Politics as a Filter

Politics as a FilterAuthor(s): George DalySource: Public Choice, Vol. 36, No. 1 (1981), pp. 171-177Published by: SpringerStable URL: http://www.jstor.org/stable/30023425 .

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Politics as a filter

GEORGE DALY* University ofHouston

The basic proposition advanced in this note is based on several related arguments. The first is that for well-known reasons markets for political candidates are likely to be characterized by informational deficiencies on the part of voters (demanders). The second is that, in part due to these deficiencies, elected officials (hereafter also called politicians) are likely to engage in the sort of 'discretionary' behavior that economists have frequently attributed to private and public managers; i.e., that the 'tastes' of politicians influence the choices they make. Third, it is argued that because of informational deficiencies alluded to above, the market for politicians is likely to act as a 'filter' which systematically selects individuals with preferences which differ in important ways from those of the electorates they represent.

I

It has been argued that circumstances where ownership and control are widely separated and information is costly may give rise to discretionary behavior in which corporate and public managers seek goals which are at least partially of their own choosing (Berle and Means, 1932; Williamson, 1964; Niskanen, 1971; Migue and Belanger, 1974; DeAlessi, 1969, 1974). It is likely that political markets produce and transmit information even less efficiently than do markets for managers.' In addition, if the electorate are viewed as the 'owners' of the public sector, it would seem reasonable to conclude that ownership and control are indeed widely separated in the case of most elected government officials. For these reasons, it is plausible to

suppose that politicians may engage in discretionary behavior.

* Helpful criticism was provided by Gordon Tullock.

Public Choice 36:171-177 (1981) 0048-5829/81/0361-0171 $01.05. c 1981 Martinus Nijhoff Publishers by, The Hague. Printed in the Netherlands.



172 G. Daly

II

Consistent with the traditions of economics and the level of abstraction re- quired, political markets are usually analyzed as if they operated in a highly depersonalized fashion. For example, the characteristics by which candidates are described usually consist of positions on particular issues rather than personal characteristics.2 In addition, these positions are assumed to be determined primarily, if not exclusively, by the demand side of this market. That is, competition among vote maximizing suppliers of political services (candidates) is assumed to lead to outcomes which reflect the preferences of demanders (voters) as these are modified by other demand side factors - majoritarian principles, differential organization costs, etc. Thus the picture that emerges is one in which the electoral market is guided by forces essen- tially external to the politicians' personal attitudes, beliefs or other personal characteristics.

There have been several notable exceptions to this general trend. In The Politics of Bureaucracy Tullock emphasizes how the internal political structure of any organization will be manifested in promotion policies that will systematically emphasize certain personal characteristics while discouraging others. He observes, for example, that successful politicians will tend to exhibit below average levels of personal integrity simply as a result of the process through which they achieve their positions. More recently, McCormick and Tollison have examined the factors which determine both the compensation and composition of state legislatures. Their findings also emphasize the importance of supply side factors and, in particular, outside income potential in determining the occupational mix of legislators.

Apart from these important exceptions, however, there has been a tendency to ignore supply-side aspects of the market for politicians services, a tendency which has served to obscure a number of important issues. For example, questions such as: 'What sort of person will choose to supply politician services and what implications might this have for observed behaviour?' have received scant attention in the professional literature. Yet, the term 'politician' appears to be strongly associated with certain personal characteristics in the public mind suggesting that such individuals may indeed be quite different from the rest of us in certain respects. Moreover, if discretionary behavior is important in political environments, issues which relate to the 'tastes' of politicians take on added significance.

The critical issues can be perhaps seen more clearly from the perspective of the recent literature in economics which analyzes market behavior under circumstances in which important information is either costly or unavailable to demanders (Akerlof, 1970; Spence, 1974; Stiglitz, 1975). It would appear that some of the assumptions which characterize this literature might be applicable to aspects of political markets. In particular, informational asymmetries may both rationalize discretionary behavior on the part of



Politics as a filter 173

elected officials and cause the market for politicians' services to systematically produce certain characteristics which influence that behavior.

Consider a politician as being described by a collection of characteristics or attributes. Some of these characteristics will be of great interest to voters (positions on major issues) while others will be of little or no interest (mother's maiden name). Similarly, the costs to the typical voter of obtaining accurate information on these characteristics may also vary widely. For example, a candidates' physical appearance may be easily ascertained while accurate information on his fundamental moral or ethical beliefs may be prohibitively expensive to acquire.

The characteristics of successful (elected) politicians will be determined by the related decisions of two sets of individuals: the demanders of political services (voters, pressure groups, etc.) and the suppliers of those services (candidates). The relative importance of supply and demand in influencing a particular characteristic will in turn be influenced by the benefits and costs to demanders of politician services in obtaining information about it.

