Is paying for votes really a bad thing?

Vote buying is a recurring theme in elections in ‘emerging democracies’. There are strong allegations it happened in the 2006 and 2012 Mexican elections. US elections normally have some party accusing the other of vote-buying (through offering free food at election stations). You get stories on vote-buying from around the world though, ranging from Uganda to Bulgaria.

A colleague explained to me what ‘best-practice’ is in term of vote-buying: you give a voter one half of a bank note and give him a pre-filled ballot paper that includes a vote for a particular party. The voter would then get the other half of the bank-note in return for an empty ballot paper from the polling station. It’s an ingenious way of paying for a vote that involves a level of mutual monitoring of the deal. Not quite fail-safe because of course the voter could simply invalidate or change the pre-filled ballot paper whilst still collecting the bribe, but most likely the system is quite effective in reality.

Let’s think about the economics of this though: is it actually so bad if political parties would be able to outright buy the votes of the electorate in an open competition wherein they approach individuals with offers of bribes and a voter picks the one offering the most? I will of course end up objecting to vote-buying, but it is nevertheless handy to go through the normal economic train of thought to identify what it is in reality that makes vote-buying a bad thing.

If we look at this from our mythical rational economic man perspective, the surprising answer in a one-shot game is ‘no, it is not bad at all. In fact it is optimal and highly egalitarian’. Consider why: when political parties vie for voters by means of direct payment, the political party that wins is the one with the greatest purchasing power. In turn, in fully operational markets, the party with the best overall policy plans for increasing the size of the future economy (the tax-base) would be able to borrow the most on international financial markets, ensuring that it is the party with the best policies that wins in a ‘vote for sale system’.

Indeed, with otherwise entirely uninformed voters versus perfectly informed markets, buying votes is an efficient way of generating a believable signal to uninformed voters about what the best party is to vote for! And the ‘one man one vote’ aspect of elections means that the entire available surplus in an economy would be handed out equally to all voters, a highly egalitarian outcome! Hence paying for votes is not just optimal in the fully rational one-shot case, but also can help to overcome the issue of relatively uninformed voters facing better-informed politicians and markets. There is much to recommend it from a simplistic economic egalitarian point of view.

With this ‘rational economic’ benchmark in mind, we can start to talk more clearly about the importance of background factors in whether or not paying for votes is bad in reality.

One objection one might raise to the ‘buying votes is optimal’ story is the question of the limits to future government policies and the limits to the ability of voters to hide their election bribe. If an elected government is capable of immediately taking back any election bribe in full, then of course the election market would break down and paying-for-votes would only serve to scam the gullible off their electoral rights. This argument really turns on a subtlety though: whilst there is surely an element of recouping, lump-sum payments such as election bribes cannot be easily traced and thus recouped (the rational voter would cash in the banknote and buy foreign assets with it if fearing later dispossession). In a rational setting, limited recouping would simply feed back into a higher original election bribe, so as long as full recouping is not possible one should view the effective transfer as being inalienable and limited recouping as irrelevant to the main argument!

Another objection one can make comes if we consider a repeated game rather than a one-shot game; in the repeated game there is an inherent inability of a political party to commit to anything beyond the next election date, implying that from a pure investment point of view, all returns should be monetised within a single electoral cycle. But this runs into both national and international legal constraints: with the outlawing of slavery and child-labour contracts, it became impossible to commit a young person now to paying taxes in the far future as recompense for health and education services received now. The ability to have such long-deferred payment systems means that one-shot governments cannot fully monetise the value of various investments they might make in a population (like infrastructure and education), which in turn limits the degree to which they can borrow to pay the bribes. One hence gets a degree of myopia in decision making that focuses on the short-run at the expense of the long-run.

From a theoretical point of view the real issue with the repeated election game is that one cannot bribe a voter for the whole future stream of his or her election choices! As soon as one envisages such a ‘life-time electoral bribe’ possibility though, one would once again be in the optimal scenario with paying-for-votes.

