Disentangling the Direct and Indirect Effects of the Initiative Process

36 Pages Posted: 28 Jul 2012

See all articles by John G. Matsusaka

John G. Matsusaka

University of Southern California - Marshall School of Business; USC Gould School of Law

Date Written: July 2012

Abstract

Voter initiatives are a central part of the policy making process in many states. While much evidence shows that the initiative process affects policy choices, almost no evidence explains how the initiative process affects policy. One view is that initiatives change policy directly through voters approving laws that override the legislature; a different view, grounded in game theory, is that the initiative process changes policy indirectly by providing a threat that induces the legislature to change policy. This paper develops and implements an empirical strategy to quantify the direct and indirect effects of the initiative based on the idea that direct effects can be observed in states that actually pass initiatives while indirect effects can be observed in states where the initiative is available but not used. Evidence from 50 states on nine separate issues suggests that both direct and indirect effects are important, but the direct effect is several times more important than the threat effect. The evidence also suggests the importance of another indirect channel: when voters reject an initiative, legislatures move policy away from the outcome proposed by the initiative.

Suggested Citation

Matsusaka, John G., Disentangling the Direct and Indirect Effects of the Initiative Process (July 2012). Available at SSRN: https://ssrn.com/abstract=2119029 or http://dx.doi.org/10.2139/ssrn.2119029

John G. Matsusaka (Contact Author)

University of Southern California - Marshall School of Business ( email )

Department of Finance & Business Economics
Los Angeles, CA 90089
United States
213-740-6495 (Phone)
213-740-6650 (Fax)

USC Gould School of Law

699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-6495 (Phone)

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