In particular, if reliable information regarding a characteristic is costly to obtain, the net benefits to demanders of using that characteristic as a criterion will be reduced or eliminated. In the extreme case where information is unavailable about a characteristic, there is no necessary reason to suppose that it will reflect voter preferences in any systematic way. Rather, supply-side factors will be its primary determinant. A relevant question becomes: What characteristics influence potential candidates' labor supply decisions and what are the net benefits to voters of obtaining information about those characteristics.

One example may help illuminate the role of labor supply decisions in influencing candidate characteristics. Examinations of office holders indicates that they are frequently highly dissimilar from the body which elected them (Matthews, 1960). Specifically, politicians tend to be older, and more affluent, white and male than their electorates. Much of this presumably simply reflects the preferences of voters. Other characteristics of politicians, however, appear to have quite different explanations. For example, while less than one percent of adults are lawyers, roughly half of the U.S. Senate are members of the bar. McCormick and Tollison have produced compelling evidence which suggests that this dominance is primarily explained by the fact that political activity has more favorable effects on the human wealth of lawyers than of non-lawyers. Hence, a larger propor- tion of lawyers choose to supply politicians services and, assuming voters are indifferent to or ignorant of a candidate's occupation, a larger percent- age of politicians turn out to be lawyers.3

While such notions of 'self-selection' processes are common to theories of occupational choice and community formation, they have rarely been applied to the market for politicians. Yet, it is likely that in politics as in



174 G. Daly

other areas of the economy the composition of the labor force is not independent of labor supply decisions. More importantly, self-selection may be of particular significance to the theory and operation of representative government. This is because the political-electoral process and the existence of imperfect information may produce politicians who are atypical of their electorate in certain ways and are so for reasons unrelated to the preferences of that electorate. That is, the process of representative government will systematically produce what might be called 'non-preferred atypicality'.

As we have noted, characteristics which induce individuals to supply candidate services while leaving demand unchanged will, other things the same, be disproportionately exhibited by politicians. By definition, characteristics about which accurate information is unavailable or prohibitively costly to obtain by voters will be among those which do not influence demand. This leads to the following hypothesis: politicians will display what I have termed 'non-preferred atypicality' among characteristics (a) which are either positively or negatively related to the decision to seek political office (i.e., lower or raise the supply price of candidacy) and (b) about which information is costly to obtain. If the set of characteristics defined by (a) and (b) is not empty, 'non-preferred atypicality' should be observed among politicians.

III

I would hypothesize that such a characteristic and one which economists have long regarded as important to the allocation of public resources is the politician's attitude towards risk. The study of public economics has long focused substantial attention on how risk and uncertainty should influence government policy, usually in the context of normative discussions of the 'optimal' social rate of discount. Yet is is plausible that self-selection in the market for politicians may play as large a role in explaining observed behavior.

Several authors have downplayed the discrete, 'winner take all' character of most elections. Rather, it is argued, the overall political process consists of many such elections and, accordingly, is best viewed as a more or less continuous process in which incremental gains and losses are possible (Tullock, Stigler, 1975). While this is undoubtedly true from a social perspective, it would seem less descriptive of the decision calculus of the individual politician for whom each election does, in fact, represent a win or lose proposition (Crain, 1977). Unlike individuals in other endeavors he cannot easily diversify his human capital or otherwise insure it against risks. Rather, he must engage in a series of 'winner take all' contests. As has been noted of political office holders: 'As compared to his opposite number in business, his tenure is uncertain and brief (Banfield, 1975).




If the above speculation - that electoral politics is a relatively risky proposition for individual candidates and that this risk cannot be easily reduced - then the potential suppliers of politicians' services are, on average, likely to be less risk averse than the public they seek to represent. If information were costless this need not produce atypical elected officials since voters could (and presumably would) choose only those candidates whose risk preferences satisfied them. On the other hand, when information about the relevant characteristics is costly or impossible to obtain - as in the case of risk preferences - there is no reason to suppose that voter preferences will influence the outcome.

IV

The hypothesis that self-selection in the market for political candidates acts as a filter which may systematically produce atypical politicians for reasons independent of the preferences of the electorate is of significance only to the extent that politicians can and do engage in discretionary behavior. The development of specific hypotheses would require knowledge of (a) the traits or characteristics likely to be 'filtered' and (b) the areas of 'slack' in the politicians environment in which behavior related to these traits is manifested. As we have noted, non-preferred atypicality is most likely to develop among those characteristics where voters find information costly to obtain and/or where they are indifferent about that characteristic. It is most likely to be manifested in areas where the politician has substantial lattitude for independent action. For example, a President's handling of foreign policy may be such an area and risk-bearing a relevant trait.

The perspective of this paper may suggest alternative interpretations of certain events. For example, 'informed' public opinion seems to hold that politicians behave in a myopic fashion because the apparent short-sighted- ness of voters does not allow elected officials to 'see beyond the next election.' The hypothesis of this paper suggests the possibility of a separate and reinforcing factor of work: that political candidacy will attract a disproportionate number of individuals with short time horizons.

