Economy of Elections

Krystal Okonkwo, Millicent Usoro, Paul Strader, Charles Tilley, William Warren

Public Choice Model

Models Voters, Politicians and Bureaucrats as self-interested. Methodologically individualistic: Public

interest is the aggregation of private decision makers

Positive Economics Utility Maximization

Game Theory

Cooperative games – People only form coalitions to maximize their own utility. As groups increase individual value

decrease so coalitions are unstable. Logrolling or Vote-trading :: quid pro

quo

Pareto Optimality

Pareto Optimality: Policies that benefit some people and hurt no one. Externalities: effects of a decision on

a third party not considered – Imperfect Information Negative Or Positive

Negative Externalities

S0 = Marginal Private Cost

D = Marginal Social Benefit

Cost, P

Q

S1 = Marginal Social Cost

P0

P1

Q0

Q1

If there are no externalities, P0Q0 is the

equilibrium If there are externalities, the

marginal social cost differs from the

marginal private cost, and P0 is too low and

Q0 is too high to maximize social

welfare

Cost of externality

21-5

Government Failure

Failure of Market Outcome: Market is functioning properly but not achieving goals

3 Criteria necessary to correct a problem Recognize Will Ability

Government Interaction Worsens the situation

Median Voter Theorem

Fundamental process of democracy Politicians will move toward to the other

extreme Explains why extremists won’t get elected Ambiguity of political ideology and actions

Assumptions

Political preference ordered from left to right

Single-peaked and sloped downward Two-party system/two candidates Only one political question

Median Voter Model

Simple model of demand aggregation One-dimensional spectrum Center becomes smaller and smaller Elastic demand Primary elections vs. national election

An Illustration of the Median Voter

Three individuals Al ($5.00), Bob ($10.00), Charlie

($20.00) Bob is the median voter Weak form vs. strong form

OPTIONS PATTERN OF VOTES RESULT

$10 vs. $20 A: 10 B: 10 C: 20 10

$5 vs. $20 A: 5 B: 5 C: 20 5

$5 vs. $16 A: 5 B: 5 C: 16 5

$10 vs. $5 A: 5 B: 10 C: 10 10

Limitations

No supply side of the public sector Complex policies cannot be applied Not applicable to multimodal issues

GerrymanderingGerrymandering is the process of redrawing election districts for political purposes Elbridge Gerry –

1812

Massachusetts Governor

Originally benefitting Democratic-Republicans

Three Methods of Gerrymandering

Cracking-Spreading voters of one party across multiple districts to diminish their voting power

Packing-Concentrating voters of one party in one district to diminish their broader voting power

Sweetheart-Agreement between two parties to redraw districts to favor incumbents

General Redistricting Practices

Reapportionment of Congressional seats occurs every 10 years with new Census

Based on change in seats, each state legislature redistricts to uphold doctrine of “one person, one vote” (Wesberry v. Sanders 1964)

http://www.redistrictinggame.org/launchgame.php?level=basic&mission=2

Collusion is an effective method to achieve sweetheart districts

The Democratic and Republican parties collude to maintain the status quo, ensuring incumbents achieve re-election

Collusion

Racial Gerrymandering

Voting Rights Act of 1965 allowed for the creation of majority-minority districts

Aim is to help systematically disenfranchised populations

Can be viewed as either packing or cracking based on specifics of district

Illinois Congressional District 4

Created in a 1990 court order

“Earmuff District” 73.8% Hispanic Rep. Luis Gutierrez

(D)

Externalities For those who do not support the

majority party, gerrymandering represents a negative externality

Various tests have been developed to assess election districts, the most common measure is compactness

In most measures of compactness, scores range from 0 to 1, 1 being a perfectly compact district

Measures of Compactness Polsby-Popper Score

Measures of Compactness Roeck and Ehrenburg Tests

Condorcet Paradox

What is it? Choosing who to elect When there are only two candidates: chose the

one who would likely get the most votes What do we do when there are more than two

candidates Everybody adds their own rank of to each

candidate But is there a social choice that reflects the will

of the people

If we consider a situation where we have three voters and three candidates

Each voter ranks the candidates in different orders of preference

The first voter prefers A to B to C The Second: B to C to A The Third: C to A to B

