Public Choice

, Volume 174, Issue 1–2, pp 107–143 | Cite as

Public policy and the initiative and referendum: a survey with some new evidence

  • John G. MatsusakaEmail author
Literature Survey


This paper surveys the extensive literature that seeks to estimate the effect of the initiative and referendum on public policy. The evidence on the referendum uniformly finds that requiring voter approval for new spending (or new debt) results in lower spending (or lower debt). The initiative process is associated with lower spending and taxes in American states and Swiss cantons, but with higher spending in cities. The initiative is consistently associated with more conservative social policies. Policies are more likely to be congruent with majority opinion in states with the initiative process than states without the initiative, suggesting that direct democracy allows the majority to counteract the power of special interests in policy making.


Public policy Initiative and referendum Direct democracy Representation 



I am grateful for helpful feedback from Zareh Asatryan, Lars Feld, Christina Gathmann, Rod Kiewiet, Jeffrey Lax, Nolan McCarty, David Primo, Christoph Schaltegger, Stefan Voigt, and anonymous referees. USC provided financial support.


  1. Achen, C. H. (1977). Measuring representation: Perils of the correlation coefficient. American Journal of Political Science, 21(4), 805–815.CrossRefGoogle Scholar
  2. Arceneaux, K. (2002). Direct democracy and the link between public opinion and state abortion policy. State Politics and Policy Quarterly, 2(4), 372–387.CrossRefGoogle Scholar
  3. Asatryan, Z. (2016). The indirect effects of direct democracy: Local government size and non-budgetary voter initiatives in Germany. International Tax and Public Finance, 23(3), 580–601.CrossRefGoogle Scholar
  4. Asatryan, Z., Baskaran, T., Grigoriadis, T., & Heinemann, F. (2017a). Direct democracy and local public finances under cooperative federalism. Scandinavian Journal of Economics, 119(3), 801–820.CrossRefGoogle Scholar
  5. Asatryan, Z., Baskaran, T., & Heinemann, F. (2017b). The effect of direct democracy on the level and structure of local taxes. Regional Science and Urban Economics, 65, 38–55.CrossRefGoogle Scholar
  6. Baqir, R. (2002). Districting and government overspending. Journal of Political Economy, 110(6), 1318–1354.CrossRefGoogle Scholar
  7. Barro, R. J. (1973). The control of politicians: An economic model. Public Choice, 14(1), 19–42.CrossRefGoogle Scholar
  8. Besley, T., & Case, A. (2003). Political institutions and policy choices: Evidence from the United States. Journal of Economic Literature, 41(1), 7–73.CrossRefGoogle Scholar
  9. Besley, T., & Coate, S. (2008). Issue unbundling via citizens’ initiatives. Quarterly Journal of Political Science, 3(4), 379–397.CrossRefGoogle Scholar
  10. Blume, L., Döring, T., & Voigt, S. (2011). Fiscal effects of reforming constitutions: Recent German experiences. Urban Studies, 48(10), 2123–2140.CrossRefGoogle Scholar
  11. Blume, L., Müller, J., & Voigt, S. (2009). The economic effects of direct democracy—a first global assessment. Public Choice, 140(3–4), 431–461.CrossRefGoogle Scholar
  12. Blume, L., & Voigt, S. (2012). Institutional details matter—more economic effects of direct democracy. Economics of Governance, 13(4), 287–310.CrossRefGoogle Scholar
  13. Boehmke, F. (2005). The indirect effect of direct legislation: How institutions shape interest group systems. Columbus: The Ohio State University Press.Google Scholar
  14. Boehmke, F. J., & Witmer, R. (2004). Disentangling diffusion: The effects of social learning and economic competition on state policy innovation and expansion. Political Research Quarterly, 57(1), 39–51.CrossRefGoogle Scholar
  15. Bohn, H., & Inman, R. P. (1996). Balanced-budget rules and public deficits: Evidence from the U. S. states. Carnegie-Rochester Conference Series on Public Policy, 45, 13–76.CrossRefGoogle Scholar
  16. Bowler, S., & Donovan, T. (2004). Measuring the effect of direct democracy on state policy: Not all initiatives are created equal. State Politics and Policy Quarterly, 4(3), 345–363.CrossRefGoogle Scholar
