Political resource allocation: Benefits and costs of voter initiatives

This article explores the benefits and costs of the voter initiative, a dir ect democracy device that allows policy decisions to be made by voters rath er than their elected representatives. Previous research suggests that by i ntroducing "competition" into the proposal process, the initiative leads to policies that are closer to the median voter's ideal point. In our model, in contrast, the effect of the initiative is conditional on the severity of representative agency problems and uncertainty about voter preferences. Th e initiative always makes the voter better off when representatives are fai thful agents, but when voter preferences are uncertain, initiatives can cau se "shirking" representatives to choose policies farther from the voter's i deal point. Our evidence shows that initiatives are more common in states w ith heterogeneous populations, and initiatives reduce state spending when D emocrats control the government and when citizens have diverse preferences.