In the most recent wave of initiative use in the American states, citizens have passed an eclectic range of ballot measures. Voters have banned gay marriage, punished negligent doctors, prohibited the confinement of pregnant pigs, limited the taxation and spending powers of state governments, funded stem cell research, and ended affirmative action. Critics of the process claim that this plebiscitary system is out of control, with special interests dominating the process and threatening democratic governance. Defenders, in contrast, claim that ballot measure outcomes reflect the will of the people and are certainly more representative of public opinion than legislative bodies.

Versions of these competing visions have been rehashed since the triumvirate mechanisms of direct democracy—the initiative, popular referendum, and recall—were first introduced in the United States in the late nineteenth century. In several of the two dozen American states that permit the process, the initiative has become an important tool of policymaking. Instrumentally, ballot measures have been used by a wide array of citizens, interest groups, and even prospective and incumbent officeholders to achieve a variety of substantive ends, progressive and conservative alike.

In his largely dispassionate study, economist John Matsusaka attempts to establish whether the presence of the initiative benefits the many or the few. An avowed empiricist, Matsusaka examines a century's worth of tax and spending data from 48 of the American states (Alaska and Wyoming, two initiative states, are excluded from his analysis), as well as comparable data from more than 5,000 American cities in the 1980s. His aim is two-fold: 1) to isolate the effects (if any) of the initiative on fiscal policy in states and localities permitting the process, and 2) to determine whether fiscal policies in jurisdictions with the initiative reflect public opinion.

Matsusaka shows that since the 1970s, states with the initiative have had lower levels of taxation and state spending than those without the mechanism (although when controlling for the stringency of the petition threshold, there is only evidence of reduced expenditures, not lower levels of taxation in initiative states). While the key explanatory variable used in his study—a binary measure of whether or not a state has the initiative process—is crude and masks the tremendous variation in the actual use of the initiative across the states, his models are robust. His parsimonious cross-sectional time series models consistently reveal that the mere presence of the initiative is a predictor of the fiscal outcomes. He also finds that states with the initiative have decentralized much of their fiscal responsibilities to local governments and have shifted their sources of revenue from taxes to user fees. However, when the author turns his attention to state fiscal outcomes during the first half of the twentieth century (1902–42), he finds that states permitting the initiative had higher revenue and expenditure levels than their noninitiative counterparts. He also finds that in the 1980s, municipalities with the initiative relied more heavily on charges but did not have lower taxation rates than cities without the process. He chalks up these substantive policy differences to fluctuations in the will of the majority.

For Matsusaka, the disparate findings indicate that the initiative is nonideological and that its only bias is “toward the majority, whether conservative or liberal” (p. 79). He argues that when public opinion began shifting to the right in the 1970s, the presence of the initiative was instrumental in reining in taxation and spending levels, bringing state fiscal policy in line with increasingly conservative public opinion. In contrast, during the first half of the century, Matsusaka speculates (since he lacks public opinion data), citizens in initiative states wanted to increase the amount of public resources spent on public schools, highways, and social welfare programs, but that state legislatures were unwilling to increase public spending. Although he does not empirically test these claims, he submits that elected officials were out of step with the dominant wishes of the public due to legislative malapportionment, but that in initiative states, the mechanism facilitated the expression and realization of majority public opinion.

The book has several limitations. Because much of the empirical analysis was first published more than a decade ago and draws heavily on social choice literature, Matsusaka ignores most of the recent work conducted by political scientists on direct democracy in the American states. He also does not include in his statistical models the control variables that direct democracy scholars have shown to be strong predictors of support for ballot measures dealing with fiscal matters. For instance, scholars have shown that in states with high racial diversity, white voters are less willing to pay higher taxes for social services, and that tax and expenditure limits (TELs) are more likely to be adopted in initiative states and have the direct effect of reducing taxation and spending. In addition, the author has an unorthodox penchant for interpreting as statistically significant the signs of coefficients that do not meet conventional levels of significance. As a result, he often expresses more confidence in the reliability of his coefficients than is warranted. Furthermore, while his key dichotomous explanatory variable does not measure the actual use of initiatives, he often infers such a link, summarizing his findings with statements, such as “Voters appear to have used the initiative to chip away at both revenue and spending” (p. 33). Although Matsusaka briefly touches on the normative question of direct democracy and minority rights, criticizing studies that “rest on intuition, not on convincing, systematic evidence” (p. 115), he offers no empirical evidence of his own before asserting that “an impressionistic look at the historical record does not give much reason to be concerned about the initiative process” (p. 126). Finally, several of the figures and tables in the text are inadequately notated. The data from one table, which Matsusaka interprets as showing how “surveys make it clear that Americans do not trust their representatives to do the right thing, and have much more confidence in the electorate at large” (pp. 130–31), is quite dated, though one has to sift through Appendix 3 to determine it is from 1986.

Matsusaka provides convincing evidence that fiscal outcomes in states and localities with the initiative vary from noninitiative states, and he shows that voting on ballot measures “is an important way citizens signal their policy preferences” (p. 143), as the passage of 11 ballot measures in the November 2004 election banning same-sex marriages makes all too obvious. The overarching claim that special interests do not distort the initiative process, though, goes largely unanswered. While ballot measures may signal the preferences of the voting public, Matsusaka does not probe how ballot measures receiving majority support may also benefit the interest groups that sponsor the initiatives; the two ends are by no means mutually exclusive. In the end, For the Many or the Few provides new empirical evidence about the fiscal impact of the initiative and is a useful point of departure for more general inquiries into the effects of the initiative on public policy in the American states.