Professor Jane Leuthold

1
Public Choice and Voting

• Professor Jane Leuthold
• Department of Economics
• University of Illinois

Economics 214
2
Agenda for today ...

• Who votes and why?
• The political equilibrium and the median voter
  theorem
• Why majority voting sometimes leads to arbitrary
  decisions
• Arrows impossibility theorem

3
This class ..
According to your responses to the free rider
survey last week, 86 of you intend to vote in
the November election, 33 vote in student
elections, and 10 contribute time or money to a
political candidate or party.
4
Voter turnout rates
Average turnout ( of voting age pop)
5
Why do people vote?
Reasons for not voting
Reasons for voting

• To influence a desired alternative
• To exercise duty as a citizen

• Belief that vote wont make any difference
• Registering to vote and voting are time-consuming
  and costly
• Becoming informed on the issues is costly
  voters are rationally ignorant

6
Rational ignorance
Rational ignorance voters are not fully
informed about policy issues because obtaining
complete information is unreasonable,
impractical, or unproductive.
7
Are non-voters free riders?
Free riding causes voter turnout to be too low.
MB MC
MC
MPB
V
Voting frequency
8
DI Editorial
Our democracy was not built by people saying,
All politicians are crooks, I cant change
anything anyway or none of it matters.
9
Discussion

• How do you think factors like the weather affect
  voter turnout? the price of gasoline? age and
  education of the electorate?
• What are some ways to discourage free riding and
  encourage voting?
• Do you agree with on-line student voting? Should
  we adopt on-line voting for federal elections?

10
Peer pressure
11
Most-preferred political outcome
Tax Share
DON
MC
Tax shareDon
MBDon
GDon
Public good output
12
Political equilibrium
An agreement on the level of public good
production given the voting rule and the
distribution of tax shares among individuals.
13
Political equilibrium with majority rule
MC 3
t charge per voter per unit of the public good
1/unit
MB
3
MBCarol
What will be the majority rule outcome of this
election?
MBDon
2
t1
1
MBRyan
3
4
6
Public good
0
14
Median voter theorem

• The median voter is the one whose most preferred
  outcome is the median of the most preferred
  outcomes of all those voting.
• As long as the marginal benefit curves all slope
  downward, the median voter will be the decisive
  voter when a decision is made by simple majority
  rule.

15
Who will be the next President of the United
States?
Could it be .?
16
Election 2000?
In a majority election, which candidate will be
selected?
1 First Choice 2 Second Choice 3 Third
Choice
17
Election 2000?
A v J A A v G ?
A v G G G v J ?
G v J J J v A ?
The order of the voting determines the outcome of
this election! The outcome is arbitrary. This
is an example of cyclical voting.
18
Why is this happening?

• Which voter group caused the problem?

19
Multiple-peaked preferences
1
Republicans
2
Independents
3
Democrats
Jesse
George
Al
Lets change the preferences!
Who has multiple-peaked preferences? Who has
single-peaked preferences?
20
Single-peaked preferences
1
Republicans
2
Independents
3
Democrats
Jesse
George
Al
Who wins this election?
21
No cycling
A v J J J v G J Jesse is the winner!!
22
Declining marginal benefits means preferences are
single-peaked
Net benefit
Budget size
MB
t
MB
Budget size
G
23
Examples of multiple-peak preferences

• School Vouchers
• Generous voucher system/minimum quality public
  schools
• Modest voucher system
• No voucher system/high quality public schools
• Vietnam War

24
Arrows Impossibility Theorem

• In the 18th century, the French mathematician
  Condorcet showed that majority rule can lead to
  cycling.
• Kenneth Arrow won the Nobel prize for showing
  that it is impossible to devise any voting rule
  that will guarantee a political equilibrium.

25
Soap Box
Select ONE economic issue (for example, welfare
reform, health care, defense spending, social
security, etc.) that you think will be important
in the November Presidential election. Summarize
what you think would be the position of the
median American voter on this issue.
26
Next time ...
The Political Process Text, Ch 5 (182-205)