Political Resource Allocation: Benefits and Costs of Voter Initiatives

TitlePolitical Resource Allocation: Benefits and Costs of Voter Initiatives
Publication TypeJournal Article
Year of Publication2001
AuthorsMatsusaka JG, McCarty NM
JournalJournal of Law, Economics, and Organization
Pagination - 448
Date PublishedOctober 2001
ISBN Number8756-6222, 8756-6222
KeywordsDemocracy, Northern America, Political, Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior (D72), Representatives, U.S., Voter
AbstractThis article explores the benefits and costs of the voter initiative, a direct democracy device that allows policy decisions to be made by voters rather than their elected representatives. Previous research suggests that by introducing "competition" into the proposal process, the initiative leads to policies that are closer to the median voter's ideal point. In our model, in contrast, the effect of the initiative is conditional on the severity of representative agency problems and uncertainty about voter preferences. The initiative always makes the voter better off when representatives are faithful agents, but when voter preferences are uncertain, initiatives can cause "shirking" representatives to choose policies farther from the voter's ideal point. Our evidence shows that initiatives are more common in states with heterogeneous populations, and initiatives reduce state spending when Democrats control the government and when citizens have diverse preferences.