A more serious objection is that vote-buying is likely to be an asymmetric market in the sense that not all political parties get access to the opportunity to buy votes. A political party with greater clout on the ground might thus use that advantage to ensure it is the only local party to be able to buy votes, effectively cashing in on local muscle. This would undermine the operation of an open vote-buying market and thus lead to potential distortions. It is undoubtedly an important component of vote-buying in the real world.

Yet again, from a ‘deeper perspective’ you could argue that an importance of ‘local muscle’ simply means that the necessary pre-conditions for true democracy have not been met, ie an absence of the threat of violence between political parties. Even more fundamentally, one can see the ability to organise local muscle as evidence for ‘high reputation’ and ‘deeper pockets’. If you thus see local muscle as a direct outcome of the ability of a party to access resources, which in a functioning financial system means better able to borrow against future income streams because it has the better policies, then even local muscle would be ‘for sale’ and thus get sold to the party with the best policies. One then gets less egalitarian distributions, effectively because the providers of local protection ‘tax’ a part of the vote-bribe, but one could still get optimal policies.

A final objection one can raise is that of pre-commitment: implicit in the rational-voting model briefly sketched above is that parties can pre-commit to markets on future policies via which they can recoup the investment made in vote-buying. In reality that pre-commitment is limited to the reputational value of an existing party, i.e. the amount of reputation it stands to lose from reneging on a loan. This reputational value itself depends on internal party cohesion and the ability to make good on implicit dynamic promises to party bosses and workers, ie on complicated group dynamics within political parties. Whilst such things are normally not considered in economic models, it brings the question to the fore whether monetisation of electoral relations via election bribes would have adverse effects on that internal cohesion.

Much like friends don’t pay each other for a meal or a good conversation lest their friendship becomes cold and of less social value, so too will political parties where all relations are monetised lose internal social identity: they will lose the ability to appeal to group ideals and must then base all relations on an open economic accounting. The inability to generate and maintain idealism is serious business to any large group, particularly in better run countries, and one of the main reasons you don’t see full monetisation of relations in any large organisation in the West.

In short, though it may sound intuitively reprehensible, from a mainstream rational economic perspective there is much to like about political parties competing with each other by means of direct offered payments to voters in return for votes. The main counter-arguments come from the murky issues of ‘loss of idealism’ and ‘adverse effects of monetisation of group relations’. To understand those matters and thus the real reasons why our societies frown upon paying for votes, you of course have to read my book on groups, ideals, and other such matters!

 

 

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crocodile
crocodile
8 years ago

I count the private health insurance and child care rebates as vote buying as well. Aussie has been doing it for years too, but in a more subtle way.

aidan
aidan
8 years ago

If we look at this from our mythical rational economic man perspective, the surprising answer in a one-shot game is ‘no, it is not bad at all. In fact it is optimal and highly egalitarian’. Consider why: when political parties vie for voters by means of direct payment, the political party that wins is the one with the greatest purchasing power. In turn, in fully operational markets, the party with the best overall policy plans for increasing the size of the future economy (the tax-base) would be able to borrow the most on international financial markets, ensuring that it is the party with the best policies that wins in a ‘vote for sale system’.

Wow.

Julie Thomas
Julie Thomas
8 years ago

Paul

Hmm I just cannot follow your reasoning here, particularly the bit about how ‘reputation’ is something that anyone can assess objectively.

I have requested that the local public library purchase your book; I will have to wait to read it until then.

But I have come across a review of your book that I found interesting.

http://www.enlightenmenteconomics.com/blog/index.php/2013/07/putting-people-in-economic-theory/

But on topic, would it be okay with you

Paul Frijters
Paul Frijters
8 years ago
Reply to  Julie Thomas

yes, I know that review. She was honest in her assessment and ‘kinda supportive, kinda on-the-fence’. Her wish to find more on corporate lobbying and greed should have been satisfied by the networking and power chapter though.

As to the post, reputation is of course not something easily observable, but is quite often monetised by markets. Think for instance about the market value of hotel chains and luxury watch manufacturers: all you are paying for when buying such a stock is mainly reputation! The value of the actual factories is usually merely a pittance compared to their reputation.

