selecting politicians and provide incentives, this indirect welfare reducing effect is stronger.

Suggested Citation

  • Carlo Prato & Bruno Strulovici, 2010. "Direct Democracy, Political Delegation, and Responsibility Substitution," Discussion Papers 1515, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1515
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    Cited by:

    1. Le Bihan, Patrick, 2015. "Popular Referendum and Electoral Accountability," IAST Working Papers 15-31, Institute for Advanced Study in Toulouse (IAST).
    2. Tim Willems, 2013. "Political Accountability and Policy Experimentation: Why to Elect Left-Handed Politicians?," Economics Series Working Papers 647, University of Oxford, Department of Economics.

    More about this item

    Keywords

    Direct Democracy; Initiative; Referendum; Political Agency; Delegation JEL Classification Numbers: D72; D78; P16;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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