Policy Payoffs Research Articles

Die hessische Landtagswahl vom 8. Oktober 2023: Die Schwäche der Ampelparteien und das überraschende Ende von Schwarz-Grün

The Hesse state election on October 8, 2023, took place in a polarized political context that was characterized by a decreasing support for the parties of the federal government and the several implications of Russia’s attack on Ukraine for German and European politics . At the same time, the state government consisting of the CDU and Alliance 90/The Greens worked relatively conflict-free and remained stable even after the change in the office of Prime Minister from Volker Bouffier to Boris Rhein . The Social Democrats, as the largest opposition party, nominated the Federal Minister of the Interior, Nancy Faeser, as their top candidate and thus a politician well-known in Hessian state politics and nationwide . The election results reflected the weak support of the parties forming the federal government (SPD, Alliance 90/The Greens and FDP) in the electorate . The CDU benefited from the high level of dissatisfaction with the federal government and from the Prime Minister’s incumbency advantage . The CDU vote share was almost twice as high as the vote share of the AfD, which became the second strongest party in Hesse with 18 .2 percent of the vote and achieved its best result to date in a West German state election . The Left failed to win parliamentary representation . The CDU was able to choose its coalition partner between Alliance 90/The Greens and the SPD . The Christian Democrats selected – because of a smaller programmatic distance, as the analysis of the parties’ election manifestos indicates – the Social Democrats as their new junior partner . The analysis of the office and policy payoffs for CDU and SPD shows that the Christian Democrats were better able to enforce their office and policy preferences than the SPD .

In power but not in office: how radical right ‘outsiders’ can influence their mainstream rivals – the UK and Australian cases

ABSTRACT Countries with populist radical right governments are the exception rather than the rule. This paper uses the Australian case of Pauline Hanson’s One Nation (PHON) and the UK case of the UK Independence Party (UKIP) – and its effective successor, the Brexit Party – to help explain a puzzle: how do populist radical right parties in the absence of any likely route to winning office or even holding legislative influence achieve policy payoffs? Tracing the political factors that have driven policy influence in these two cases reveals that an entrepreneurial leader with agenda-setting influence can have policy impact, despite disadvantageous structural conditions, through the following: leveraging electoral influence over both social democratic and mainstream right parties; gaining credibility through sub-national elections; and achieving (or threatening to achieve) defections from centre-right parties.

Support Party Strategies on Important Policy Issues: Results from Swedish Minority Governments

AbstractThe survival of minority governments depends on support from non-cabinet parties that strive to safeguard government stability while also fulfilling their accountability to the electorate. This article argues that non-cabinet parties' propensity to support the government depends on their desire to uphold distinctiveness when accountability is at stake. This even applies to opposition parties that are officially committed to minority government support and, as a trade-off, receive policy pay-offs. By analysing opposition party voting in 23 years of Swedish minority governments (1991–2018), the article suggests that ideologically distant support parties are more likely to oppose the government on their core issues since compromise would involve too-large concessions. These results question our understanding of support party pay-offs as a trade-off for minority government support and highlight the rationality of entering a support agreement, which gives the support party a certain degree of policy influence while also keeping a distinct party profile.

The Advantage of Incumbents in Coalitional Bargaining

Political parties frequently form coalitions with each other to pursue office or policy payoffs. Contrary to a prominent argument, the distribution of rents within the coalition does not always reflect the relative sizes of the coalition members. We propose that this is at least partially due to an incumbency advantage in coalitional bargaining. To evaluate this argument empirically, we construct a data set of candidates, parties, and members of the executive in Finnish local governments. We first use a regression discontinuity design to document a personal incumbency advantage in nominations to executive municipal boards. We then show that an incumbency premium is present also at the party level. Using an instrumental variable strategy that hinges on within‐party close elections between incumbents and non‐incumbents, we find that, ceteris paribus, having more re‐elected incumbents increases party’s seat share in the executive.

Regionalist Parties in Central Government: A Shift in Ministerial Portfolio Preferences?

AbstractThis article takes a closer look at the ministerial representation of peripheral elites in central state institutions. We assess the ministerial portfolios that regionalist parties hold once they enter national government. We use a novel dataset that consists of a large sample of ministerial posts (N=1880) allocated to regionalist parties across Western multilevel democracies throughout the post–World War II period. An empirical analysis shows that regionalist parties control a disproportionately high share of the minister posts, a proportionate share of the policy domains, and a disproportionately low share of the key leadership positions in national cabinets. They have a distinctive preference to hold territorial and institutional (that is, decentralization) responsibilities in their ministerial portfolios. In contrast, concerning secondary policy domains (social-economic and culture-identity) they appear to be highly flexible. Ministerial appointments are an important gateway for peripheral elites to get access to central state institutions. It is also one of the clearest manifestations of (policy) payoffs: portfolios are meaningful tools to defend the interests of a territorial subgroup. Yet, there is no straight line from portfolio distribution to policy outcomes at the end of a legislative term. Resolving this broader question of a party’s influence on public policy requires continued research.

