One of the fastest growing areas of research on electoral systems in political science and political economy has been on the effects of electoral systems on policy outcomes. This agenda has sparked some lively controversies among prominent scholars. It has also generated new theoretical ideas and new datasets with which these ideas have been tested. Research has focused on the effects of electoral systems on a wide range of policy issues, including:
• redistribution of wealth through taxation and progressive social welfare policies;
• redistribution of wealth through regulatory policies that affect consumer prices;
• fiscal restraint versus profligacy of governments as measured by size of the public sector and government deficits;
• government intervention in markets to protect workers and local industries;
• levels of protectionism through tariffs, subsidies, exchange rate policies, and regulations on FDI; and
• the relative priority policymakers place on providing broad public goods versus goods targeted at narrow constituencies.
Most arguments about how and why electoral systems shape policy outcomes rest on a distinction between “narrow” versus “broad” socio-economic interests, advancing claims that the type of competition engendered by a particular electoral system favors one sort of interest or the other. But how scholars conceive of narrowness and breadth, and the nature of the tradeoff between them, varies markedly. We see five distinct types of stories about what constitutes narrowness and breadth—that is, whose economic interests are properly conceived as narrow and whose as broad. Each type of story, moreover, is associated with a particular set of claims about how specific electoral systems shape the narrow/broad tradeoff.
The five main stories differ on whether narrow versus broad ought to be conceived according to level of wealth, economic sector, access to economic rents, geography, or non-geographic characteristics that nevertheless allow for targeted policies. We discuss each of these accounts in turn, but we match the first three and the last two because the theoretical foundations of these sets are most directly comparable.
Redistribution: Governing Coalitions, Voter Leverage, and Rents
The first approach takes as a starting point the fact that the distribution of wealth in every democracy is skewed such that the median voter's wealth is below the mean level, so that a progressive redistribution of wealth could appeal to electoral majorities. From that premise, narrow interests are those of the minority rich, whereas broad interests are those of the numerically larger middle class and poor groups. In a competing approach, by contrast, the narrow versus broad distinction is not about level of wealth, but about economic sector. Those whose livelihoods derive directly from domestic industries whose production costs and market positions are shaped by government regulatory policies are characterized as narrow, whereas broad interests are those of all others in low consumer prices.
The key division in this literature is over how electoral rules act as a source of the relative political leverage for the narrow versus the broad. The landmark arguments here are advanced by Iversen and Soskice (and Cusack) on one side, and by Rogowski (with various co-authors) on the other, and by Persson and Tabellini (and Roland), who offer combinations and alternative permutations of arguments from both sides.Footnote 94 For the Iversen and Soskice camp, redistribution primarily takes the form of taxation by the government and transfers from richer to poorer groups, so the crucial form of government intervention in the economy is progressive. On the other hand, for the Rogowski et al. camp, the vehicles of redistribution are regulatory and trade policies that favor the narrow interests of producer groups, but raise prices for everyone. Consequently, they characterize government intervention in the economy as primarily regressive.Footnote 95 For Persson and Tabellini, redistribution takes the form of rents extracted from state coffers by politicians and political parties, both in the form of fiscal transfers and regulatory protection for favored groups. In both of these latter cases, the effect of government intervention in the economy is to transfer resources from the broader population to politically privileged constituencies, and so is regarded as regressive. The logics of the various arguments are as follows.
Iversen and Soskice start with a three-class model of society: low (L), middle (M), and high (H) income citizens.Footnote 96 Governments have three options: (A) no redistribution; (B) moderate redistribution, from H to M and L; or (C) radical redistribution, from H and M to L. L prefers C to B to A, M prefers B to A to C, and H prefers A to B to C. The electoral system shapes policy outcomes by influencing which parties exist and which governments form. Proportional representation (PR) systems lead to one party representing each of group (L, M, and H) and coalition governments either between LM or MH. M is the pivotal player and can decide which government forms. M's first choice is to coalesce with L to pursue a policy that redistributes from H to M and L. As a result, PR systems lead to moderate levels of redistribution (e.g. high levels of public spending).
Single-member district (SMD) systems, meanwhile, lead to two parties: LM and MH. M is split between the parties, and is hence weaker than the other group within the respective party. As a result, M cannot guarantee that its partner will not seize control of policy and pursue its own first preference: policy C (radical redistribution) in the case of LM, or policy A (no redistribution) in the case of MH. Unable to guarantee itself policy B, and preferring A to C, M's voters prefer to ally with group H under SMD competition. The consequence is lower levels of economic redistribution in SMD systems compared to PR systems. Note that the argument hinges on SMD competition yielding a policy outcome that deviates from the median group's preference whereas PR competition allows the median group to determine policy.
