A Carrot and Stick Approach to Agenda-Setting

Matthias Dahm and Amihai Glazer

Much legislation is usefully viewed as imposing a tax on all legislators (or their constituents), and distributing the benefits among only some individuals or groups. It may therefore appear that proposed legislation can gain majority support only if in a majority of districts the amounts distributed exceed the taxes collected. The existence of large majorities thus suggests wide benefits from a policy. Nevertheless, redistributive legislation often gains strong political support though benefits are concentrated among few districts. Consider for example farm bills. The Food, Conservation, and Energy Act of 2008 passed in the House (Vote #353) by 306/110 and in the Senate (Vote #144) by 77/15. Moreover, both the House and the Senate overrode a veto by the President with a 2/3 majority. On the other hand, data on commodity subsidies from 1995--2010 for 400 congressional districts shows that the 24 districts (6% of all districts listed) that received the largest subsidies obtained 52.8% of the total of $167.3 billion. 

In this Nottingham School of Economics working paper, published in the Journal of Economic Behavior and Organization, Matthias Dahm and his co-author Amihai Glazer provide an explanation allowing current policy proposals and voting outcomes to depend not only on current benefits, but also on past decisions and on expectations of future behaviour. This is intended to capture behaviour as the one captured by a study of the Connecticut legislature (Barber 1996) that reports: But for a considerable number, the relevant patronage is not that which can be offered here and now, but, in effect, all the patronage which the leaders are expected to control in the future. ... As one legislator said, "It isn't what you've been promised, it's what you hope for that helps, that will swing a person into line."

Dahm and Glazer formalise this idea and model a legislature in which the same agenda setter serves for two periods. They show how he can exploit a legislature (completely) in the first period by promising future benefits to legislators who support him. In equilibrium, a large majority of legislators vote for the first-period proposal because they thereby maintain the chance of belonging to the minimum winning coalition in the future. Legislators may therefore approve policies by large majorities, or even unanimously, that benefit few, or even none, of them. The analysis also points to conditions that allow for exploitation, and conditions or institutional arrangements that limit it.

Forthcoming Journal of Economic Behavior and Organization, "A Carrot and Stick Approach to Agenda-Setting" by Matthias Dahm and Amihai Glazer

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