  17. Bradbury, J. C., & Crain, W. M. (2001). Legislative organization and government spending: Cross country evidence. Journal of Public Economics, 82(3), 309–325.CrossRefGoogle Scholar
  18. Buchanan, J. M., & Tullock, G. (1962). The calculus of consent: Logical foundations of constitutional democracy. Ann Arbor: University of Michigan Press.CrossRefGoogle Scholar
  19. Burret, H. T., & Feld, L. P. (forthcoming 2018). (Un-)intended effects of fiscal rules. European Journal of Political Economy.Google Scholar
  20. Di Tella, R., & Fisman, R. (2004). Are politicians really paid like bureaucrats? Journal of Law and Economics, 47(2), 477–513.CrossRefGoogle Scholar
  21. Ebdon, C. (2000). The effects of voter control on budget outcomes. Journal of Public Budgeting, Accounting and Financial Management, 21(1), 22–42.Google Scholar
  22. Erikson, R. S., Wright, G. C., & McIver, J. P. (1993). Statehouse democracy: Public opinion and policy in the American states. New York: Cambridge University Press.Google Scholar
  23. Farnham, P. G. (1990). The impact of citizen influence on local government expenditure. Public Choice, 64(3), 201–212.CrossRefGoogle Scholar
  24. Fedaseyeu, V., Gilje, E., & Strahan, P. E. (2016). Voter preferences and political change: Evidence from shale booms. Bocconi University, University of Pennsylvania, and Boston College, working paper.Google Scholar
  25. Feld, L. P., Fischer, J., & Kirchgässner, G. (2010). The effect of direct democracy on income redistribution: Evidence for Switzerland. Economic Inquiry, 48(4), 817–840.CrossRefGoogle Scholar
  26. Feld, L. P., & Kirchgässner, G. (1999). Public debt and budgetary procedures: Top down or bottom up? Some evidence from Swiss municipalities. In J. M. Poterba & J. von Hagen (Eds.), Fiscal institutions and fiscal performance. Chicago: University of Chicago Press.Google Scholar
  27. Feld, L. P., & Kirchgässner, G. (2001). Does direct democracy reduce public debt? Evidence from Swiss municipalities. Public Choice, 109(3–4), 347–370.CrossRefGoogle Scholar
  28. Feld, L. P., Kirchgässner, G., & Schaltegger, C. A. (2011). Municipal debt in Switzerland: New empirical results. Public Choice, 149(1/2), 49–64.CrossRefGoogle Scholar
  29. Feld, L. P., & Matsusaka, J. G. (2003). Budget referendums and government spending: Evidence from Swiss cantons. Journal of Public Economics, 87(12), 2703–2714.CrossRefGoogle Scholar
  30. Feld, L. P., Schaltegger, C. A., & Schnellenbach, J. (2008). On government centralization and fiscal referendums. European Economic Review, 52(4), 611–645.CrossRefGoogle Scholar
  31. Ferejohn, J. (1986). Incumbent performance and electoral control. Public Choice, 50(1–3), 5–25.CrossRefGoogle Scholar
  32. Freitag, M., & Vatter, A. (2006). Initiatives, referendums, and the tax state. Journal of European Public Policy, 13(1), 89–112.CrossRefGoogle Scholar
  33. Funk, P., & Gathmann, C. (2011). Does direct democracy reduce the size of government? New evidence from historical data, 1890–2000. Economic Journal, 121, 1252–1280.CrossRefGoogle Scholar
  34. Funk, P., & Gathmann, C. (2013a). How do electoral systems affect fiscal policy? Evidence from cantonal parliaments. Journal of the European Economic Association, 11(5), 1178–1203.CrossRefGoogle Scholar
  35. Funk, P., & Gathmann, C. (2013b). Voter preferences, direct democracy and government spending. European Journal of Political Economy, 32, 300–319.CrossRefGoogle Scholar
  36. Galetta, S., & Jametti, M. (2015). How to tame two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation. European Journal of Political Economy, 39, 82–93.CrossRefGoogle Scholar
  37. Gerber, E. R. (1996). Legislative response to the threat of popular initiatives. American Journal of Political Science, 40(1), 99–128.CrossRefGoogle Scholar
  38. Gerber, E. R. (1999). The populist paradox: Interest group influence and the promise of direct legislation. Princeton: Princeton University Press.Google Scholar