In contrast, Rogowski and Kayser focus on how electoral rules shape the relationship between the proportion of votes parties receive and the proportion of seats they win.Footnote 97 Because vote swings between parties lead to disproportionately larger seat swings under SMD than under PR, the value of the marginal vote is higher under SMD. As a result, parties pay closer attention to the median voter in SMD systems, while politicians in PR systems are more likely to be “captured” by producer interests that deviate from median voter preferences.Footnote 98
The level of consumer prices is the main policy manifestation of the differing electoral incentives in SMD versus PR. Consumers make up the larger share of the electorate, and thus include the median voter, who prefers policies that yield lower consumer prices. Such policies include lower import tariffs, a lighter regulatory footprint, and more competition among producers. Producers are a smaller group than consumers, and prefer policies that yield higher consumer prices (and so, producer rents), such as import duties, regulatory standards that protect favored sectors, industrial subsidies and industrial concentration. If politicians in SMD systems are more keenly attuned to consumers than are politicians in PR systems, then consumer prices should be lower in the former and higher in the later. The empirical evidence supports this proposition.
Persson and Tabellini develop a similar logic to Rogowski et al., embracing the seat-vote elasticity premise to argue that competition between politicians and parties is stiffer under SMD than PR, and therefore that politicians will be more responsive to voters in SMD systems.Footnote 99 This not only relates to the policies politicians deliver to secure their re-election (the primary focus of Rogowski et al.), but also the policies politicians pursue to promote their own personal interests, such as seeking political rents and engaging in corruption. The policy consequences, they suggest, are that SMD systems lead to fewer public goods, but also lower rents for politicians than PR systems.Footnote 100
Building on this argument, Persson, Roland and Tabellini contend that electoral rules also have indirect policy consequences, via their impact on party and government formation.Footnote 101 This would appear to put Persson, Roland, and Tabellini on the same page as Iversen and Soskice,Footnote 102 but whereas Iversen and Soskice focus on spatial coalitions between parties and groups, Persson, Roland, and Tabellini focus on accountability and efficiency.Footnote 103 Specifically, SMD systems lead to fewer parties, which makes single-party government more likely, clarifying government accountability and yielding more efficient policies. In contrast, PR systems lead to more parties and incentives for each party in a coalition government to spend money on its own supporters while free riding on the accountability deficit implied by lower clarity of responsibility.
These authors derive opposing inferences about policy outcomes from the same sets of electoral rules in part because they define narrow and broad interests differently. All might agree that PR rules are more likely than SMDs to yield labor market regulations that boost industrial wages and compensation, but Iversen and Soskice interpret this outcome as redistribution from citizens in the “narrow” (richer) category to those in the “broad” (poorer) category, whereas Rogowski et al. see the same policies as redistributing from “broad” (consumer) to “narrow” (producer) interests, and Persson et al. see political and economic rents. But Persson, Roland, and Tabellini also suggest a way to reconcile Iversen and Soskice with Rogowski et al.Footnote 104 Median voters may favor both moderate redistribution via taxation and transfer (per Iversen and Soskice) and low consumer prices (per Rogowski et al.), and PR systems may tend to produce cabinets with pivotal parties closer to the median voter than do SMD systems.Footnote 105 In the operation of coalition government, however, the pivotal centrist party may be better able to deliver on its fiscal promises of moderate redistribution than on its commitment to refrain from regulatory policy that drives up consumer prices, owing precisely to the spending dynamics and the common pool resource problems that Persson and Tabellini et al. emphasize.
Several other authors support the claim that PR encourages more progressive redistribution of wealth than does SMD.Footnote 106 Alesina, Glaeser, and Sacerdote qualify this claim, maintaining that whereas PR may encourage redistribution in advanced (i.e., OECD) democracies, there is little evidence of this effect in developing countries.Footnote 107 One explanation may be that the Iversen and Soskice result of progressive redistribution hangs on the logic of government formation in a parliamentary system with party competition along a single, left-right dimension. Under presidentialism or less well-ordered ideological competition among parties, both of which are prevalent in less developed regions, the PR-progressivity logic may not apply. A related line of argument, by Amat and Wibbels, suggests low redistribution under PR in environments where parties have not developed ideological foundations.Footnote 108
Finally, as with all research based largely on cross-national comparisons, there is the persistent question of identifying causal effects, and specifically the extent to which electoral systems drive policy interventions that affect redistribution, as opposed to the distribution of economic resources driving electoral system choice. Cusack, Iversen, and Soskice acknowledge that the choice of the electoral system might be endogenous, since high local economic coordination appears to have facilitated the adoption of inclusive, PR electoral rules in many European contexts in the early twentieth century.Footnote 109 Countries with traditionally low economic policy coordination and adversarial relations between employers and craft-based unions tended to choose SMD systems. In contrast, countries with high economic coordination and common interest of employers and industrial unions tended to choose PR.
