Oct 20, 2011

A story: Charging a small fee for not voting

Osi Odemi is a professor of economic development at Ibadan University, in Nigeria. He tries to keep up with current research and looks for the latest findings for his classes and  for his writing.

Today he will teach his class “Institutional Economics and its Applications to West Africa,” but it won’t start until noon. He waked up pretty early to check out the most resent research on Political Economy. 

The obvious source of information is the Journal of Political Economy - JPE. He accessed it using his new intenet-movil device. He found the latest number of the JPE uninteresting, and moved to the previous issues. This paper called his attention: "The Demarcation of Land and the Role of Coordinating Property Institutions." The abstract said: 
We use a natural experiment in nineteenth-century Ohio to analyze the economic effects of two dominant land demarcation regimes, metes and bounds (MB) and the rectangular system (RS). MB is decentralized with plot shapes, alignment, and sizes defined individually; RS is a centralized grid of uniform square plots that does not vary with topography. We find large initial net benefits in land values from the RS and also that these effects persist into the twenty-first century. These findings reveal the importance of transaction costs and networks in affecting property rights, land values, markets, and economic growth.
The topic sounded rather obscure and he was not sure why this would matter for Nigeria. He moved on to the next article that called his attention: "Overcoming Ideological Bias in Elections." This looks interesting, he thought. The abstract was a defense for free elections. In fact, the article suggest that free and costly elections can overcome ideological bias. The abstract claims:
We study a model in which voters choose between two candidates on the basis of both ideology and competence. While the ideology of the candidates is commonly known, voters are imperfectly informed about competence. Voter preferences, however, are such that ideology alone determines voting. When voting is compulsory, the candidate of the majority ideology prevails, and this may not be optimal from a social perspective. However, when voting is voluntary and costly, we show that turnout adjusts endogenously so that the outcome of a large election is always first-best.
Osi was not quite sure what "costly elections" meant in this paper. He decided to google the article, and he found it. The article was highly mathematical and almost impossible to understand, so he scrolled down to the conclusions:
In this paper, we identify a natural and arguably realistic additional channel - voters' feet. That is, when voters are allowed to express preferences with turnout, large majoritarian elections continue to perform admirably: the Condorcet Jury Theorem is restored even when voting is based purely on ideology.
The discussion section of the paper was particularly relevant:
The main result of this paper relies essentially on the assumption that the lower support of the cost distribution is 0. If instead, all voters had voting costs of at least "e" > 0, then large elections suffer from the familiar problem (Downs, 1957) that turnout is bounded in the limit and, as a consequence, information does not aggregate regardless of preferences over ideology versus competence. In principle, this situation may be remedied by introducing a small one, equal to "e", for not voting, and redistributing the proceeds in lump-sum fashion. This effectively shifts the cost distribution "e" to the left and the results of our model apply.
The paper suggests that charging a small fee for not voting can help the system to aggregate preferences around competence of the candidates and not around the ideology. Osi paused and thought about this. If we were to charge a small fee for not voting, depending on the fee, one would expect more voters than without the fee. The idea is actually ingenious, he thought. I need to bring up the idea in class, he reflected. His main concern is how effective this idea would be in a country like Nigeria, that has very weak institutions. Who would win or who would loose from implementing such an idea? And what would be the reaction of political parties? And how would this affect individual liberty? Is the benefit worth the cost?
At Ibadan there are very good students. In Osi's class there are a couple of very bright ones. Omungy Osungu, a tall and skinny young man from Kano, and Oyemori Ogun, a extroverted girl from Benin City. Omungy said that the fee for not voting was a bright idea. Some people don't vote, she said, because they think that their vote will not make a difference at the margin, even though they think that their candidate has the capacity. The capable candidate will not win because the majority will vote for ideological reasons. But if there were a fee for not voting more people will vote for capacity rather than ideology. For simplicity Osi left outside the discussion an important idea in the paper: that the total amount collected with the fee would be redistributed as a lump sum. Oyemari Ogun, was more skeptical, she talked about the practical problems to determining such a feed. Should the fee be high or should it be low for it to work? Should we have different fees for different states, according to their level of income, or should we have only one across the whole country? Should we consider differences at the village level? Osi thought that taking Oyemari's questions seriously could improve the practical application of the model. At this stage Osi's was thinking that the fee could improve the system, although it probably would work better during the first round of the elections. But not only that, Oyemari claim, imagine how a corrupt state will deal with the bureaucratic procedure of implementing such a system? Other students also share their insights.
It was a successful class after all. Osi thought how fortunate he was. He was using technology to get the most recent research and adapting it to a class environment in his country. He knew that there was something really special about US economists: they share their research results online. 

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