Racism and redistribution in the United States: A solution to the problem of American exceptionalism

The two main political parties in the United States in the period 1976–1992 put forth policies on redistribution and on issues pertaining directly to race. We argue that redistributive politics in the US can be fully understood only by taking account of the interconnection between these issues in political competition. We identify two mechanisms through which racism among American voters decreases the degree of redistribution that would otherwise obtain. In common with others, we suggest that voter racism decreases the degree of redistribution due to an anti-solidarity effect: that (some) voters oppose government transfer payments to minorities whom they view as undeserving. We suggest a second effect as well: that some voters who desire redistribution nevertheless vote for the anti-redistributive (Republican) party because its position on the race issue is more consonant with their own, and this, too, decreases the degree of redistribution in political equilibrium. This we name the policy bundle effect. We propose a formal model of multi-dimensional political competition that enables us to estimate the magnitude of these two effects, and estimate the model for the period in question. We compute that voter racism reduced the income tax rate by 11–18% points; the total effect decomposes about equally into the two sub-effects. We also find that the Democratic vote share is 5–38% points lower than it would have been, absent racism. The magnitude of this effect would seem to explain the difference between the sizes of the public sector in the US and northern European countries.     

Redistributive policies with heterogeneous social preferences of voters

There is growing evidence on the roles of fairness and other-regarding preferences as fundamental human motives. Call voters with fair preferences, as in Fehr and Schmidt (1999), fair-voters. By contrast, traditional political economy models are based on selfish-voters who derive utility solely from “own” payoff. In a general equilibrium model with endogenous labor supply, a mixture of fair and selfish voters choose optimal policy through majority voting. First, we show that majority voting produces a unique winner in pairwise contests over feasible policies (the Condorcet winner). Second, we show that a preference for greater fairness leads to greater redistribution. An increase in the number of fair voters can also lead to greater redistribution. Third, we show that in economies where the majority are selfish-voters, the decisive policy could be chosen by fair-voters, and vice versa. Fourth, while choosing labor supply, even fair voters behave exactly like selfish voters. We show how this apparently inconsistent behavior in different domains (voting and labor supply) can be rationalized within the model.     

Demand of direct democracy

The growing demand for referendum challenges the traditional model of representative democracy. In this paper we study under which conditions voters prefer a system of representative democracy to direct democracy. In direct democracies voters choose a policy among two alternatives, under uncertainty about which policy better fits the realized state of the world; in representative democracies voters select a candidate who, once elected, chooses a policy having observed which is the realized state of the world. Voters and politicians' payoffs depend on a common component which is positive only if the policy fits the state of the world, and on a private ideological bias towards one of the policies. In direct democracies voters are uncertain about the future state of the world, while in representative democracies they are uncertain about the degree of ideological bias of the candidates, even if they know towards which policy each candidate is biased. We show that representative democracy is preferred if (i) the majority of voters are pragmatic (the common component prevails), and (ii) society is ideologically polarized, meaning that the majority of voters are ideological (the private component prevails), but the median voter is pragmatic. Direct democracy is the preferred instrument for collective choices in societies in which the majority of voters and the median voter are ideological, implying that the majority of voters have the same ideological bias, as, for instance, it occurs when the populist rhetoric of people against the elite succeeds.     

Endogenously Weighted Voting

We define Endogenously Weighted Plurality Voting (EWPV) as the voting rule that, each individual being allowed to cast exactly one vote, selects the individual(s) who obtain(s) the greatest number of indirect votes. Endogenously Weighted Approval Voting (EWAV) selects the individual(s) who obtain(s) the greatest number of indirect votes when each individual can cast as many votes as he wants. In both cases, each individual can vote for any other individual, i.e., the set of candidates is the set of voters. In this study, we give necessary and sufficient axioms for EWPV and EWAV. We also propose a simple model where EWAV is more efficient than the traditional Approval Voting.     