  39. Gerber, E. R., & Phillips, J. H. (2005). Evaluating the effects of direct democracy on public policy: California’s urban growth boundaries. American Politics Research, 33(2), 310–330.CrossRefGoogle Scholar
  40. Gilligan, T. W., & Matsusaka, J. G. (1995). Deviations from constituent interests: The role of legislative structure and political parties in the states. Economic Inquiry, 33(3), 383–401.CrossRefGoogle Scholar
  41. Gilligan, T. W., & Matsusaka, J. G. (2001). Fiscal policy, legislature size, and political parties: Evidence from state and local governments in the first half of the twentieth century. National Tax Journal, 54(1), 57–82.CrossRefGoogle Scholar
  42. Glazer, A., & McGann, A. (2008). Direct democracy and the stability of state policy. In S. Bowlder & A. Glazer (Eds.), Direct democracy’s impact on American political institutions. New York: Palgrave Macmillan.Google Scholar
  43. Golder, M., & Stramski, J. (2010). Ideological congruence and electoral institutions. American Journal of Political Science, 54(1), 90–106.CrossRefGoogle Scholar
  44. Hume, R. J. (2011). Comparing institutional and policy explanations for the adoption of state constitutional amendments: The case of same-sex marriage. American Politics Research, 39(6), 1097–1126.CrossRefGoogle Scholar
  45. Initiative and Referendum Institute (2017). Overview of initiative use, 1900–2016. Available at
  46. Kauffman, B., Büchi, R., & Braun, N. (2010). Guidebook to direct democracy: In Switzerland and beyond. Marburg: Initiative and Referendum Institute Europe.Google Scholar
  47. Kessler, A. S. (2005). Representative versus direct democracy: The role of informational asymmetries. Public Choice, 122(1/2), 9–38.CrossRefGoogle Scholar
  48. Kiewiet, D. R., & Szakaly, K. (1996). Constitutional limitations on borrowing: An analysis of state bonded indebtedness. Journal of Law, Economics, and Organization, 12(1), 62–97.CrossRefGoogle Scholar
  49. Lax, J. R., & Phillips, J. H. (2012). The democratic deficit in the states. American Journal of Political Science, 56(1), 148–166.CrossRefGoogle Scholar
  50. Leamer, E. E. (2010). Tantalus on the road to Asymptotia. Journal of Economic Perspectives, 24(2), 31–46.CrossRefGoogle Scholar
  51. Lewis, D. C. (2011). Direct democracy and minority rights: Same-sex marriage bans in the U. S. states. Social Science Quarterly, 92(2), 364–383.CrossRefGoogle Scholar
  52. Lewis, D. C., Schneider, S. K., & Jacoby, W. G. (2015). The impact of direct democracy on state spending priorities. Electoral Studies, 40, 531–538.CrossRefGoogle Scholar
  53. Luechinger, S., & Schaltegger, C. A. (2013). Fiscal rules, budget deficits and budget projections. International Tax and Public Finance, 20, 785–807.CrossRefGoogle Scholar
  54. Lupia, A., & Matsusaka, J. G. (2004). Direct democracy: New approaches to old questions. Annual Review of Political Science, 7, 463–482.CrossRefGoogle Scholar
  55. Matsusaka, J. G. (1995). Fiscal effects of the voter initiative: Evidence from the last thirty years. Journal of Political Economy, 103(3), 587–623.CrossRefGoogle Scholar
  56. Matsusaka, J. G. (2000). Fiscal effects of the voter initiative in the first half of the twentieth century. Journal of Law and Economics, 43(2), 619–650.CrossRefGoogle Scholar
  57. Matsusaka, J. G. (2001). Problems with a methodology used to evaluate the voter initiative. Journal of Politics, 63(4), 1250–1256.CrossRefGoogle Scholar
  58. Matsusaka, J. G. (2004). For the many or the few: The initiative, public policy, and American democracy. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  59. Matsusaka, J. G. (2005a). Direct democracy works. Journal of Economic Perspectives, 19(2), 185–206.CrossRefGoogle Scholar
  60. Matsusaka, J. G. (2005b). The eclipse of legislatures: Direct democracy in the 21st century. Public Choice, 124(1), 157–177.CrossRefGoogle Scholar
  61. Matsusaka, J. G. (2006). Direct democracy and electoral reform. In M. P. McDonald & J. Samples (Eds.), The marketplace of democracy electoral competition and American politics. Washington DC: Brookings Institution Press.Google Scholar