Given this situation, regardless of who the “social choice” selects, in other words who wins the election, two thirds of the voters will be dissatisfied

A social choice function takes people’s preferences and comes out with the single alternative to win the election and please the most people

This paradox shows however that the function cannot always pick the best outcome

A candidate who can beat all the others in head to head comparisons is called a Condorcet winner

Selection of the Condorcet Winner

The Condorcet Method provides a solution to the paradox

Whichever candidate would beat all other candidates in head to head elections is the Condorcet winner

I.e. If A would beat B head to head and would beat C head to head then A is the overall Condorcet winner.

Many studies have been dedicated to finding the probablilities of the paradox occuring

One of two probabilistic models were used for most of the findings multinomial equiprobable

model(Impartial Culture condition) Anonymous Culture Condition(doesn’t

take voter identity into account)

Maximal Culture Assumption

MC- used to generate profiles of preference

“neutral towards the alternatives and tends to characterize “close” elections”

Probability of Paradox under MC

First let the set {A,B,C} be a given set of alternatives or in the case of elections candidates

Voters can have six linear preference orders for these three candidates ABC - BCA ACB - CBA BAC - CAB

Prob. Con’t.

The probability of Condorcet's paradox in three-alternative elections under the Maximal Culture condition is given by: 11/120 +[

(99L4+341L3+474L3+305L+209)/(120(L+1)5)]

• This theorem is a representation of the probability of the Condorcet paradox occurring under MC as a function of the parameter L

Expected probability

P(n,p) is the probability of a Condorcet winner where n is the number of voters and p is a vector showing the probability that a randomly selected voter has any of six linear rankings of the three candidates, assume all values for p are equally likely

P(n,p) given by 15(n+3)2/[16(n+2)(n+4)]

Vote for someone outside one’s own true preference in order to prevent an undesirable outcome

Using the 2000 election as an example: Vote for Nader to prevent Gore from

winning This is known as strategic voting

Example Florida in 2000

2,912,790 for Bush 2,912,253 for Gore 97,488 for Nader

Voting in open Primaries

Democratic voters may vote in republican primaries and vote for the less qualified candidate so that the Democrat has a better chance of winning a general election

Rent-Seeking Behavior

Activities designed to transfer surplus from one group to another

Context of tariffs and government intervention

Transferring wealth Lottery

Elections

Campaigning to win an election Rent = Elected Position

Money, prestige, power

Incentives

Corruption? Signaling Effect

Voters favor candidates supported by special interests

Costs

Winner: comes out of rent Loser: comes from supporters

Tussock’s Game:

Election Game:

Social Implications

Benefitting the rich Super PACs Publicly funded elections

Works Cited http://www.sciencedirect.com/science/article/pii/S0962629808000954

http://www.redistrictingthenation.com/glossary.aspx

http://www.redistrictinggame.org/launchgame.php?level=basic&mission=2

http://www.ccrpc.org/planning/pdfs/StatisticalStandards.pdf

http://www.nationaljournal.com/almanac/2010/area/il/04

http://www.yourdictionary.com/images/articles/lg/379.PresidentialElection.jpg

http://upload.wikimedia.org/wikipedia/en/thumb/e/e8/Florida_2000.PNG/200px-Florida_2000.PNG

http://www.jpattitude.com/Images/2000Election.jpg

http://upload.wikimedia.org/wikipedia/commons/thumb/5/5b/Nicolas_de_Condorcet.PNG/220px-Nicolas_de_Condorcet.PNG

http://www.sciencedirect.com/science/article/pii/0165176581901075

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Foundations of Constitutional Democracy. Ann Arbor: University of Michigan, 1965. Print.

David Colander, Microeconomics 8th Edition (New York: McGraw-Hill, 2010), 189-190 , 487, 532-537

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Buchanan, James M., and Gordon Tullock. The Calculus of Consent ; Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan, 1965. Print.

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Bullock, David S. "Cooperative Game Theory and the Measurement of Political Power." American Journal of Agricultural Economics 78.3 (1996): 745. Print.

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