Majority committees

Suppose an m-member committee is to be selected by a set of voters from a set X of M > m nominees. If A is an m-member committee, and if as many voters prefer A to B as prefer B to A for every other committee B of m nominees, then A is a majority committee of size m. Although the existence of majority nominees (m = 1) has been extensively analyzed, little attention has been given to conditions that imply the existence of majority committees of size m ? 2. Known restrictions on voters' preferences on X that guarntee the existence of a majority nominee could be applied directly to voters' preferences on m-member committees. However, this definitional exercise lacks intuitive appeal, and a different approach is taken in this paper. The paper presumes that profiles of voters' preferences on X are either dichotomous or single peaked. Both cases ensure the existence of a majority nominee. Independence-monotonicity assumptions are then used to connect voters' preferences on X to their preferences on committees of equal size. Although these assumptions guarantee the existence of majority committees when m = 1 and when m = M ? 1, they do not generally do so when 1 < m < M ? 1. The latter observation motivates additional restrictions on profiles. In the dichotomous case, we consider profiles in which all voters have the same number k of nominees in their preferred subsets, and show that this restriction guarantees the existence of a majority committee of size m for 1 < m < M ? 1 only when k = 1 or k = M ? 1. In the single-peaked case, we consider profiles in which all voters have the same most-preferred (peak) nominee, and prove that this guarantees the existence of a majority committee of size m for every m between 1 and M ? 1.     

Tops-only domains

In this paper we consider the standard voting model with a finite set of alternatives A and n voters and address the following question: what are the characteristics of domains \({\mathcal D}\) that induce the property that every strategy-proof social choice function \({f: {\mathcal D}^n \rightarrow A}\) satisfying unanimity, has the tops-only property? We first impose a minimal richness condition which ensures that for every alternative a, there exists an admissible ordering where a is maximal. We identify conditions on \({\mathcal D}\) that are sufficient for strategy-proofness and unanimity to imply tops onlyness in the general case of n voters and in the special case, n = 2. We provide an algorithm for constructing tops-only domains from connected graphs with elements of A as nodes. We provide several applications of our results. Finally, we relax the minimal richness assumption and partially extend our results.     

Do voters vote ideologically?

In this paper we address the following question: To what extent is the hypothesis that voters vote “ideologically” (i.e., they always vote for the candidate who is ideologically “closest” to them) testable or falsifiable? We show that using data only on how individuals vote in a single election, the hypothesis that voters vote ideologically is irrefutable, regardless of the number of candidates competing in the election. On the other hand, using data on how the same individuals vote in multiple elections, the hypothesis that voters vote ideologically is potentially falsifiable, and we provide general conditions under which the hypothesis can be tested.     

Electoral manipulation via voter-friendly spending: Theory and evidence

We present a model of the political budget cycle in which incumbents try to influence voters by changing the composition of government spending, rather than overall spending or revenues. Rational voters may support an incumbent who targets them with spending before the election even though such spending may be due to opportunistic manipulation, because it may also reflect sincere preference of the incumbent for types of spending voters favor. Classifying expenditures into those which are likely targeted to voters and those that are not, we provide evidence supporting our model in data on local public finances for all Colombian municipalities. Our findings indicate both a pre-electoral increase in targeted expenditures, combined with a contraction of other types of expenditure, and a voter response to targeting.     

