Why and how do Political Actors Pursue Risky Reforms?

Abstract

Why and how do political actors pursue risky welfare state reforms, in spite of the institutional mechanisms and political resistance that counteract change? This is one of the key puzzles of contemporary welfare state research, which is brought about by the absence of a complete account that identifies both the cause and causal mechanisms of risky reforms. In this article we offer a remedy for this lacuna. Prospect theory teaches us that political actors will only undertake risky reforms if they consider themselves to be in a losses domain, that is when their current situation is unacceptable. Next, we discuss the strategies that political actors use to avoid the blame associated with risky reforms. These provide the causal mechanisms linking cause and effect. The sudden outburst of risky reforms in formerly ‘immovable’ Italy provides an empirical illustration of our account.