Finding exits and voices: Albert Hirschman’s

contribution to the study of public services*

Peter John

Department of Political Science

University College London

peter.john@ucl.ac.uk

*Paper first presented for a conference in honour of Albert Hirschman, “The gift

of (self)subversion”, Rome, 12-13 September 2014. I thank the organisers and

presenters for their reactions and comments.

1

Abstract

This paper is an assessment Albert Hirschman’s contribution to the study of

public services, in particular from his book Exit, Voice and Loyalty (1970).

Hirschman argues that exit and voice are two responses to dissatisfaction. Voice

being more effective and desirable, and a lack of exit opportunities increases

voice (moderated by loyalty or social investment). The paper starts by noting the

suitability of the exit, voice and loyalty (EVL) framework for understanding how

public services can perform effectively and responsively as there are a wide

range of exits and voices available to citizens when they are dissatisfied with

public services. The paper’s review of the use of EVL in public management

reveals extensive citations of Hirschman but relatively few direct applications of

the framework. The main exception is the literature on urban services, which has

extended and refined EVL. The paper concludes by suggesting that as the topics

of service quality, performance, competition, choice and participation continue

to be of interest to scholars of public services, Hirschman’s insights and

framework can help understand relationships between different kinds of citizen

responses that too often are studied separately.

2

Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations and States

(1970) is probably Hirschman’s most famous work. This prominence is not just

because of the originality of the central claim—the negative trade-off between

exit and voice—but due to its wide application right across the social sciences

and beyond. Hirschman knew this of course and he wrote in the Preface about

how his concepts can apply outside traditional economic analysis to such diverse

contexts as ‘competition and the two party system, divorce and the American

character, black power and the failure of “unhappy” top officials to resign over

Vietnam’ (1970: vii). Academic history has proved him to be right with the large

number and diverse range of applications now published (for reviews see

Dowding et al 2000).

The study of public services is a particularly relevant field to assess

Hirschman’s contribution. He was inspired to start his investigation of exit and

voice by the very public sector case of rail transport in the state-owned railway

company in Nigeria where competition and exit had removed the consumers

who would have agitated to improve services. The public sector, with its implied

monopoly of service provision and potentially dissatisfied consumers who do not

have access to the market, is very suitable site for research using Hirschman’s

ideas. The exit-voice framework can help find out whether the ‘lock in’ of

consumers to the public sector might actually improve the quality of public

services rather than harm them as traditional economic theory supposes.

The public sector is also vulnerable to approaches from the private

market either through privatisation or from creating market-like mechanisms in

the public sector so as to improve efficiency. Rather than seeing the market and

choice approach as the only way to improve public services (or to worsen them

3

in a more critical view), Hirschman realised that exit is only one kind of

individual response to dissatisfaction, which can either take the market route

through choice and exiting out of public services, or the more public solution of

expressing dissatisfaction through voice, that is through more political activities

of representing and complaining. Whereas market-orientated reformers believe

the release of choice is the solution to the problem of dissatisfaction, other

advocates regard greater citizen participation as the panacea. In contrast,

Hirschman argues these two sets of actions belong together in an integrated

approach that citizens take when responding to dissatisfaction. Exit and voice

are treated as functional equivalents in this respect even though they have

different causes and consequences. Choices to voice or exit are usually present in

most circumstances citizens find themselves in though variations in institutional

design can alter how responses to dissatisfactions become manifest.

The negative trade-off between exit and voice—that less exit

opportunities create voice because citizens have no low cost options to deal with

their dissatisfaction—at first seems uncomplimentary to political participation

whose virtues have been extolled by democrats down the ages. Perhaps it is not

flattering. But it arrives at a defence of politics over market choices that is quite

subversive—to use a Hirschman kind of phrase. Citizens who are not able to exit

participate in politics and make things better for their fellow citizens by ensuring

higher quality services. Rather than taking a conventional economic approach to

public service provision—that of wanting to increase efficiency by fostering

choice—Hirschman says the opposite: more choice might lead to less efficiency

because organisations lose the constituency of people who keep them on their

toes.