Julie Thomas
Julie Thomas
8 years ago
Reply to  Paul Frijters

Like the writer of the review, I find your reasoning difficult to follow.

The failure on my part seems to be because I get stuck on words you use, like ‘reputation’ for example. You dismiss the problem too easily by saying it is not easily observable. That is an awesome understatement.

Reputation is not easily defined or measured or understood.

And, is it not important how the reputation comes about, or if it is accurate?

“The inability to generate and maintain idealism is serious business to any large group, particularly in better run countries, and one of the main reasons you don’t see full monetisation of relations in any large organisation in the West.”

Idealism can be generated? Why would you want idealism and not self-interest?

I am confused but I am sure the book will make it all clear.

I liked the second sentence in the review. You are probably both, brilliant and barking, and is there a difference?

john r walker
john r walker(@annesanders)
8 years ago
Reply to  Julie Thomas

Julie, In history people have been as (or more) likely to fight fiercely (and die) for reputation than for money, I agree it does not make much sense … but what about us humans does?

As for Paul I have only briefly met him, but he seems quite sane to me :-)

Julie Thomas
Julie Thomas
8 years ago

sorry for the last unintended part sentence.

Nicholas Gruen
Admin
Nicholas Gruen(@nicholas-gruen)
8 years ago

Julie, Paul is brilliant and barking. No quibbles from me there. ;)

Tel
Tel
8 years ago

Consider why: when political parties vie for voters by means of direct payment, the political party that wins is the one with the greatest purchasing power. In turn, in fully operational markets, the party with the best overall policy plans for increasing the size of the future economy (the tax-base) would be able to borrow the most on international financial markets, ensuring that it is the party with the best policies that wins in a ‘vote for sale system’.

In which case, don’t bother having an election at all… just have a market and the most profitable corporations get to make the law. It comes to the same thing, and can be justified by the same reasoning.

Paul Frijters
Paul Frijters
8 years ago
Reply to  Tel

nope, exactly the opposite: corporations would hate vote-buying because their entire future profit would be handed out evenly as an election bribe.

Tel
Tel
8 years ago
Reply to  Paul Frijters

Gosh that explains why corporations kept right away from making donations to political parties in recent elections… because it eats into their profits so much.

But wait! Hypothetically, there’s an off-chance that someone might make more profit by getting a law put through that just happens to be in their own favour. That would be positive feedback, which doesn’t exist for Economists, but does exist for real people (and physicists, and engineers, etc).

Marks
Marks
8 years ago
Reply to  Tel

You’ve got it.

It is cheaper and easier to pay the relatively few politicians for their votes rather than the great unwashed millions.

It is also easier to check that they have voted for the laws you want in an open parliamentary forum, and to hide the amount you paid to a relatively smaller number of people.

Julie Thomas
Julie Thomas
8 years ago

John

I agree – with bells on – that reputation (William James thought it was ‘the approval of others’) is a very important human need. It seems to me that Paul is assuming that we already have a homogeneous culture/society where everyone understands and accepts what a ‘good’ reputation. This doesn’t fit with my experience of the world where we argue fiercely about who is a liar.

About being sane or not; there is a very interesting article in New Scientist

http://www.newscientist.com/article/mg21929264.400?cmpid=NLC|NSNS|2013-1807-GLOBAL&utm_medium=NLC&utm_source=NSNS&

They say “The research, presented last week at the Society for Molecular Biology and Evolution meeting in Chicago, reveals that after our ancestors split from Neanderthals and Denisovans, they evolved differences in genes connected with cognitive abilities. Many of those genes are associated with mental disorders in modern humans.”

