Working Paper: CEPR ID: DP12673
Authors: Hans Gersbach; Oriol Tejada
Abstract: We study the feasibility and efficiency of policy reforms in democracies. We develop a simple election model where (i) reforms are costly for voters and politicians and these costs increase with the extent of policy change, and (ii) politicians differ in their ability to carry out reforms efficiently. We identify a so-called Reform Dilemma, which manifests itself in two variants. From a static perspective, low-reform-ability politicians are elected when political parties are polarized, who then impose high costs on citizens for each reform step. This property of elections arises as low reform ability is a substitute for policy commitment. From a dynamic perspective, incumbents may choose socially undesirable policies to align the social need for reform with their own reform ability and are thus re-elected regardless of their reform ability.
Keywords: Elections; Democracy; Costs of Reform; Political Polarization
JEL Codes: D72; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| party polarization (D72) | election of low-reformability politicians (D72) |
| election of low-reformability politicians (D72) | costs for citizens associated with policy reforms (H59) |
| high reform ability incumbents (E69) | extreme policies (E65) |
| extreme policies (E65) | future need for reform (E69) |
| future need for reform (E69) | reelection of incumbents (D72) |
| strategic behavior of incumbents (L13) | voter perceptions and decisions (D72) |