4

In spite of a veritable cottage industry investigating exit, voice and loyalty

(EVL) across the social sciences (see Dowding et al 2000), there is surprisingly

little impact of Hirschman on research in public management and service

provision (in spite of some notable exceptions). This is a surprising finding as the

concepts Hirschman was interested in have been studied much more in the forty-

five years since the book was first published. The study of citizen satisfaction

with public services hardly existed in 1970, but has blossomed since that time;

investigations of market efficiency and the promise of the new public

management have become the staple fare of public administration and public

economics since the late 1970s, often articulating critical views about the

efficiency of the market just like Hirschman did; and the voice side itself has

become much more important with public participation, consultation, citizen

governance, deliberation are researched and advocated for strongly. Although

Hirschman sometimes gets briefly citied or footnoted in the course of these

arguments, often in the opening paragraphs, studies that systematically

investigate these processes and understand them as one are only too rare, even

in the simple formulation that Hirschman offered. Moreover, there are many

ways his framework can be advanced and elaborated to offer more fine-grained

and multidimensional views of exit and voice. Research on choice and public

participation still largely operate in separate worlds with Hirschman-inspired

studies hardly noticed by either side. Hopefully the gradual diffusion of

Hirschman’s ideas can remedy this lacuna and encourage academics not only to

appreciate the complexity of the exit-voice trade-off but to think about how to

design institutions that get the best from exit and voice and to encourage loyalty

too.

5

The following sections of this paper take each of Hirschman’s concepts in

turn to elaborate what role they play in the EVL framework and to see how they

can help understand key issues in public service provision and management as

well as taking into account relevant findings from extant research on public

services. The central part of the paper reviews the key studies of public services

that have used and extended the framework as Hirschman intended. Finally, the

paper summarises what has been achieved and seeks to mark out the research

agenda for the next forty-five years.

Satisfaction

Satisfaction or rather dissatisfaction is the key mechanism for Hirschman. It

underlies the reasons why the individuals consider exit or voice. The satisfied

consumer does not need to voice or exit and can rationally conserve energy by

doing nothing or just the routine (consuming services, paying taxes). The

dissatisfied consumer is someone else: a person who does not like what has

happened to the service she or he depends on. Decline can happen to any

organisation as Hirschman makes clear in the first sentence of the book: “Under

any economic, social, or political system, individuals, business firms and

organisations in general are subject to lapses from efficient, rational, law-biding,

virtuous, or otherwise functional behaviour” (1970:1). In other words, it is to be

expected that, just like individuals, organisations from time to time make

mistakes or lose their mission. Hirschman was very interested in the idea—

promulgated by Becker and others (see pp. 10-14)—of slack that implies a lack

of efficiency could be in the interest of organisations and their leaders. The

public sector is an arena that uniquely suffers from slack because of the absence

6

of competition though of course the private sector is far from immune. But the

public sector cannot go out of business so cannot renew through that method

(2). So the question becomes is there a mechanism that keeps public managers

alert and responsive to consumers and citizens?

At the time Hirschman was writing there was relatively little attention to

or research on citizens dissatisfaction with services. In the UK Cabinet Office

review of dissatisfaction, for example, there are no studies reported that were

written before 1995 (PIU 2006). The field effectively begins in the 1980s with

studies of attitudes to service quality that come from research on marketing.

Researchers were preoccupied with techniques to improve satisfaction that

centre on the improvement of the performance of public services. There was a

lot of attention in measuring satisfaction and sources of it (DeHoog et al 1990).

The more recent literature on public sector management uses an expectations

model of satisfaction and explores relative perceptions of satisfaction (Ryzin

2004, James 2007). The focus is on how actual and measured performance affect

satisfaction: actual performance does not have that strong relationship as

perceptions of it are strongly filtered. Hirschman is neither used not citied in

these papers as the focus is on understanding of the dependent variable and the

how the citizen responds to changes in behaviour or performance by the public

authority. The Hirschmanian response would be to say that these studies miss an

important feature of satisfaction: it operates in a dynamic context in response to

previous choices made to exit and to voice. Existing studies treat the citizen

passively and as someone to be manipulated by public authorities. As

governments have found out to their cost, such as the British government’s

attempt to improve satisfaction with higher public spending on the National

7

Health Service in the early 2000s (Appleby and Robertson 2010), it often does

not work: citizens weigh up a variety of factors rather than depend on just the

amount resources being deployed. Instead public organisations need to

recognise the autonomy of the individual to make choices as whether to exit or

voice. In this sense, Hirschman is very modern in considering the active citizen

and the complex relationships between satisfaction, voice and performance.

The exception to these studies is the work by Lyons et al (1993) that

starts from dissatisfaction and models responses in a modified Hirschman

model. It is still very focused on satisfaction and does not look at citizen

responses in a dynamic perspective. But it is an important advance. This book

appears in the later discussion of exit and voice.