Geography: District Magnitude and Policy Incentives
Narrow and broad interests can be conceived geographically rather than socially. From this perspective, the design of electoral systems shapes whether politicians have incentives to deliver local or regional/national public goods. The key distinction here is between SMD systems and the rest, perhaps with a further distinction among PR systems according to district magnitude. SMD elections privilege more narrow geographic interests than do PR election because SMDs mean the geographical scope of each district must necessarily be smaller.Footnote 110 For example, Funk and Gathmann find that PR leads to spending on broader public goods, like education, rather than targeted goods, like roads and agricultural subsidies.Footnote 111 Looking at individual legislators, Gagliarducci, Nannicini, and Naticchioni find that during Italy's use of a mixed electoral system, SMD-elected members supported geographically-targeted spending projects more than PR-elected members did.Footnote 112
Research in international political economy has mirrored that on public spending, with protectionist trade policies in the role of budget largess. Several scholars claim that SMDs encourage high tariffs because small districts encourage protection of narrow interests.Footnote 113 Kim finds that politicians in SMD systems tend to restrict mergers and acquisitions more than those in PR systems, arguing that the reason is that SMD representatives are more inclined to protect firms in their home districts that might be adversely affected by mergers and acquisitions. Moving in a slightly different direction, Vernby argues that strikes are more common in SMD systems than in PR systems, and diminish under PR as district magnitude grows.Footnote 114 His explanation is that unions recognize that strikes are more electorally costly to incumbents under SMD, where vote-seat elasticity is greater, and so they deploy that strategy more readily.
However, political competitiveness varies across districts within both SMD and PR systems. A more subtle extension of the general argument that SMD elections encourage narrowly-targeted policy benefits posits that the effect of electoral systems is conditional on district-level characteristics—for example, the geographical concentration of voters with shared interests. The logic rests on the marginal bang-for-the-buck that politicians get from distributing resources in pursuit of votes. Thus, in SMD systems, narrow interests—for example, in subsidies for a particular industry—are more likely to be privileged in policy when voters who share that interest are geographically concentrated, whereas the distribution of such benefits is unrelated to geographical concentration in PR systems.Footnote 115 Rickard also finds that violations of GATT/WTO agreements (which favor narrow sectoral interests) tend to be more frequent in SMD countries than in PR countries.Footnote 116
There is, however, an additional condition implicit in this account—district-level competitiveness. Politicians only want to lavish additional goods, like subsidies, on a geographically-concentrated voting bloc when that bloc is pivotal. If a group of voters with a shared interest is geographically concentrated, but those districts are either already safely in the government's column or are unwinnable, then policy benefits should be targeted elsewhere. This logic implies a compound conditionality (Electoral System * Geographical Concentration * District-Level Competitiveness) to the effect of electoral system on the geographical concentration of benefits. There is some suggestive evidence in favor of such a relationship. McGillivray advances the case that, under SMD systems, protectionism is targeted at geographically-concentrated industries located in electorally marginal districts.Footnote 117 Neugart also argues that under SMD systems, worker protection tends to be narrowly targeted at voters in pivotal districts,Footnote 118 whereas PR systems encourage policies with broader protection against unemployment because parties need to take the employment risks of all voters into account.Footnote 119
Ideological Breadth/Narrowness: Targeted Versus Universal Appeals
Ideology is an alternative conception of narrowness or breadth of appeal. Park and Jensen, for example, argue that the low thresholds for representation that characterize inclusive PR systems encourage parties organized around appeals to narrow constituencies, which in turn produce high levels of agricultural subsidies and protectionism.Footnote 120 McGillivray argues that the dispersion of stock prices among firms in different industries is an indicator of the degree to which governments favor some economic sectors over others,Footnote 121 and shows that dispersion is generally higher under PR than SMD systems, suggesting more policy favoritism under PR than SMD.Footnote 122
An extension of this logic posits a conditional effect of ballot structure on district magnitude, whereby intra-party competition in high-magnitude districts encourages candidates to appeal to highly specific (i.e., narrow) groups of voters for personal support.Footnote 123 In high-magnitude districts, which tend to be large and highly populated, these targeted benefits might be geographically specific, but they need not be, and policies targeted by sector or industry, demographic criteria, or partisanship are equally feasible. Crisp and Hankla both present evidence that, under PR, stronger incentives to cultivate a personal vote (as, for example, in open-list or transferable vote systems) encourage protectionism through particularistic subsidies and regulations for targeted industries.Footnote 124 Further empirical results consistent with this are in Bagashka, Naoi and Krauss, Ehrlich, Golden and Picci, Golden and Chang, and Wright.Footnote 125
