The Impact of Direct Democracy on Crime: Is the Median Voter Boundedly Rational?

University of St. Gallen Discussion Paper No. 2005-14

61 Pages Posted: 16 Aug 2005

See all articles by Justina A. V. Fischer

Justina A. V. Fischer

Organization for Economic Co-Operation and Development (OECD); Stockholm School of Economics; University of Hohenheim

Date Written: July 2005

Abstract

Direct democracy is believed to lead to an allocation of resources that is closer to the median voter's preferences. If, however, the median voter suffers from bounded rationality, the allocation of public goods actually achieved should be affected. Based on recent empirical findings by economic psychologists, optimism bias and availability heuristic are assumed to influence the median voter's preferences for public safety; particularly, (1) a preference for lower spending on crime prevention and (2) a preference for fighting property crime to fighting violent crime is hypothesized. In consequence, in more direct democratic systems, a re-allocation of scarce means in favor of property crimes should be observed. Estimation of a structural economic model of crime using Swiss cantonal crime rates from 1986 to 2001 corroborates these hypotheses.

Keywords: Direct Democracy, Bounded Rationality, Economic Model of Crime

JEL Classification: K42, D80, D70

Suggested Citation

Fischer, Justina A.V., The Impact of Direct Democracy on Crime: Is the Median Voter Boundedly Rational? (July 2005). University of St. Gallen Discussion Paper No. 2005-14. Available at SSRN: https://ssrn.com/abstract=778984 or http://dx.doi.org/10.2139/ssrn.778984

Justina A.V. Fischer (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Stockholm School of Economics

PO Box 6501
Stockholm, 11383
Sweden

University of Hohenheim

Fruwirthstr. 48
Stuttgart, 70599
Germany

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