Dissertation abstract: Voting in the laboratory

Almost every week national elections are held somewhere in the world. Many more elections take place at federal and local levels of government. Surely, these are important events to many of us. This thesis aims at providing a better understanding of why and how people vote in elections. Three original modifications of Palfrey and Rosenthal’s (1983) participation game are used to study voter turnout theoretically and experimentally.¹ In the basic game, each voter supports (i.e., prefers) one of two exogenous candidates and privately decides between voting at a cost and abstaining (without costs). The candidate who receives more votes wins the election (ties are broken randomly) and each supporter of this candidate receives an equal reward, independent of whether or not she voted. The first study (published in the American Political Science Review 100, pp. 235–248) analyzes the effects of social embeddedness on turnout, assuming that voters may be influenced by observing the decisions of other voters around them (e.g., a family or working place). Our experimental results show that the social context matters: this information increases turnout by more than 50%. The increase is greater when neighbors support the same candidate rather than when they support opponents. The second study investigates the effects of public opinion polls on voter turnout and welfare. Poll releases resolve uncertainty about the level of support for each candidate caused by `floating’ voters, whose preferences change across elections. This information increases turnout in the laboratory by 28–34%, depending on the fraction of floating voters in the electorate. If polls indicate equal levels of support for both candidates—in which case aggregate benefits for society are not affected by the outcome—welfare decreases substantially due to costs from excessive turnout. In the final study, elections are preceded by the competition between two candidates: they simultaneously announce binding policy offers in which some voters can be favored at the expense of others through inclusion and exclusion in budget expenditure (Myerson 1993).² We observe that policy offers include 33% more voters—yielding a smaller budget share for each—when voting is compulsory rather than voluntary. Moreover, we find evidence of political bonds between voters and long-lived parties. Overall, in all three experiments many subjects strongly react to economic incentives (i.e., benefits, costs, and informational clues), often in line with what is observed outside of the laboratory. JEL Classification C72, C92, D72 Dissertation Committee: Arthur Schram, University of Amsterdam (advisor) Axel Ockenfels, University of Cologne Thomas Palfrey, California Institute of Technology Cees van der Eijk, University of Nottingham Frans van Winden, University of Amsterdam ¹Palfrey, T.R., & Rosenthal, H. (1983). A strategic calculus of voting. Public Choice, 41, 7–53. ²Myerson, R.B. (1993). Incentives to cultivate favored minorities under alternative electoral systems. American Political Science Review, 87, 856–869.     

A recursion relation for the probability of the paradox of voting

For alternatives x_i, i = 1,…, m, giving rise to m! linear preference orderings of which one is selected independently by each of N voters, a recursion relation is developed which expresses the probability that x_i is the Condorcet winner when there are N voters in terms of the probability of this event when there are N ? 1 voters. Hence the probabilities of the paradox of voting when N is odd, and of Condorcet indecision when N is even may be obtained. The relationship holds for any set of probabilities, or culture, governing the selection of the preference orderings by the voters.     

Majority rule when voters like to win

I analyze symmetric majority rule voting equilibria when voters wish to elect the better candidate and to vote for the winner. When voters care only about the winning candidate (the standard formulation) a unique responsive equilibrium exists. The addition of a desire to win creates multiple equilibria, some with unusual properties. In most of these equilibria information is not aggregated effectively, and I uncover the novel possibility of negative information aggregation in which information aggregated in equilibrium is used to select the worse rather than the better candidate.I then characterize the efficiency of optimal equilibria as the population becomes large and show that a discontinuity arises in the information aggregation capabilities of the majority rule voting mechanism: in elections without a dominant front-running candidate the better candidate is almost surely elected, whereas in races with a front-runner information cannot be effectively aggregated in equilibrium.     

CORRUPTION AND ELECTIONS: AN EMPIRICAL STUDY FOR A CROSS-SECTION OF COUNTRIES

In this paper, we study whether voters are more likely to "vote out" a corrupt incumbent than to re-elect him. Specifically, we examine whether they retract their support from political candidates who they think are corrupt by looking at changes in an index of corruption perceptions between the current and the last elections. Our results suggest that corruption in public office is effectively punished by voters. Furthermore, our findings support the idea that both the political system and the democratic experience are important determinants of the voters' reaction and control of corruption; while voters in countries with parliamentary systems or with relatively low levels of democracy react negatively to an increase in corruption, no perceptible effect of this kind was found in countries with mature democracies, and the evidence is inconclusive in the case of countries with presidential systems.     

An efficiency theorem for incompletely known preferences

There are n agents who have von Neumann-Morgenstern utility functions on a finite set of alternatives A. Each agent i's utility function is known to lie in the nonempty, convex, relatively open set Ui. Suppose L is a lottery on A that is undominated, meaning that there is no other lottery that is guaranteed to Pareto dominate L no matter what the true utility functions are. Then, there exist utility functions ui∈Ui for which L is Pareto efficient. This result includes the ordinal efficiency welfare theorem as a special case.     

How many voters are needed for paradoxes?