  62. Matsusaka, J. G. (2008). Direct democracy and the executive branch. In S. Bowler & A. Glazer (Eds.), Direct democracy’s impact on American political institutions. New York: Palgrave MacMillan.Google Scholar
  63. Matsusaka, J. G. (2009). Direct democracy and public employees. American Economic Review, 99(5), 2227–2246.CrossRefGoogle Scholar
  64. Matsusaka, J. G. (2010). Popular control of public policy: A quantitative approach. Quarterly Journal of Political Science, 5(2), 133–167.CrossRefGoogle Scholar
  65. Matsusaka, J. G. (2014). Disentangling the direct and indirect effects of the initiative process. Public Choice, 160(3), 345–366.CrossRefGoogle Scholar
  66. Matsusaka, J. G., & McCarty, N. M. (2001). Political resource allocation: Benefits and costs of voter initiatives. Journal of Law, Economics, and Organization, 17(2), 413–448.CrossRefGoogle Scholar
  67. Matsusaka, J. G., & Ozbas, O. (2017). A theory of shareholder approval and proposal rights. Journal of Law, Economics, and Organization, 33(2), 377–411.Google Scholar
  68. McCarty, N. M., Poole, K. T., & Rosenthal, H. (2015). Political bubbles: Financial crises and the failure of American democracy. Princeton: Princeton University Press.Google Scholar
  69. McEachern, W. A. (1978). Collective decision rules and local debt choice: A test of the median-voter hypothesis. National Tax Journal, 31(2), 129–136.Google Scholar
  70. Merrifield, J. (2000). State government expenditure determinants and tax revenue determinants revisited. Public Choice, 102(1–2), 25–50.CrossRefGoogle Scholar
  71. Nguyen-Hoang, P. (2012). Fiscal effects of budget referendums: Evidence from New York school districts. Public Choice, 150(1–2), 77–95.CrossRefGoogle Scholar
  72. Niskanen, W. A., Jr. (1971). Bureaucracy and representative government. Chicago: Aldine, Atherton.Google Scholar
  73. Peltzman, S. (1976). Toward a more general theory of regulation. Journal of Law and Economics, 19(2), 211–240.CrossRefGoogle Scholar
  74. Peltzman, S. (1992). Voters as fiscal conservatives. Quarterly Journal of Economics, 107(2), 327–361.CrossRefGoogle Scholar
  75. Pippen, J., Bowler, S., & Donovan, T. (1992). Election reform and direct democracy: Campaign finance regulations in the American states. American Politics Research, 30(6), 559–582.CrossRefGoogle Scholar
  76. Poole, K. T. (2007). Changing minds? Not in Congress! Public Choice, 131(3), 435–451.CrossRefGoogle Scholar
  77. Primo, D. M. (2006). Stop us before we spend again: Institutional constraints on government spending. Economics and Politics, 18(3), 269–312.CrossRefGoogle Scholar
  78. Primo, D. M. (2010). The effect of initiatives on local government spending. Journal of Theoretical Politics, 22(1), 6–25.CrossRefGoogle Scholar
  79. Romer, T., & Rosenthal, H. (1979a). Bureaucrats versus voters: On the political economy of resource allocation by direct democracy. Quarterly Journal of Economics, 93(4), 563–587.CrossRefGoogle Scholar
  80. Romer, T., & Rosenthal, H. (1979b). The elusive median voter. Journal of Public Economics, 12(2), 143–170.CrossRefGoogle Scholar
  81. Schildkraut, D. J. (2001). Official-English and the states: Influences on declaring English the official language in the United States. Political Research Quarterly, 54(2), 445–457.CrossRefGoogle Scholar
  82. Stigler, G. J. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2(1), 3–21.CrossRefGoogle Scholar
  83. Tolbert, C. J. (1998). Changing rules for state legislatures: Direct democracy and governance policies. In S. Bowler, T. Donovan, & C. Tolbert (Eds.), Citizens as legislators. Columbus: Ohio State University Press.Google Scholar
  84. Weingast, B. R., Shepsle, K. A., & Johnsen, C. (1981). The political economy of benefits and costs: A neoclassical approach to distributive politics. Journal of Political Economy, 93(4), 642–664.CrossRefGoogle Scholar
  85. Zax, J. S. (1989). Initiatives and government expenditures. Public Choice, 63(3), 267–277.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Marshall School of BusinessUniversity of Southern CaliforniaLos AngelesUSA

Personalised recommendations