How political ideology of government affects health system efficiency. Evidence from parliamentary democracies

What role does the government ideological composition play in health policy formation and outcomes? According to the conventional view, left-oriented governments are more likely to increase health spending. However, the impact of government ideology on health policy payoff is still a question for discussion. This paper examines how the ideological differences of ruling parties influence the efficiency of health systems. We use four stage data envelopment analysis (DEA), a non-parametric approach, to measure the health efficiency of 31 OECD countries for the period of 2001-2016. Based on the results from a panel tobit regression model, we show that while left-wing governments tend to increase public health spending, the efficiency of health systems is higher under ideologically balanced and/or right-wing governments.

Fairness and qualitative portfolio allocation in multiparty governments

How do political parties divide coalition payoffs in multiparty governments? Perhaps the most striking answer to this question is Gamson’s Law, which suggests a strong fairness norm in the allocation of office payoffs among coalition partners. Building upon recent advancements in portfolio allocation research, we extend this approach in three important ways. First, we study fairness with regard to the allocation of policy (rather than office) payoffs. Second, we introduce measures to assess the fairness of the division of policy payoffs following two norms: envy-freeness and equitability. Third, we explore why some allocations of ministerial portfolios deviate from fairness norms. Based on an original data set of party preferences for individual portfolios in Western and Central Eastern Europe, we find substantial variation in the fairness of policy payoffs across cabinets. Moreover, coalitions are more likely to arrive at envy-free and equitable bargaining outcomes if (1) these fair allocations are based on an allocation of cabinet positions that is proportional to party size and if (2) the bargaining power is distributed evenly among government parties. The results suggest that fairness is not a universal norm for portfolio allocation in multiparty governments, but in fact depends on the cabinet parties’ bargaining positions.

Selfish and Cooperative Voting: Can the Majority Restrain Themselves?

At every scale from small committees to national elections, voters face tradeoffs between self-interest and the common good. We report three experiments in which participants vote for policies with real payoffs at stake. We manipulate self-interest by randomly assigning participants to two groups in society with different policy payoffs. Participants in the majority group are confronted by a simple choice between a policy that is better for themselves or a policy that is best for society. Overall, we find a clear effect of self-interest: Participants are more likely to choose the policy that earns them more money, compared to participants in the other group, even when the policy is detrimental to the common good. Simultaneously, we observe considerable levels of cooperative voting among participants in the majority, ranging from 47% to 79% across different payoff regimes. Finally, participants were not more cooperative when voting compared to when they chose between the same policies with a lottery or leader institution, departing from the hypothesis that voting institutions promote cooperative motives. We discuss implications for multiple literatures about voting behavior.

Governator vs. Hunter and Aggregator: A simulation of party competition with vote-seeking and office-seeking rules.

The policy positions parties choose are central to both attracting voters and forming coalition governments. How then should parties choose positions to best represent voters? Laver and Sergenti show that in an agent-based model with boundedly rational actors a decision rule (Aggregator) that takes the mean policy position of its supporters is the best rule to achieve high congruence between voter preferences and party positions. But this result only pertains to representation by the legislature, not representation by the government. To evaluate this we add a coalition formation procedure with boundedly rational parties to the Laver and Sergenti model of party competition. We also add two new decision rules that are sensitive to government formation outcomes rather than voter positions. We develop two simulations: a single-rule one in which parties with the same rule compete and an evolutionary simulation in which parties with different rules compete. In these simulations we analyze party behavior under a large number of different parameters that describe real-world variance in political parties’ motives and party system characteristics. Our most important conclusion is that Aggregators also produce the best match between government policy and voter preferences. Moreover, even though citizens often frown upon politicians’ interest in the prestige and rents that come with winning political office (office pay-offs), we find that citizens actually receive better representation by the government if politicians are motivated by these office pay-offs in contrast to politicians with ideological motivations (policy pay-offs). Finally, we show that while more parties are linked to better political representation, how parties choose policy positions affects political representation as well. Overall, we conclude that to understand variation in the quality of political representation scholars should look beyond electoral systems and take into account variation in party behavior as well.