Even in its present primitive state the notion that electoral candidacy acts as a filter may have important implications. For example, proposals have frequently been made to lengthen the terms of elected officials and to outlaw succession in political office. Frequently, those who advocate such proposals do so on the grounds that the added security or discretion will free politicians from immediate 'political' concerns and, instead, to behave in a more 'statesmanlike' fashion; i.e., to do what is 'right.' Unfortunately, what is 'right' is itself often a matter of opinion. For the reasons outlined above, the opinions of politicians and their electorates may systematically differ. If so, the results of added discretionary authority for politicians



176 G. Daly

may be quite different from those anticipated by those proposing the reforms. More generally, at the level of constitutional choice the process by which elective office is reached may influence both the characteristics of individuals who attain that office and the sorts of powers and responsibili- ties we wish to reside in it.4

NOTES

1. For example, the notion that voting is an irrational act suggests that investing in information regarding that act is likewise irrational. For discussions of information costs in political markets see Downs, Nelson, and Tullock.

2. In contrast, most political advertising seems to extall the personal characteristics (e.g. integrity) of the candidate rather than his position on issues.

3. An analytically equivalent (for our purposes) notion is that a disproportionate number of individuals bent on a political career will decide to become lawyers.

4. See Buchanan and Tullock (1962) for an extended discussion.

REFERENCES

Akerlof, G. (1970). 'The Market for Lemons: Qualitative Uncertainty and the Market Mechanism.' Quarterly Journal of Economics, 84.

Banfield, E. (1975). 'Corruption as a Feature of Governmental Organization.' Journal of Law and Economics (December).

Berle, A., and Means, G. (1932). The Modern Corporation and Private Property. New York.

Buchanan, J. (1977). 'Why Does Government Grow.' In T. Borcherding (Ed.), Budgets and Bureaucrats: The Sources of Government Growth. Durham.

Buchanan, J., and Tullock, G. (1962). The Calculus of Consent. Ann Arbor. Crain, W.M. (1977). 'On the Structure and Stability of Political Markets.' Journal of

Political Economy, August. Crain, W.M., and Tollison, R. (1976). 'Campaign Expenditures and Political Competi-

tion.' Journal of Law and Economics, AIlril. DeAlessi, L. (1969). 'Implications of Property Rights for Government Investment

Choices.' American Economic Review, 59 (March). DeAlessi, L. (1974). 'An Economic Analysis of Government Ownership and Regula-

tion: Theory and Evidence from the Electric Power Investment Choices.' Public Choice, 19 (Fall).

Downs, A. (1957). An Economic Theory of Democracy. New York. Marris, R. (1964). The Economic Theory of Managerial Capitalism. New York. Matthews, D. (1960). U.S. Senators and Their World. Chapel Hill. Migue, J., and Belanger, G. (1974). 'Toward a General Theory of Managerial Discre-

tion.' Public Choice, 17 (Spring). Nelson, P. (1976). 'Political Information.' Journal of Law and Economics, August. Niskanen, W. (1971). Bureaucracy and Representative Government. Chicago. Orzechowski, W. (1977). 'Economic Models of Bureaucracy.' In T. Borcherding (Ed.),

Budgets and Bureaucrats: The Sources of Government Growth. Durham. Spence, A.M. (1974). Market Signaling: Informational Transfer in Hiring and Related

Screening Processes. Cambridge.




Stigler, G. (1972). 'Economic Competition and Political Competition.' Public Choice, 13 (Fall).

Stiglitz, J. (1975). 'Incentives, Risk and Information: Notes Toward a Theory of Hier- archy.' Bell Journal of Economics, 6 (Autumn).

Tullock, G. (0000). 'Some Problems of Majority Voting.'Journal of Political Economy. Tullock, G. (1967). The Politics of Bureaucracy. Ann Arbor. Tullock, G. (1971). 'The Paradox of Revolution.'Public Choice, 12 (Fall). Williamson, O.E. (1964). The Economics of Discretionary Behavior, Managerial Ob-

jectives in a Theory of the Firm. Englewood Cliffs.

ANNUAL MEETING: CALL FOR PAPERS

The annual meeting of the Public Choice Society for 1981 will be held in New Orleans, Louisiana at the Hilton Hotel on March 13-15, Friday noon to Sunday noon. Registration opens Friday morning.

Those interested in presenting a paper should send a brief abstract (less than 300 words) before December 15, 1980 to: Professor John Ledyard, 1922 Sheridan Road, Evanston, Illinois 60201. Each submission should contain the author's name, affiliation, address, telephone number, and one of the following area designations:

Normative Public Choice (social choice, institutional design, property rights, contracts, redistribution, etc.).

Political Processes (Election and voting models and empirical analyses, political business cycle, agendas, committees, Congress, etc.).

Public Goods/Public Finance (Taxation, supply of government, clubs, urban economics, local public goods, etc.).

Government and Bureaucracy (public sector models, government productivity, institutions, budget models, rent seeking, regulation, etc.).

Other Suggestions and proposals for panels or special sessions are also welcome.



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Politics as a Filter