A Reform Dilemma in Polarized Democracies

Hans Gersbach () and Oriol Tejada ()
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Hans Gersbach: ETH Zurich, Switzerland
Oriol Tejada: ETH Zurich, Switzerland

No 16/255, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We study the feasibility and efficiency of policy reforms in polarized democracies. We develop a simple election model where (i) reforms are costly for voters and politicians and these costs increase with the extent of policy change, and (ii) politicians differ in their ability to carry out reforms efficiently. We identify a so-called Reform Dilemma, which manifests itself in two variants. From a static perspective, low-reform-ability politicians may be elected, who impose high costs on citizens for each reform step. From a dynamic perspective, incumbents may choose socially undesirable policies to align the social need for reform with their own reform ability and are thus re-elected regardless of their reform ability. In general, both manifestations of the Reform Dilemma are more pronounced when political parties' positions are polarized. Furthermore, the existence of the Reform Dilemma is independent of the exact point in time when the abilities of candidates reveal themselves and become common knowledge.

Keywords: Elections; democracy; costs of reform; political polarization (search for similar items in EconPapers)
JEL-codes: D72 D82 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2016-07
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