A model of majority voting and growth in government expenditure

Allan Feldman

Public Choice, 1985, vol. 46, issue 1, 3-17

Abstract: In this paper I have developed a mostly new graphical technique for analyzing government expenditure and, particularly, for analyzing how expenditure grows. The analysis assumes that government has the power to set agendas that are straight lines in the space of issues, and that voters choose majority voting equilibria, given these agendas. Government knows individual preferences, and with this knowledge it tailors the agendas so as to maximize the total levels of expenditure of the resulting majority voting equilibria. The process repeats itself, there may be a new agenda and a new vote every year (or whatever period is used), and the process may go on forever. The important results are: If there are two issues, and if preferences remain constant, the process should converge to a point in the issue space that is stable in the sense that the government's optimum agenda will induce voters to vote down other points allowed by the agenda. If there are three or more issues, and if preferences remain constant, the sequence of points {x k } may not converge. However, the increment in total government expenditure δe k will approach zero. If preferences shift, there is a ratchet effect. That is, changes in people's bliss points will generally cause total expenditure to rise, but will never cause it to fall. If bliss points shift out, and then return to their original positions, total expenditure will shift out, and then shift out again. If new voters are enfranchised, total expenditure levels will either remain the same, or rise. If the new voters have bliss points near the origin, or are ‘low spenders,’ total expenditure levels will rise slightly. If the new voters have bliss points near the iso-expenditure line through the reigning stable equilibrium, total expenditure may rise very sharply. If voters are disenfranchised, or leave a jurisdiction, total expenditure levels will either remain the same, or rise. If voters migrate from one jurisdiction to another, total expenditure levels will generally rise in both jurisdictions. Copyright Martinus Nijhoff Publishers 1985

Date: 1985
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DOI: 10.1007/BF00150960

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