Majoritarianism Reinterpreted: Effective Representation and the Quality of Westminster Democracy

Comparative analyses have frequently cast the United Kingdom as a paradigm of majoritarianism, wherein a power-hoarding executive dominates parliament and policymaking. Yet, this article contends that existing studies have paid insufficient attention to the opportunities for opposition parties to affect policymaking via the legislative arena; and applies a refined version of Powell’s index of effective representation to map the institutional conditions that structure policy payoffs. This analysis demonstrates that reforms to shift the balance between government and parliament have served to offset the declining vote basis of government, and have in turn ensured that Westminster remains effectively responsive to a majority of the electorate.

An Incomplete Revolution: Enhancing the Security Council’s Role in Enforcing Counterterrorism Obligations

Since 9/11, international organizations have actively devised counterterrorism strategies and frameworks. Of particular interest are the contributions of the United Nations Security Council (SC), which are increasingly attracting scholarly attention. Through Resolutions 1368, 1373, and subsequent resolutions, the SC instituted a robust counterterrorism framework, an exercise that was in many ways revolutionary in scope. To date, considerable scholarly emphasis has been placed on the SC’s role as legislator, ie as creator of primary international counterterrorism obligations. However, insufficient attention is paid to the SC’s role as implementer of those legal norms, namely at the second stage of the inquiry when it is time to actually enforce obligations or settle disputes over the application of State responsibility (SR) norms. This article examines the largely unexplored role of SR, if any, in catalysing or informing the SC’s exercise of its powers when handling counterterrorism matters, whilst shedding light on the policy payoffs that could be derived from institutionalizing this normative scheme. Moving away from self-help remedies and unilateral countermeasures, I argue that SR for failing to prevent terrorism can be implemented by the SC in appropriate cases. In substantiating my claims, I draw heavily from relevant institutional and state practice. Ultimately, the picture that emerges is one where the SC can play a role, sometimes determinant, in applying SR norms, a prospect that may be a welcome alternative to unchecked unilateralism and constitute a desirable dispute settlement option in certain instances.

The Allocation of Ministries in Multiparty Governments

How do coalition parties in parliamentary democracies distribute government ministries? The predominant empirical finding from four decades of research is that ministerial portfolios are allocated in such a way that coalition parties receive payoffs that are roughly proportional to their share of legislative seats. I argue, however, that most work to date has limited our understanding of portfolio allocation by focusing solely on numerical payoffs received by parties, neglecting more nuanced policy payoffs associated with holding ministerial posts. I implement a new empirical approach that evaluates the seat proportionality thesis as it pertains to multiple types of payoffs. I demonstrate that: (1) parties distribute both the number and types of ministries in proportion to legislative seat share; (2) concentrating purely on numerical proportionality leads to mistaken inferences about its importance in bargaining; and (3) accounting for policy payoff proportionality vastly improves the predictive power of existing models of portfolio allocation.

Cabinet payoffs in coalition governments

Understanding how coalition parties in multiparty governments divide office and policy payoffs is one of the greatest challenges in political science. Gamson’s Law predicts that ministries are allocated proportionally with the coalition members’ legislative seat holding. However, doubts remain about how differences in the valuation of portfolios affect their distribution. The challenge is not only to determine whether government parties receive their fair share of cabinet payoffs once the importance of individual ministerial posts is taken into consideration, but also to develop a measure of portfolio importance that takes time and context into account. This article proposes a new method of measuring portfolio salience using official records of cabinet appointments in the Fifth French Republic that list ministerial posts hierarchically. The result is a more nuanced measure of portfolio importance, which is context sensitive and varies with time. The article argues that the new measure is able to reduce artificial deviations from the one-to-one linkage of seat shares and portfolio shares and that it can travel beyond the French case.

Ethnic diversity, democracy, and health: Theory and evidence

This paper examines the relationship among ethnic composition, political regimes, and social welfare. We provide a simple model which divides individuals in each ethnic group into two types of individuals: the benevolent and the self-interested. Each individual determines whether or not to run for office. A policy maker, who allocates government budget among ethnic groups, is chosen among the candidates by voting. In a democracy, all individuals can run for office and can vote in the election. In a dictatorship, the right to run for election and the right to vote are limited to a specific ethnic group. We investigate how ethnic diversity affects selection of a politician and the resulting policy choices in democratic and dictatorial regimes. Ethnic composition affects electoral outcome and policy payoff. Thus, individuals׳ incentive to run for election depends on ethnic composition. The size of ethnic group in power also affects social welfare. Our model derives (1) a negative relationship between ethnic diversity and social welfare, both in a democracy with a dominant group and in a dictatorship, and (2) a non-monotonic relationship in a democracy without a dominant group. In the empirical examination, employing health outcomes as the proxy for the social welfare, our theoretical results are supported by evidence from the data of 157 countries.

