Policy Decay and Political Competition

Abstract:
Modern political systems exist not in a vacuum but in a world of continuous technological, social, and economic change. As a result, policies designed for today's world are likely to provide an imperfect fit tomorrow, a phenomenon we refer to as policy decay. In principle, legislators could act to update legislation in response to changing conditions and remove decay when it appears, but in practice such policy modernizations are contentious, appear only long after it has become clear that they are needed, and are often seen as inadequate even at the time of adoption. We investigate one source of this kind of policy rigidity: political competition. Minority parties have an incentive to block efficiency-enhancing improvements to existing policy if the resulting poor outcomes lower voters' evaluation of the incumbent party. We model the dynamic path of policy in an environment with both decay and political competition, demonstrating that 1) decay persists and accumulates in equilibrium, 2) alternations of power occur efficiently often, and 3) the threat of transition sharply constrains but does not eliminate proposal power, exerting a centripetal force on policy within the classical gridlock interval.
Contact Emails:
scoco@ceibs.edu