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A Comparative Theory of Legislation, Discretion, and Policy making Process (Huber

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A Comparative Theory of Legislation, Discretion, and Policy making Process (Huber&Shipan) Two crucial elements in the politicians-bureaucrats interaction – PowerPoint PPT presentation

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Title: A Comparative Theory of Legislation, Discretion, and Policy making Process (Huber


1
A Comparative Theory of Legislation, Discretion,
and Policy making Process (HuberShipan)
  • Two crucial elements in the politicians-bureaucrat
    s interaction
  • Policy Preference divergence less
    delegation, more details in statutes to
    micromanage policy implementation
  • Technical complexity (and policy uncertainty) of
    the policy issues more delegation to
    utilize the bureaucracy expertise and vaguer
    legislation.

2
A Comparative Theory of Legislation, Discretion,
and Policy making Process (HuberShipan)
  • Additional elements
  • Legislative capacity that affects the costs to
    politicians of drafting detailed legislation
    (informational costs and decision making costs)
  • Bargaining environment (the number of actors have
    the authority to propose or veto legislation)
  • Non statutory features of political system that
    oblige the bureaucrats to behave consistently
    with politicians preferences.

3
Model of Designing Legislative
StatutesAssumptions (1)
  • Politician legislators who determine the level
    of policy discretion in a statute
  • Bureacrat who implements the policy once the
    statute is adopted.
  • Both actors are motivated by policy outcomes
  • Policywhat is spelled out in legislation and
    during implementation
  • Outcomeswhat happens in the real world once a
    policy is adopted and implemented.

4
Model of Designing Legislative
StatutesAssumptions (2)
  • The Bureaucrat is better informed than the
    Politician about the repercussions of particular
    policy choices
  • Designing a statute is costly to the Politician.
    These costs depend on
  • The extent to which the Politician limits
    discretion
  • General legislative capacity
  • The Bureaucrat have a choice about whether to
    implement the policy chosen by the Politician. If
    he/she is caught to implementing a policy that
    the Politician does not like, he/she will pay a
    price.
  • If no policy change occurs, then the status quo
    is retained

5
Model of Designing Legislative
StatutesEmpirical implication
  • As it is empirically impossible to obtain
    minimally accurate measures of the actual
    preferences of bureaucrats H.S. assume that
    political actors at the apex of bureaucratic
    structures strongly influence the policy
    preferences of the bureaucrats. In the case of
    the Parliamentary democracies these political
    actors are the Cabinet ministers.

6
Three Institutional environments, three Models
  • Parliamentary model only one politician (median
    member of Parliament or leader of Majority party
    or pivotal member of a majority coalition)
    unilaterally establishing the contours of the
    legislation
  • Veto model two politicians, one proposing, the
    other accepting or vetoing. Useful to understand
    logics in presidential systems
  • Bicameral system two politicians with both
    proposal and veto power.

7
Basic models stages
  • Stage 1 the Politician decides whether to adopt
    new statute and the degree to which the statute
    actually limits the type of policies that the
    Bureaucrat can implement.
  • In one dimension the Politician specifies the
    left and right boundaries on policy

Statute 2
Statute 1
L
R1
R2
Less delegation
More delegation
8
Basic models stages
  • Stage 2The Bureaucrat implements the policy (x).
    Bureaucrats knows which outcomes will result from
    which policy outcomes. The politicians dont. In
    one dimension the outcome (y) will be a mapping
    that is a specific direction and distance away
    from the original policy.
  • If the distance is 0 and xy then Outcome
    Policy What happens if on the contrary the
    distancegt0 and y ?x?

