Organizational Structure and the Optimal Design of Policymaking Panels: Evidence from Consensus Group Commissions’ Revenue Forecasts in the American States

Abstract

Increasing both the size and diversity of policymaking panels is widely thought to enhance the accuracy of collective policy decisions. This study advances the theoretical conditions in which improving collective accuracy necessitates an efficient trade‐off between a panel's size and its level of organizational diversity. This substitution effect between these organizational characteristics is empirically supported with data on official general‐fund revenue forecasts made by consensus group (CG) independent commissions in the American states. Evidence of an asymmetric substitution effect is also uncovered, whereby increasing organizational diversity in large CG commissions produces revenue forecasts that reduce collective accuracy by slightly more than three times as much compared to decreasing such diversity in small CG commissions. This study underscores the limits of organizational diversity as a mechanism for improving collective judgments when policymaking authority is diffuse among many panel members.