Exit

Exit is an essential part of Hirschman’s framework. It is one of the responses to

dissatisfaction and represents an element of consumer choice so that citizens can

get better services by exiting whether by switching to a private sector provider

or moving out of or within the jurisdiction. For the economist exit is an essential

means to improve the efficiency of the market by giving signals to providers to

provide desired products. Most economists and Hirschman would agree that

choice is constrained by monopoly of provision and also by a degree of inertia

and information deficit on the part of consumers. In the public sector this is

magnified because of the lack of choices consumers and citizens have and that

most forms of exit are costly, such as moving house or paying for services when

one is already taxed and in effect paying for them. For the public choice advocate,

the solution is to free up the market by introduce competitive mechanisms to

8

increase choice of providers without having to move house, such by setting up

and giving autonomy to service-providing units and disseminating more

information about their performance. In this way, all would benefit because new

units of production or service provision would respond to demand and the

existing ones would need to improve services to keep their consumers. This is at

the heart of public choice recommendations for school reform for example

(Chubb and Moe 1990).

Hirschman’s account of exit has some important differences to standard

economic approaches. Not only is exit costly for the individuals, it is also fateful

for the organisation that loses loyal supporters who help the organisation deliver

effective performance partly by voicing. Exit is a last resort option that

individuals do not really want to take. If exit happens all at once the organisation

can fail so spoiling any chance for recovery. What consumers really want to do is

to give a signal to exit that can alert the organisation but without the drastic

course of leaving being taken. In later work, Hirschman (1995) thought that exit

threats could be combined with voice, which is puzzling because exit should

reduce voice, but in some circumstances citizens can get the courage to voice just

before they decide to exit.

For public services, if Hirschman’s argument is accepted, efficiency need

not come from exit not unless there are special conditions at work. It is better

that exit is not used very much, more as a threat or signal than in actuality. There

may be advantages in monopolies that have locked in consumers just like

traditional public services. At first glance, this seems to be opposed to the

conventional wisdom in accounts of public organisations as inefficient and in

need of reform from more competition. The public management and public

9

policy literatures reveal a large numbers of tests of the impact of efficiency

savings and gains from choice (see Dowding and John 2008, 6 2003). There are

studies of particular sectors (e.g. Propper et al 2006), but they find it hard to

come to concrete conclusions and the efficiency gains are usually where agencies

can reduce wages or cut out uncompetitive practices. It is very hard to come up

with a universal case for more competition though also it is not possible to

confirm the critiques that competition is always bad. It depends on the context,

and there is varying evidence for the impact of choice (LeGrand 2007). Such

diverse findings support Hirschman’s view that market mechanisms are not

inapplicabke, but there may be other reasons why a service is efficient, not least

from the behaviour and commitment of its constituent groups.

The other way of understanding exit is through the Tiebout model that

implies that residential choices can mimic the market and give signals for

consumers to put pressure on producers to get the public services they want. As

with competition with public services, there is a criticism of this model, mainly

that it cannot work because citizens cannot freely choose to move residence and

then usually do so for reasons unrelated to the quality of public services. But in

fact there is quite a lot of evidence that Tiebout mechanism are in place

(Dowding et al 1994), such as surveys of citizen attitudes and verification of the

testable implications of the model, such as capitalisation of property prices.

Whether this leads to more efficiency is open to debate though some say yes (see

Hoxby 2000). But the mechanism must also be constrained by limits to

residential mobility that most residents are locked into their residences and

cannot move quickly or have to wait for an opportunity. The incentive in

Hirschman’s terms must be to voice first which is desirable, with exit only to be

10

used as a backdrop. In this way, just as with competition in quasi-markets, the

world revealed by research is similar to that elaborated by Hirschman where

both exit and voice play a role but neither necessarily dominates.

Voice

Voice is desirable in Hirschman’s framework, which was a novel thing for an

economist to say, though of course for political scientists it is less radical and

even economists are more interested in politics these days. Voice is in response

to dissatisfaction and involves ‘kicking up a fuss’ (1970: 30). It encompasses a

wide range of activities: ‘any attempt at all to change, rather than to escape from,

an objectionable state of affairs, whether through individual or collective petition

to the management directly in charge, though appeal to a higher authority with

the intention of forcing a change in management, or through various kinds of

actions and protests, including those that are meant to mobilize public opinion’

(1970: 30). In this way, voice is richer than exit as it conveys more information to

the producer and can indicate what the organisation can to do to put things right

(Hirschman 1981).

