Working Paper: NBER ID: w7579
Authors: Timothy Besley; Stephen Coate
Abstract: This paper contrasts direct election with political appointment of regulators. When regulators are appointed, regulatory policy becomes bundled with other policy issues the appointing politicians are responsible for. Since regulatory issues are not salient for most voters, regulatory policy outcomes reflect the preferences of party elites and special interests. Direct election of regulators strengthens the power of voters by ensuring the salience of regulatory issues. Using panel data on regulatory outcomes from U.S. states, we find evidence in favor of the idea that elected states are more pro-consumer in their regulatory policies.
Keywords: Regulatory Policy; Elected Regulators; Appointed Regulators; Consumer Welfare
JEL Codes: D78; H11; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Method of selecting regulators (appointment) (D72) | Regulatory policies favoring elites and interests (G18) |
| Method of selecting regulators (direct election) (D72) | Pro-consumer regulatory policies (G18) |
| Method of selecting regulators (appointment) (D72) | Regulatory outcomes (L51) |
| Method of selecting regulators (direct election) (D72) | Regulatory outcomes (L51) |