Summary. This paper presents a general procedure for finding profiles with the minimum number of voters required for many important paradoxes. Borda's and Condorcet's classic examples are revisited as well as generalizations. Using Saari's procedure line, we obtain an upper bound for the minimum number of voters needed for a profile for which the Condorcet winner is not strictly top ranked for all weighted positional procedures. Also we give a simple upper bound on the minimum number of voters needed for a set of prescribed voting outcomes. In contrast to situations wherein small numbers of voters are needed, we consider paradoxes requiring arbitrarily large numbers of voters as well as large numbers of alternatives. Finally we indicate connections with statistical rank based tests. Received: April 18, 2001; revised version: May 25, 2001     

A live experiment on approval voting

This paper presents a large-scale experiment on the Approval Voting rule that took place during the 2002 French presidential election. We describe the experiment and its main results. The findings are as follows: (i) Such an experiment is feasible, and very well accepted by voters. (ii) The principle of approval voting is easily understood and accepted. (iii) Within the observed political context, compared to the official first-round vote, approval voting modifies the overall ranking of candidates. (iv) The candidates Le Pen and Chirac, more than the others, were able to convert approval votes into official first-round votes. JEL Classification C93, D70, D72     

Unemployment and Labor–market Reform: A Contract Theoretic Approach

Why do many democracies fail to reform their labor–market institutions? To answer this question we study the feasibility of reforms that include compensation to insiders for the removal of labor–market regulations. Under asymmetric information, a reformer who wants to buy the approval of voters has to pay them an informational rent in addition to the pure costs of compensation that would arise under symmetric information. In this setting, unemployment may be constrained Pareto–efficient. Labor–market reforms may fail politically because none of the reform packages proposed wins the approval of a majority of voters. We also discuss the role of capital taxation in a reform program. JEL classification: D70; E61; J68     

Coordinated voting in sequential and simultaneous elections: some experimental evidence

This paper studies a situation wherein a set of voters choose between two alternatives in the presence of a payoff externality. Specifically, regardless of her intrinsic preference, a voter’s payoff is maximized should she vote for the alternative that garners a majority of the votes cast. Are votes coordinated on a single alternative? Using laboratory experiments, we examine voting patterns in sequential voting and simultaneous voting elections. Across both election types, we also vary the amount of information that an individual voter has regarding the intrinsic preferences of the other voters. Our main findings are as follows. In the “low” information treatment, sequential voting elections facilitate coordinated voting. However, in the “high” information treatment, voting patterns are not dependent on how the election is structured.     

The binary policy model

We introduce a model of electoral competition with office-motivated candidates who are exogenously committed to particular positions on some issues, while they choose positions for the remaining issues. A position is majority-efficient if a candidate cannot make a majority of the electorate better off, given his fixed positions. We characterize existence conditions for majority-efficient positions. The candidates' fixed positions in our framework imply that only some voters are “swing voters,” and we analyze how the distribution of swing voters determines whether candidates choose majority-efficient positions. We also analyze plurality and runoff elections with multiple candidates in our framework.     

Preferences for redistribution—A country comparison of fairness judgements

This paper seeks to explain within- and between-country variation in redistributive preferences in terms of self-interest concerns and an input-based concept of fairness, which we examine by looking at the effects of beliefs regarding the causes of income differences. Results of estimations based on data for 25 countries indicate that both factors are indeed important determinants of redistribution support, in line with hypothesised patterns. We find that while differences in beliefs on what causes income differences seem to be important for explaining within-country variation in redistributive preferences, they do little to explain between-country differences. Differences in the effects of holding certain beliefs, however, are important for explaining between-country variation in redistributive preferences, suggesting considerable heterogeneity across societies in what is considered as fair.     

Are voters rationally ignorant? An empirical study of Portuguese local elections

The application of the rational choice postulate to a political context invariably leads to the conclusion that most voters are ill informed when making the decision on whom to vote for. In this paper, the authors conduct an empirical evaluation of the rational ignorance theory, based on the model developed by (Rogoff and Sibert Rev Econ Stud LV:1–16, (1988) and by considering that better informed voters reward political candidates who show better performances. The levels of performance are established through the construction of an empirical frontier using the Data Envelopment Analysis (DEA) methodology. According to our results, based on the 1997 Portuguese local elections, even though swing voters do not necessarily behave as rationally ignorant voters, a large majority of voters are rationally ignorant.