Voice increases as exit opportunities become unavailable, which is

essentially a balancing exercise: when exit is not an easy option the costs of voice

do not seem to be so high and a desirable way to putting right; when exit is

feasible and low cost, it is chosen as the costs of voice are much higher in

comparison. It is important that Hirschman considers voice to considered

alongside exit, which implies that an element of exit velocity is helpful when

voicing. It also needs to be done carefully, not excessively or else there will be no

effective response. Voicing is an ‘art’ (1970: 43). The organisation also needs

11

time to respond (1970: 33). As ever in Hirschman’s world, the main concepts

operate quite subtly. But the organisation needs to be serious in its response:

consumers will wait before exiting, basing their responses on past experiences

and well as the ones in the current period, but if the response is not forthcoming

they will take the exit option from which there is no return. Citizens update their

beliefs and the lack of response of voice will eventually reach a threshold when

they will exit.

In public management and political science there are a large number of

studies of participation that go beyond voting to representation, complaining,

and direct involvement in the policy process, which has reflected the

participation movements that have been occurring since the late 1960s.

Responding to voice is very much more part of the litany of practices in the

public sector and to be expected to be used nowadays, partly as a way to ensure

satisfaction and respond to concerns, whether these are individual or collective.

The large numbers of studies include evaluation of participation initiatives (e.g.

Berry et al 1993) or more general assessments of citizen governance (Fung

2004). Here citizen governance is partly evaluated on intrinsic grounds of

developing democracy, but it is valued also because it helps improve outcomes,

for which some evidence is presented. Greater opportunities for voice seem to

improve outcomes consistent with Hirschman. Hirschman even gets a footnote in

Fung’s book (2004: fn7, 243). He also appears in Sirianni’s (2009: 97-98) recent

advocacy of participation initiatives, but more as an example of the use of exit.

But in fact the interaction with choice and exit is not discussed in these books, or

in many others on participation and public services. There is no sense of the

dynamic nature of the choices facing individuals.

12

Loyalty

Not only is Hirschman often absent in voice and exit studies of public services,

the concept of loyalty hardly makes an appearance, being confined to studies of

consumer attachment to public services, which is a brand of consumer studies,

and also appears in studies of public employees (Lee and Whitford 2008). A

number of writers have puzzled over this concept that is hard to measure. It may

be seen a psychological disposition which inclines people to be more inclined to

voice (Barry 1974). If writers on the public sector have been reluctant to

embrace the twin of exit and voice, then it is not surprising that loyalty does not

make an appearance. Dowding and John (2012) discuss this problem arguing

that loyalty should be conceptualised as a form of social investment akin to social

capital, which comes form making networks and trusting others in a particular

environment that becomes more familiar and attached to over time. Once this

move is conceded, then the massive literature on social capital comes to bear

with its powerful impact on outcomes shown in various studies and reviews (see

Putnam 2000). Here the mechanism for public service improvement is partly to

do with lower transaction costs, which is outside the EVL framework, but also

through the link from social capital to participation. The operation of social

bonds is consistent with Hirschman’s framework, in particular on the limits on

exit.

Exit, voice and loyalty: more direct applications to public services

It is fair to say that on its own Hirschman’s ideas have not had a massive effect

on mainstream work on competition and citizen participation with public

services. This may be to do lack of understanding of the subtly of the framework.

13

There is no single dependent variable to investigate as there are complex

interactions and dynamic relationships to take account of. It is also hard to test

Hirschman as investigators need a very precise research design to model exit

and voice over time. Each element to the model is quite protean and can change

in varying conditions, even the negative exit-voice trade off. This can delight the

reader who enjoys the exegesis, but social scientists prefer simpler tests.

Such was the importance of the book that writers on public services did

take it up, particularly those working in urban services, such as Sharp’s study of

citizen voice based on likelihood of exit in US local government (1984, 1986) and

Lyons and Lowery on citizen dissatisfaction (1986, 1989). Devereux and

Weisbrod (2006) study the effect of satisfaction on voice in the form of

complaints. But overall the use of EVL has been modest, except as a metaphor

(e.g. Hudson 2014), which can at times be imprecise. There has been a recent

interest in Hirschman in the health policy field, such as to understand patient

satisfaction (see Ippolito et al 2013) and responses to dissatisfaction in over

social care (de Campo 2007). A further fruitful area has been the exit options of

public employees (Lee and Whitford 2008, Pitts et al 2011, Whitford and Lee

2014), which extend a long line of Hirschman-style studies of private sector

employees (see review in Dowding et al 2000).

Extensions of EVL

If much of social science deploys the EVL model in a simple way—which is

entirely understandable given its complexity—one of the contributions of work

on public services is to extend the framework and elaborate it. First was the

work of Lyons et al (1993) who set out a two-by-two matrix by adding neglect.

