Optimal Term-Length and the Structure of Democracy

111 Pages Posted: 30 Jun 2020 Last revised: 2 Mar 2021

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Research; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2020

Abstract

Periodic elections are the bedrock of democracy, but the power they grant to the median voter is a source of dynamic inefficiencies. We analyze the optimal frequency of elections (equivalently, the optimal term-length) to minimize such inefficiencies. To do so, we build a dynamic model in which (i) the candidates of two polarized parties compete for office and the median voter shifts over time, capturing both the changes in the electorate’s preferences and the volatility of election outcomes, (ii) office-holders determine policy and experience persistent random shocks to their effectiveness, and (iii) policy changes are costly for citizens and politicians. Optimal term-length then balances the frequency of costly policy changes when parties change office with the incumbent’s average effectiveness during tenure. Our baseline model is augmented with further factors that may affect optimal term-length, which allows us to offer several comparative statics about this key institutional variable, and hence about the structure of democracy.

Keywords: elections; term-length; costs of change; polarization

JEL Classification: C72, C73, D72, D78

Suggested Citation

Gersbach, Hans and Jackson, Matthew O. and Tejada, Oriol, Optimal Term-Length and the Structure of Democracy (June 1, 2020). Available at SSRN: https://ssrn.com/abstract=3615407 or http://dx.doi.org/10.2139/ssrn.3615407

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Research ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

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HOME PAGE: http://www.cer.ethz.ch/mip/people/toriol

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