9
Basic models stages
  • Stage 2. How policy uncertainty can affect the
    game ? Two scenarios
  • The policy implemented by B. is also the policy
    outcome (x0y0)
  • The outcome is 1 unit to the left of the policy
    implemented by B (x1gty1)

y1
x1
1 unit
x0y0
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
10
Basic models stages
  • Stage 2.
  • Politician believes with some probability that a)
    or b) are true.
  • Bureaucrat knows with certainty if a) or b) is
    true.

y1
x1
1 unit
x0y0
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
11
Basic models stages
  • Stage 2. First type of politicians mistake
  • Suppose that the Politician L believes that (b)
    is very likely (x1gty1) and he/she allows the
    Bureaucrat B to implement x1. This requires a
    policy with a right boundary R1 (large
    delegation).
  • Suppose, against Ls expectation that (a) is true
    (x0y0)
  • B will implement its preferred outcome, far from
    L. Too much delegation!

y1
x1
1 unit
!
x0y0
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
12
Basic models stages
  • Stage 2. Second type of politicians mistake
  • Suppose that the Politician L believes that (a)
    is very likely (y0 x0). He/she wants to
    constrain B by adopting a right- side boundary
    very close to L, such as R2 (Small delegation)
  • Suppose, against Ls expectation that (b) is
    true (y2lt x2)
  • 2. Suppose B complies with the statute by
    implementing x2 that will produce y2, a bad
    outcome for both actors. Too small delegation!
    However

!
y2
x2
1 unit
x0y0
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
13
Basic models stages
  • Stage 2. Why The Bureaucrat should have to comply
    with the statute even when the size of delegation
    does not allow to achieve the Politicians
    interest ?
  • The Bureaucrat must decide whether to comply
    with the statute by choosing a policy that is
    within the boundaries set by the Politician.
  • In the previous assumption the Bureaucrat who
    does comply with the statute cannot be punished.
    So the Bureaucrat can prefer to be unefficient
    but compliant.

14
Basic models stages
  • Stage 3. Non statutory factors (independent
    central banks, judges etc) can influence policy
    outcomes.
  • Assumption After the Bureaucrats act one of two
    things occurs
  • No non statutory factors intervene to influence
    the policy outcome
  • These factors intervene shifting the policy
    outcome to the Politicians preferred policy. In
    this last circumstance if the Bureaucrat is
    disloyal he/she will be punished and must pay a
    cost
  • Both the Politician and the Bureaucrat know the
    likelihood of these two events.

15
The Bureaucrats implementation Decision
If the Bureaucrat knows that the policy outcome
will be one unit to the left of the policy that
is implemented, then he/she would like to be able
to implement a policy x1, that is one unit to the
right of his/her ideal point B and yields y1 as
an outcome. This possibility is given by the
statute 1 as statute 1 gives enough discretion
x2
1 unit
y2
y1
x1
1 unit
CB1
CB2
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
16
The Bureaucrats implementation Decision
What happens when the policy the Bureaucrat wants
to implement is outside the set of policies
allowed by the statute (for instance when the
statute 2 is adopted) ?
x2
1 unit
y2
y1
x1
1 unit
CB1
CB2
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
17
The Bureaucrats implementation Decision
If he/she adopts his/her most preferred policy x1
he may be caught and sanctioned, since this
policy is outside L-R2 (statute 2) Alternatively
he/she can adopt the optimal safe policy x2
x2
1 unit
y2
y1
x1
1 unit
CB1
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
18
The Bureaucrats implementation Decision
In order to decide which policy to implement, the
Bureaucrat will compare (nc) the net benefits
from non compliance to (c) the benefits he would
obtain from simply (and safely) complying with
the statute. If the (c)gt(nc) the Bureaucrat will
comply with the law.
x2
1 unit
y2
y1
x1
1 unit
CB1
CB2
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
19
The Bureaucrats implementation Decision
The compliance boundary (CB) is the point at
which the combined benefits and costs of non
compliance are equal to the benefits of
compliance. B will be indifferent between
implementing a law that is a the compliance
boundary and implementing a policy that yields
the Bureaucrats preferred policy but that also
risks sanction when the right boundary of the law
, R, will coincide with CB.
x2
1 unit
y2
CB2
  • Compliance boundary depends on
  • Influence of non statutory factors
  • Magnitude of sanctions
  • Relationship between policies and outcome. If
    policy and outcome coincide then CB will be more
    to left.