14

Building on an approach developed in social psychology, which indicates that it

might be possible to conceive of voice and exit as one dimension of active

responses to dissatisfaction, loyalty and neglect are treated as less active

responses with the former being more constructive than the other latter. In this

way loyalty can include some participation. They draw predictions from their

model for different types of responses, which are then tested with survey data.

This is ingenious and gets over the problem of loyalty being a residual in the

model that now becomes a full part of it. The problem is that these underlying

attitudes are hard to measure and also do not form part of Hirschman’s

conceptualisation which tended to assume a relatively stable characteristic of

individuals (bar the degree of loyalty) but whose circumstances could vary. In

this way, as Dowding and John (2012: 56-68) argue, the EVLN framework is

turned into something different to EVL even though some of the relationships

remain. In spite of this, it is important to recognize that the EVLN framework has

probably had the most influence in studies of the public sector after Hirschman

himself.

Dowding and John (2012) provide the second main innovation. They

desire greater precision in the use of the terms finding different elements to both

exit and voice in three exits and three voices. Their main theoretical contribution

is to introduce the collective action problem as part of the analysis in that

collective kinds of voice, such as voting or mobilizing, are more costly than

individual forms, such as complaining, so such a strong exit tradeoff is not

expected with individual voice as with collective voice. It also makes sense to

separate out voting from other forms of collective action, which create the

triptych. Exit takes different forms from Tiebout exit, which is about leaving the

15

jurisdiction, moving from service units within the jurisdiction and then exit from

public services altogether, so the trinity appears on the exit side too. This

modified framework helps testing and sorting out the different kinds of exit and

voice relationships in statistical models.

Conclusions

This review of EVL and research on public services shows the potential of such

thinking, which originates in the original interest Hirschman had in state

organizations. The argument is that it is the public realm where all the elements

of voice and exit come together, whereas in other sectors, such as employees or

for consumers in the private market, are likely to have more limited and simpler

applications. This is because Hirschman, in spite of being an economist, was very

interested in politics and public services. The original contribution of EVL is to

integrate matters of interest to economists—choice and competition—with

those of more the concern of political scientists—individual and collective voice.

This as the ‘niche’ Hirschman aimed to fill, ‘between articulation and “desertion”’

(1970: 31). In the public realm this tension and integration is experienced very

sharply, partly because of the monopolistic nature of political institutions and

organizations, but also where choice and competition play a role alongside

participation, voting and more direct dialogue between governed and

government. In spite of many services provided directly by the public

organizations, citizens may choose to purchase services themselves instead, or

move between public sector providers, either within or outside the jurisdictions

where they live.

16

In spite of their small number, studies of public organizations have lead to

innovations in the EVL framework that has not been seen in other parts of the

Hirschman universe. There is the EVLN scheme and then the three-exit three-

voice framework of John and Dowding as the main innovations. These

elaborations both complicate the framework whilst retaining its core features.

There has been a veritable, if minority, tradition of using EVL or its variants in

the study of public services, and especially in the urban context, as well as in

studies of public employees by Whitford and Lee (2014), who examine different

kinds of exit. But it is also fair to say that there has not been as much academic

work as would have been expected given the way Hirschman’s book addresses

key issues in public services. But this is a familiar problem in studies of

Hirschman: social scientists are attracted to the basic idea of exit and voice and

they are happy to reference the book, but often do not take it much beyond this.

The other interesting feature is that the different elements to Hirschman

framework have all received massively increased amounts of attention in studies

of public services since 1970. Thus there are many studies of competition and

public services, studies of new forms of public participation and dialogue with

public managers, and then the social capital debate spawned another group of

empirical investigations of the impact of social investment on policy outcomes.

But these debates and research programmes have proceeded separately,

apparently resistant to the charms of the integrative framework that Hirschman

offers. There are various reasons for this gap. One is the nature of social science

that tends to focus on one dependent variable, not the many in EVL. Linked to

this is the subtly of the model which takes some understanding and effort to

operationalize empirically. It is possible to get an overview of EVL in a short

17

space of time, so to be able to use as a metaphor, but it is much harder to draw

testable implications from the framework. A common complaint is that EVL does

not formalise well so does not get integrated into mainstream economics and

parts of political science that value this though some recent papers may have

changed this laggard status (e.g. Gehlbach 2006). In spite of such modest levels of

interest there is no doubt that EVL continues to resonate with students of public

management.

18

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