Popular Referendum and Electoral Accountability

This paper studies how citizen-initiated referenda affect the decision-making of elected representatives. In the absence of direct democracy, elected officials who do not share the preferences of voters may enact their preferred policies even at the cost of decreasing the likelihood of reelection. Direct democracy diminishes the policy benefits of doing that, as voters may now overturn some of the policy decisions. Hence, elected officials are induced to implement the policies preferred by the voters not only on those issues that are subject to a possible citizen-initiated referendum, but also on those that are not. This result holds even when the voters’ information about their true interests is limited. Moreover, whereas in a representative democracy, being more informed may undermine voters’ ability to control public officials, the possibility of citizen-initiated referenda means that additional information improves voter control, including on issues that may be outside the direct democracy domain.