A bivariate model for evaluating equity-linked policies with surrender option

This article proposes a bivariate lattice model for evaluating equity-linked policies embedding a surrender option when the underlying equity dynamics is described by a geometric Brownian motion with stochastic interest rate. The main advantage of the model stays in that the original processes for the reference fund and the interest rate are directly discretized by means of lattice approximations, without resorting to any additional transformation. Then, the arising lattices are combined in order to establish a bivariate tree where equity-linked policy premiums are computed by discounting the policy payoff over the lattice branches, and allowing early exercise at each premium payment date to model the surrender decision.

Nuclear Posture, Nonproliferation Policy, and the Spread of Nuclear Weapons

What is the relationship between nuclear postures and nonproliferation policies and the spread of nuclear weapons? At first blush, this might appear to be an obvious question. After all, states go to great lengths—extending nuclear security guarantees to nonnuclear weapon states, forward-deploying nuclear weapons on the territory of allies, sizing their own nuclear arsenals with the proliferation decisions of other states in mind, supporting international institutions in conducting inspections of nuclear facilities in nonnuclear weapon states, restricting the availability of sensitive nuclear technology, applying and enforcing sanctions against would-be proliferators, conducting military strikes against nuclear facilities, and promoting nuclear cooperation for peaceful purposes, among many other steps—to prevent the spread of nuclear weapons. It would be strange to imagine that states pursue such actions unless they can expect a policy payoff in terms of peace or security. Yet, there is little systematic evidence to suggest that nuclear postures and policies have a meaningful impact on the spread of nuclear weapons. Correctly understanding the effects of nuclear posture and policy on both horizontal proliferation (the spread of nuclear weapons to new states) and vertical proliferation (increases in the size and sophistication of nuclear arsenals within existing nuclear states) is a subject of extreme real-world importance. United

Parties' Influence during Government Policy Negotiations: Parliamentary Dynamics and Spatial Advantages in the First Italian Republic

As long as parties are interested in policies, they will always have incentives for influencing the cabinet bargaining process, although they do not necessarily shape its outcome to the same extent. Being a member of the invested government, for example, should increase the leverage a party enjoys when bargaining over the cabinet programme. Nevertheless, depending on institutional and political conditions, non-cabinet parties may also play a role in affecting cabinet policy positions. Despite being widely recognised in the theoretical literature, this point has received considerably less attention in empirical studies. By focusing on cabinet bargaining outcomes during the First Italian Republic, the article shows that spatial advantages associated with parliamentary dynamics, including those possessed by non-cabinet parties, can be no less significant in capturing policy payoffs than government membership, even after controlling for other relevant institutional and behavioural factors.

Analytical valuation of periodical premiums for equity-linked policies with minimum guarantee

We consider the problem of computing fair periodical premiums of equity-linked policies with a minimum guarantee. The policy payoff at maturity may be decomposed into two components: a fixed part representing the guaranteed payment and a European call option written on the equity reference fund. The deemed periodical contributions into the reference fund may be considered as negative dividends paid by the reference fund and the fair value of the policy may be derived through a closed-form formula by mimicking the valuation of an option written on an underlying security that pays fixed dividends. Numerical results show that the proposed model computes accurate values.

Do Voters’ Coalition Preferences Affect Government Formation?

Studies on coalition formation assume that political parties have two major goals: they aim to maximise office and policy payoffs. This paper shows that decision-making in the government formation game is also determined by the voters’ coalition preferences. Since the coalition formation process is not a one-shot game, parties have to take the coalition preferences of the electorate into account when they evaluate the utility of potential coalitions. If parties fail to comply with the coalition preferences of voters, they are likely to be penalised in future elections. The argument is tested by an analysis of government formation in the 16 German states between 1990 and 2009. The results support the argument: the formation of coalitions – at least in the German states – is not only determined by office- and policy-seeking behaviour of political parties, but also by the preferences of voters regarding their preferred outcome of the coalition game.

Gamson rule not for all: Patterns of portfolio allocation among Italian party factions

AbstractThis article investigates the dynamics of portfolio allocation within political parties to shed light on the patterns of conflict and cooperation between rival party factions. It provides a game‐theoretic model that helps in explaining differences in portfolio allocation due to alternative modes of party organisation or party system competitiveness. Focusing on party congresses to estimate the number, strength and policy positions of party factions, the Italian case is analysed by testing some hypotheses generated by the theoretical model. The results shown that, overall, spoils are shared in proportion to the strength of each faction, in line with the prediction of Gamson's Law. However, there are also some important deviations from this path. Rules that foster party leaders' autonomy in fact provide them with a higher degree of discretion that will be used to reward their followers and to ward off any credible and harmful threat to party unity. Indeed, strategic portfolio allocation might balance out a lower amount of policy payoffs and becomes a strategy to restrain minorities from breaking away, thus contributing to the preservation of party unity in highly competitive political systems.