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Voters’ commitment problem and reforms in welfare programs

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  • David Hollanders
  • Barbara Vis

Abstract

When will a vote-seeking government pursue unpopular welfare reforms that are likely to cost it votes? Using a game-theoretical model, we show that a government enacts reforms that are unpopular with the median voter during bad economic times, but not during good ones. The key reason is that voters cannot commit to re-elect a government that does not reform during bad times. This voters’ commitment problem stems from economic voting, i.e., voters’ tendency to punish the government for a poorly performing economy. The voter commitment problem provides an explanation for the empirical puzzle that governments sometimes enact reforms that voters oppose. Copyright The Author(s) 2013

Suggested Citation

  • David Hollanders & Barbara Vis, 2013. "Voters’ commitment problem and reforms in welfare programs," Public Choice, Springer, vol. 155(3), pages 433-448, June.
    • Handle: RePEc:kap:pubcho:v:155:y:2013:i:3:p:433-448
    DOI: 10.1007/s11127-011-9872-1
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    Cited by:

    1. Hofer, Katharina E. & Marti, Christian & Bütler, Monika, 2017. "Ready to reform: How popular initiatives can be successful," European Journal of Political Economy, Elsevier, vol. 48(C), pages 16-39.
    2. Fedotenkov, Igor, 2018. "Corruption vs reforms: Why do voters prefer the former?," MPRA Paper 89581, University Library of Munich, Germany.

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    More about this item

    Keywords

    Commitment; Political economy; Reform; Welfare-programs; D72; D78; H11; H5; I38; J48;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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