L
R2
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
20
The Bureaucrats implementation Decision
If sanctions or the probability of getting caught
are large, the compliance boundary CB can be far
to the left of B , for instance in CB1. In these
circumstances both statutes 1 and 2 are right
boundaries (R1 and R2) to the right (above) of
CB1. Bureaucrats prefer to comply with both
statutes than implementing a policy that yields B
but also risks sanctions.
x2
1 unit
y2
CB1
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
21
The Bureaucrats implementation Decision
When the compliance boundary depicts a situation
where sanctions or probability of getting caught
(or both) are quite low as in CB2, then the
bureaucrat B will comply with Statute 1 with
right boundary R1 (he can obtain B) but he wont
comply with Statute 2 , which has a right
boundary R2 to the left of CB2. (too small
delegation!)
x2
1 unit
y2
y1
x1
1 unit
CB2
L
R2
R1
B
Politicians preferred outcome
Bureaucrats preferred outcome
Statute 2
Statute 1
22
The Bureaucrats Implementation Decision
  • If the statute allows sufficient discretion
    (right boundary above, to the right of CB) the
    Bureaucrat will implement the policy that he most
    prefers among the policies that comply with the
    statute
  • If the statute limits discretion too much (right
    boundary below, to the left of CB) the Bureaucrat
    will take a chance and risk sanctions by
    implementing the policy that yields his preferred
    outcome
  • Bureaucrat is more likely to follow the
    Politicians instructions if
  • 1) the political system is likely to catch non
    compliant behaviour
  • 2) If the potential non compliant behaviours
    benefits are low

23
The Politicians optimal statute in certain
circumstances
  • For the politician will never be optimal to adopt
    a statute that the Bureaucrat is certain to
    ignore (when the right boundary R is to the right
    the CB). Adopting a statute that limits
    discretion is costly. The politician never would
    like to pay uselessly such a cost. The Politician
    would prefer to adopt a vague low cost statute
    that allows the Bureaucrat to implement the
    policy he/she most prefers than adopt a
    low-discretion, high-cost statute that results in
    exactly the same policy outcome.
  • In other terms if for the disloyal Bureaucrat the
    probability to be caught is zero or the price to
    pay is null, then limiting the discretion by a
    detailed law does not make any sense.

24
Legislation and Discretion in the Parliamentary
Model
  • Politician must pay a cost to adopt a
    low-discretion law this cost is a function of
    legislative capacity.
  • Policy conflict (between Politicians and
    Bureaucrats) and legislative capacity interact to
    influence legislative statutes (and their level
    of discretion)
  • Simplifying assumptions
  • No policy uncertainty
  • No nonstatutory factors (therefore no CB)
  • Bureaucrats will comply with the statute

25
Legislation and Discretion in the Parliamentary
Model
  1. B1, B2, B3 potential policy preferences of the
    Bureaucrats
  2. c1, c2, c3 etc different levels of costs which
    correspond different levels of legislative
    capacity . Less cost , more legislative capacity.
    c1 corresponds to the highest capacity c6
    correspond to the lowest capacity

Threshold
c4
c5
c6
c1
c2
c3
L
B1
B2
B3
26
Legislation and Discretion in the Parliamentary
Model
  • Imagine B1 and c1
  • Policy benefit of low discretion Statute is
    -L-L-c1 (the maximum of utility is of course
    0)
  • Policy benefit of high discretion Statute
    -L-B1
  • Therefore the condition to have a low discretion
    Statute is c1gt-L-B1 namely L-B1gtc1. Is it
    respected ? Yes
  • 2) Imagine B1 and c2
  • Policy benefit of low discretion Statute is
    -L-L-c2
  • Policy benefit of high discretion Statute
    -L-B1
  • Therefore the condition to have a low discretion
    Statute is c2gt-L-B1 namely L-B1gtc2. Is it
    respected ? No. in fact L-B1ltc2
  • Holding policy divergence fixed, as costs
    increase, namely as the legislative capacity
    decreases, the adoption of low discretion laws
    becomes less likely

Threshold
c4
c5
c6
c1
c2
c3
L
B1
B2
B3
27
Legislation and Discretion in the Parliamentary
Model
  • Imagine c2 and B1 The policy benefit from the
    low discretion statute is smaller than the policy
    benefit from an high discretion statute
  • c2lt -L-B1 namely c2gtL-B1 a small increase
    of the policy divergence does not matter.
  • 2) Imagine c2 and B2 now
  • c2gt -L-B2 namely c2ltL-B2 The policy
    benefit from the low discretion statute is
    greater than the policy benefit from an high
    discretion statute discretion statute
  • Therefore holding legislative capacity fixed, an
    increase in policy conflict from B1 to B2 leads
    to adoption of a low-discretion statute

