Working Paper: CEPR ID: DP4623
Authors: Hans Gersbach; Tobias Kleinschmidt
Abstract: Democratic processes may not take the welfare of future generations sufficiently into account and thus may not achieve sustainability. We show that the dual democratic mechanism ? rejection/support rewards (RSRs) for politicians and elections ? can achieve sustainability. RSRs stipulate that incumbents who are not re-elected, but obtain the majority support among young voters receive a particular monetary or non-monetary reward. Such rejection/support rewards induce politicians to undertake long-term beneficial policies, but may invite excessive reward-seeking. We identify optimal RSRs under different informational circumstances.
Keywords: democracy; elections; incentive contracts; rejection-support rewards; sustainability
JEL Codes: D72; D82; H55; Q56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rejection-support rewards (RSRs) (D91) | increased sustainability in democratic systems (D72) |
| rejection-support rewards (RSRs) (D91) | politicians' decision-making processes (D72) |
| politicians' decision-making processes (D72) | investment in socially beneficial projects (O35) |
| younger generations' voting behavior (K16) | investment in socially beneficial projects (O35) |
| rejection-support rewards (RSRs) (D91) | younger generations' voting behavior (K16) |