Unfortunately I cannot read the full article because they want money and I don’t have any. It used to be the case that one could read for free by registering but this is no longer an option.

john r walker
john r walker(@annesanders)
8 years ago
Reply to  Julie Thomas

Paul can speak for himself but having read the book , I don’t think Pauls view of ‘reputation’ is simplistic.
A interesting example of reputation(s) ‘paradoxes’ is the way dueling (as a social reputation need) was ended in the old south . Banning it would not have worked -honor is more important- what worked was using another aspect of reputation – a gentleman had to be willing to serve in parliaments and the like, as a matter of reputation- a law was brought in that , if you participated in duels, you could not serve in government , thus one kind of reputation honor duty ended another kind of honor duty.

Julie Thomas
Julie Thomas
8 years ago
Reply to  john r walker

I do get it, that Paul is taking a complex view of reputation, the problem I am having is understanding how it works if only one group of people in the ‘market’ – society – understand the ‘rules’?

What if I am an ‘outsider’ from the society or class of ‘people who duel’, and I do not understand the rules about what behaviour equals a good reputation. How would I judge the relative reputations?

Think about the ‘reputation’ of Apple computers and Steve Job’s; there is a real schism in my extended family about whether he did have a ‘good’ reputation or whether he was something far less admirable.

john r walker
john r walker(@annesanders)
8 years ago
Reply to  Julie Thomas

Julie
Have had a quick scan of the article, think it might be drawing a bit of a long bow. For several reasons, a) it is based on a rather small sample and b) the idea that the complex thing that is mind can be really understood at the grain level of, sort of ‘machine code’, is I think, conceptually ….. questionable.

Julie Thomas
Julie Thomas
8 years ago
Reply to  john r walker

Thanks for that John, perhaps I could sell my vote for the opportunity to read whatever I want for free?

I see genetic ‘evidence’ as just one part of the information we humans need to be able to conceptualise ourselves ‘appropriately’ and I have no problem with drawing long bows, I think some of us have to do that. :)

desipis
8 years ago

The issue for me isn’t so much the individual election; it’d be the rapid trend towards one party rule. Once you can buy votes direct with cash, there’s an incredible incentive to change the laws to make your side (or just your 50.1%) have all the wealth. Once you’ve got the wealth, you can easily buy the next election by ensuring that enough of the opposition supporters are desperate enough for cash that they’ll accept it to vote you back in. In essence, we wouldn’t be selling our votes, we’d be selling our country to which ever overseas party decided to pony up enough cash to buy it.

desipis
8 years ago

There’s also the more general issue that one of the reasons capitalist democracies are so stable is the separate and often conflicting power structures of wealth and popularity. If you allow a tight link between political success and economic success you unify the power structures and there’s no counter to one person or group once they obtain a majority of the power.

john r walker
john r walker(@annesanders)
8 years ago
Reply to  desipis

You have read the book,yes?

Paul Frijters
Paul Frijters
8 years ago
Reply to  desipis

Desipis,

I think we agree on democracy actually in that I agree that you need divisions of power to make democracy work, but from the point of view of vote-buying this merely limits the degree to which any party can ex post raise taxes and thus merely limits the transfers, whilst not affecting the arguments for or against them.

The issue with your fear of a slide to one-party rule under vote-buying is what you think prevents the same thing from happening without vote-buying? Somehow you must think (as I do) that an open buying of vote leads to a different kind of political party and interaction with the populace. Of course, one can argue that vote-buying in fact occurs already on a massive scale (with government spending, financed by debt, spent on marginal voters) but that it is implicit rather than explicit. Hence the difference between explicit and implicit matters!

derrida derider
derrida derider
8 years ago

Surely this model simply assumes away the source of the money – implicitly it assumes the financial resources among parties aligns with the distribution of individual interests among people. Replacing the median voter with the median dollar might work if the distribution of dollars was symmetric, but it certainly isn’t.

It’s notoriously difficult to explain high voting turnout in voluntary elections with ratchoice models (which hasn’t stopped many trying, of course). The problem is that the chances of any given voter deciding an election are so low that you can’t plausibly explain why said given voter would bother voting, even if she had a very high personal stake in the outcome (which most voters don’t). The common practical answer to this problem is compulsory voting (ie make non-voting costly) but maybe a better way would be for the state to pay a fixed fee for voting instead.