New Economics Papers
on Collective Decision-Making
Issue of 2011‒12‒19
six papers chosen by

  1. Election inversions, coalitions and proportional representation: Examples from Danish elections By Kurrild-Klitgaard, Peter
  2. Enfranchisement and Representation: Italy 1909-1913 By Valentino Larcinese
  3. Optimal Districting with Endogenous Party Platforms By E Bracco
  4. Democratization and Civic Capital in Italy By Luigi Guiso; Paolo Pinotti
  5. The Electoral Consequences of Large Fiscal Adjustments By Alberto F. Alesina; Dorian Carloni; Giampaolo Lecce
  6. The Effects of Board Characteristics on Loan Covenants: An Empirical Analysis By Sugato Chakravarty; Leann G. Rutherford

  1. By: Kurrild-Klitgaard, Peter
    Abstract: When collective choices are made in more than one round and with dif¬ferent groups of decision-makers, so-called election inversions may take place, where each group have different majority outcomes. We identify two ver¬sions of such compound majority paradoxes specifically, but not ex¬clu¬si¬ve¬ly, relevant for systems of proportional representation with governing coalitions: The “Threshold Paradox” and the “Federal Paradox”. The empirical relevance of the two paradoxes is illustrated with examples from three Danish elections (1971, 1990, 2011), where a majority of the voters voted for one bloc of parties but where a majority of the seats fell to another.
    Keywords: Social choice; voting paradoxes; electoral systems; election inversions
    JEL: D71 D72
    Date: 2011–12
  2. By: Valentino Larcinese
    Abstract: This paper presents evidence on the consequences of the 1912 introduction of "quasiuniversal" male suffrage in Italy. The reform increased the electorate from slightly less than three million to 8,650,000 and left the electoral rules and the district boundaries unchanged. This allows us to exploit the heterogeneity in enfranchisement rates across electoral districts to identify the causal effects of franchise extension on a number of political outcomes. The reform caused an increase in the vote share of social reformers (Socialists, Republicans and Radicals), together referred to as the Estrema. One standard deviation in the share of newly enfranchised voters over the total number of registered 1913 voters caused an increase of around 2% in votes for Estrema candidates but had no impact on their parliamentary net seat gains. Enfranchisement had also no impact on the parliamentary representation of aristocracy and traditional elites. Other outcomes (the chances of having candidates from the Estrema and the Herfindel-Hirshman index of electoral competition) were also unaffected, with the exception of turnout, which decreased. These findings show that de jure political equalization did not cause major changes to political representation, although the voting choices of the formerly and newly enfranchised citizens differed on average. This apparent puzzle is the consequence of the heterogeneity of the effect across a number of both social and political dimensions. The paper documents elite's effort to minimize the political impact of the reform.
    Keywords: democratization, voting, electoral competition, inequality, swingdistricts, political violence, Vatican, socialism.
    JEL: D3 D7 I25 N33 N34
    Date: 2011–12
  3. By: E Bracco
    Abstract: This paper proposes a theory of socially optimal districting in a legislative-election model with endogenous party platforms. We generalize the model of Coate and Knight (2007), allowing parties to strategically condition their platforms on the districting. The socially optimal districting re ects the ideological leaning of the population, so that parties internalize voters' preferences in their policy platforms. The optimal seat-vote curve is unbiased when voters are risk-neutral, and -contrary to previous findings-biased against the largest partisan group when voters are risk-averse. The model is then calibrated by an econometric analysis of the elections of U.S. State legislators during the 1990s.
    Date: 2011
  4. By: Luigi Guiso (European University Institute,Florence, EIEF, & CEPR); Paolo Pinotti (Università Commerciale "Luigi Bocconi", Milan & DONDENA)
    Abstract: We document a sharp reversal in electoral participation between the North and the South of Italy after the 1912 enfranchisement which extended voting rights from a limited élite to (almost) all adult males. When voting was restricted to the élite, electoral turnout was higher in the South but falls significantly below that in the North after the enfranchisement. Furthermore the new gap is never bridged over the following century and participation remains lower in the South despite the enrichment of democratic institutions and further extension of voting rights to the female population during the post war democratic republic. This pattern in the data is consistent with a simple model where individuals’ voting in political elections is affected by private benefits and by civic duty, only elites can grab private benefits from participation in politics and civic culture differs across communities. We also find that extension of voting rights to non-elites results in a significant transfer of power to their political organizations only among populations with a high sense of civic duties. Together with the very persistent gap in participation between North and South our findings suggest that democratization – a process of concession of democratic rights – can benefit non-elites only when the latter have already a high sense of civic capital and is unlikely to be a viable avenue for inducing norms of civic behavior.
    Keywords: democracy, culture, civic capital, institutions formation, voting
    JEL: A1 E0 N4 Z1
    Date: 2011–10
  5. By: Alberto F. Alesina; Dorian Carloni; Giampaolo Lecce
    Abstract: The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.
    JEL: H2 H3 H5
    Date: 2011–12
  6. By: Sugato Chakravarty (Purdue University); Leann G. Rutherford (Purdue University)
    Abstract: The objective of this study is to determine which characteristics of a company’s board of directors that are generally favored by the shareholders (specifically, higher level of independence, smaller board size, higher equity ownership, and presence of financial experts), are also used by creditors to reduce the intensity of loan covenants. Using a sample of 2,095 loans from DealScan database for the period between 1996 and 2009, we find that creditors’ board preferences are different from those of the shareholders for three of the four main board characteristics. Specifically, we find that a lower covenant intensity index is associated with greater board independence, greater board size, lower equity ownership by directors, and less financial expertise on board. We also find that a lower covenant intensity index is associated with greater audit committee independence and compensation committee independence, as well as greater audit committee size.
    Keywords: loan covenant intensity, board composition, audit committee composition, compensation
    JEL: M41 G21 G34 D22 L25
    Date: 2011–12

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.