Threshold
c4
c5
c6
c1
c2
c3
L
B1
B2
B3
28
Legislation and Discretion in the Parliamentary
Model
  1. Legislative capacity and policy conflict can have
    an interactive effect. May exist a threshold of
    policy conflict that must be surpassed before the
    legislative capacity can influence discretion in
    legislation or may exist a threshold of
    legislative capacity before the policy conflict
    can influence discretion in legislation.
  2. two distribution of legislative capacities (two
    cross-country dataset). Distr.1 has a much wider
    range of legislative capacities than Distr.2

Threshold
c4
c5
c6
c1
c2
c3
L
B1
B2
B3
Distribution 1 of Legislative Capacity
Distribution 2 of Legislative Capacity
29
Legislation and Discretion in the Parliamentary
Model
  1. If you consider Distribution 1 it would be
    unlikely to uncover direct effects of policy
    conflict and legislative capacity on discretion
    because many of the political systems have
    insufficient capacity to ever adopt a
    low-discretion statute.
  2. As the costs of adopting low discretion laws
    decrease from c6 to c5 or even to c4, nothing
    happens
  3. As the costs are above the threshold, then
    changes in policy conflict from B1 to B2 or to B3
    would have no effect on the adoption of
    low-discretion statute

Threshold
c4
c5
c6
c1
c2
c3
L
B1
B2
B3
Distribution 1 of Legislative Capacity
30
Legislation and Discretion in the Veto model
  • A politician (the Legislature) adopts a policy .
  • Another Politician (the President) has a veto
    prerogative.
  • Additional simplifying assumption
  • President and Bureaucrats have the same
    preferences

31
Legislation and Discretion in the Veto model
  • In general the same results of the Parliamentary
    model.
  • Relative value of low discretion statutes
    increases
  • 1) As policy conflict between Politician and
    Bureaucrat increases
  • 2) As Legislative capacity increases
  • 3) As non-statutory factors become less reliable.
  • However in addition
  • Status quo position matters as now gridlock is
    possible
  • The threat of veto can never lead to less
    discretion but sometimes to more discretion than
    we would find in the Parliamentary model.

32
  • For simplicity assume that
  • All the players in the model know that the final
    policy outcome will be the same as the policy the
    Bureaucrat implement (xy)
  • The Politician (the Legislature) has legislative
    capacity to adopt any statute he/she wishes (c?0)
  • The Bureaucrat will comply with any bill.
  • 2) Without any veto a Politician could implement
    a low-discretion bill with a left and right
    boundary at L, his most preferred policy. (LR1).
  • 3) The President P would realize that he prefers
    the status quo Q to L and would veto such a bill.
  • 4) The politician L must give the Bureaucrat
    leeway to implement a policy that the President
    will accept .For example a policy with an upper
    bound at R2. The Bureaucrat would implement R2
    and P would not veto anymore..

LR1
PB
Q
R2
33
Legislation and Discretion in the Bicameral
Model (with veto)
  • Both Chambers (Upper and Lower) can make policy
    proposals and they do sequentially
  • If the first proposal is met with a
    counterproposal by the other house, then the two
    chamber must pay a bargaining cost associated
    with the opportunity cost of delay .

34
  • For simplicity assume that
  • Bargaining cost of a counterproposal c
  • UBP
  • Neither Chamber pays any other cost of making a
    proposal
  • The Upper Chamber U has made a policy proposal
    and the Lower Chamber L now has to decide whether
    to pay the bargaining costs c of making a
    counterproposal.
  • The best proposal the Lower Chamber L can make is
    R2 because of the presidential veto. However such
    a proposal entails also a cost c
  • Upper chamber can take advantage of this
    situation and propose R3 as an upper bound on
    policy since the beginning. Upper chamber has
    extracted the bargaining cost from the Lower
    Chamber in the form of increased legislative
    discretion.
  • When Bicameral bargaining is necessary, the
    discretion in the statutes cannot decline and
    often will be greater.

c
LR1
PUB
Q
R2
R3
35
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