Electoral Systems, the Fiscal Commons, and Economic Growth
Last but not least, scholarship in political economy has reached beyond examination of targeted benefits to advance even broader claims about the relationship between electoral systems and macroeconomic performance. Since the work of Persson and Tabellini in the late 1990s, there has been growing support, mainly by economists, for the claim that SMD systems produce lower government spending, public deficits, and rent-seeking than PR systems.Footnote 126
The theoretical claims, however, have not gone unchallenged in the empirical literature. Milesi-Ferretti, Perotti and Rostagno concur that more proportional systems lead to higher spending in OECD countries, but find no evidence of a difference in Latin America.Footnote 127 Akitoby and Stratmann, meanwhile, present evidence that, contrary to Persson and Tebllini, SMD elections produce higher government spending than PR elections, and more penalization of governments by financial markets via higher bond-yield spreads.Footnote 128
In work echoing that on targeted benefits, some scholars have distinguished the fiscal incentives generated by strong incentives for personal vote-seeking within PR systems. Under Brazil's open-list elections, for example, Ames finds that high-magnitude PR with intra-party competition fosters particularistic spending.Footnote 129 With a broader comparative perspective, Hallerberg and Marier find that budget procedures that strengthen the executive's authority produce lower deficits where the electoral system for legislators generates strong incentives for personal votes, but yield no impact where legislators' incentives for personal votes are low (for example under closed-list PR).Footnote 130 And Martin and Thomas find that higher district magnitudes tend to produce more public goods provision when elections are party-centered (for example, under closed-lists), but lower overall spending and focus on particularistic goods when elections are candidate-centered (for example, under open-lists).Footnote 131 Bernhard and Leblang and Eichengreen and Leblang argue that SMD elections encourage floating exchange rates because single-party governments value the associated policy flexibility, whereas the coalition governments more prevalent under PR encourage fixed exchange rates as a commitment measure to resolve policy disputes among parties, and as a means for coalition partners to monitor the Finance Ministry.Footnote 132
Conclusion and Avenues for Future Research
Research on the effects of electoral systems on policy outcomes is at a relatively early stage compared to the decades of work on the impact of electoral systems on the party system, the relationship between vote and seats in parliaments, the number of parties in government, and so on. Nevertheless, a lot of progress has been made in a very short time. There are now some reasonably clear empirical regularities in terms of the effect of the two main types of electoral systems—majoritarian and proportional—on some major economic policies. In particular, whereas PR systems tend to produce higher public spending, majoritarian systems tend to produce lower public deficits and lower consumer prices. Furthermore, at a lower level of aggregation, SMD systems tend to produce policies targeted at pivotal voters in marginal districts, whereas PR systems tend to produce general public goods.
The causal mechanisms behind the connection between electoral systems and these (and other) policy outcomes are not yet fully understood. First, it remains unclear whether the electoral system effects are direct—as a result of different socio-geographic campaigning incentives for parties and politicians under the different electoral systems—or indirect, as a result of the processes of government formation and operation (such as the difference between single-party government and coalition government). Second, only a small number of countries have switched between a majoritarian and a PR system since the 1950s. This means that most of the key empirical results are based on cross-country rather than cross-time variations. The problem with relying on cross-country variation is that it is difficult to identify the effect of electoral systems independently from other factors that vary across countries, such as parties, governments, other political institutions, and voters' preferences. Electoral systems are also endogenous to political factors that vary across countries, such as the number of parties and the conflictual or consensual nature of societal relations.
Recognizing these challenges, researchers have begun to look at within-country variations. For example, several scholars have looked at mixed-member electoral systems, where politicians in the same country at the same time are elected by either SMD or PR rules. This has allowed researchers to identify the types of policies the two sets of politicians seek. Extrapolating from this micro-level behavior to macro policy outcomes, such as public spending or trade tariffs, is not straightforward. Nevertheless, we believe more can be learned, at both an empirical and a theoretical level, by focusing on the policy effects of changes in electoral rules within countries over time, such as changes in district magnitude or switches from closed-list to open-list PR.
