legislative systems with absolute party discipline: implications for the agency theory approach to...

Legislative Systems with Absolute Party Discipline: Implications for the Agency TheoryApproach to the Constituent-Legislator LinkAuthor(s): Neil LongleySource: Public Choice, Vol. 97, No. 1/2 (Oct., 1998), pp. 121-140Published by: SpringerStable URL: http://www.jstor.org/stable/30024417 .

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Public Choice 97: 121-140, 1998. 121 @ 1998 Kluwer Academic Publishers. Printed in the Netherlands.

Legislative systems with absolute party discipline: Implications for the agency theory approach to the constituent-legislator link*

NEIL LONGLEY Faculty of Administration, University of Regina, Regina, Saskatchewan, S4S OA2, Canada

Accepted 22 May 1996

Abstract. This paper examines how the presence of absolute party discipline forces one to re-examine some of the issues surrounding the constituent-legislator link. With absolute party discipline, slack at the individual district level is determined by the policy choices of a political party, rather than by the choices of the individual legislator. This party discipline not only has implications for the representational effectiveness of individual legislators, but also results in the terms "slack" and "shirking" no longer necessarily being synonymous. The empirical work shows that Canadian political parties engaged in wide scale shirking on the 1988 U.S.-Canada Free Trade Agreement.

1. Introduction

Previous research examining the application of agency theory to the constituent-legislator relationship has attempted to determine the degree of slack that exists in such relationships.' Slack has been seen to be synonymous with

legislator "shirking"; a situation where a legislator's vote on an issue is determined, at least in part, by the legislator's personal ideological preferences, rather than being exclusively determined by the interests of the legislator's constituents.

This research, however, assumes a legislative system in which the legislator has the power to independently choose his or her voting position on any given issue. While such an assumption is valid with respect to the U.S. Congress,2 it is not necessarily relevant to other legislative systems. For example, in the Canadian Parliament, party discipline is so strong that individual Members of Parliament (MPs) are almost always forced to vote in accordance with the position adopted by their party.

The paper has three objectives. First, it will develop a theory as to the manner in which agency theory can be applied to the Canadian Parliament. It will

* The author would like to thank Rod Fort, Bill Hallagan, and Stuart Thiel for their helpful comments on earlier drafts of this paper. Any errors are mine.



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show how the Canadian parliamentary tradition of extreme party discipline forces one to modify how one views the constituent-legislator relationship. Second, it will also present a theory as to why a system of complete party discipline implies that the terms "slack" and "shirking" are no longer synonymous. Third, the paper will then test these theories by empirically modelling the constituent-legislator links within the context of the Canadian parliamentary system.

2. Defining "constituent interests" under systems of complete party discipline

Under the Canadian parliamentary system, individual legislators do not have the power to independently determine their position on an issue. Even where their party's position on an issue clearly conflicts with the interests of their constituents, or conflicts with their own personal ideological preferences, the individual MP must still vote in accordance with the party position.3

Dyck (1993) attributes this strong party discipline to a number of factors. The most important factor is the Canadian parliamentary tradition that the defeat of a government bill is interpreted as an indication of non-confidence in the government. When such indications of non-confidence occur, the government is expected to resign and call an immediate election. Thus, because the fate of the government is at stake in essentially every parliamentary vote, parties are able to exert tremendous pressure on their MPs to vote the party line.

This natural incentive to vote the party line is further enhanced by the fact that the incentive structure facing Canadian MPs is largely controlled by the

political parties to which they belong. Only loyal party members can expect perks (such as attractive travel opportunities) and internal promotions,4 while

disloyal members face possible expulsion from the party caucus.5 Thus, in Canada, once an individual makes a decision to join a party, that

individual gives up the right to independently determine his or her policy position; the individual, in effect, becomes a "policy-taker" from the party. This is much different from the U.S. Congress, where Senators and Represen- tatives do have the power to independently assess each policy initiative, and to adjust their voting behavior in accordance with their constituents' interests.

In a parliamentary system with absolute party discipline, no longer is the individual legislator the "agent" in the principal-agent problem; rather, the

legislator's party is now the agent.6 It is no longer meaningful to ask whether a legislator is shirking, since a legislator has no control over his own voting behavior. Instead, the essential question is whether parties are shirking.



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To measure party shirking, a party's "constituent interests" must first be defined. The group of constituents a party represents is not stable and fixed, but rather changes with each election. If a party wins a particular seat in Parliament (i.e., the party's candidate in the district is elected to Parliament), the individuals in that district become the party's constituents, at least until the next election.

In defining a party's "constituent interests", the median voter concept used in U.S. models continues to be generally employed. In U.S. models, the preferences of an individual constituency with respect to a policy issue are taken to be the preferences of the median voter in that constituency. This paper simply takes this proposition a step further.

A party in Canada is essentially faced with a number of median voters. For each constituency a party represents, that constituency will have a median voter; a voter deemed to reflect the interests of the entire constituency. How- ever, what is needed is a singular measure of constituent interests for a party. This is obtained by examining the preferences of the median voter from each constituency a party represents, and then finding the median of these values. The constituency this median voter represents is thus deemed the party's "median constituency".

3. Differentiating between slack and shirking

The nature of the parliamentary system forces one to adopt separate defini- tions for the terms "slack" and "shirking"; unlike the U.S. system, the terms are no longer interchangeable.

Shirking can be generally defined to exist if the policy positions of political agents are not strictly determined by the configuration of their constituents' interests.

As discussed above, in a parliamentary system, it is the political parties, and not the individual legislators, who are the agents. For these parties, the term "constituent interests" can be defined as the interests of constituents in the median constituency of the party. Thus, only where the party's position is inconsistent with the preferences of its median constituency, can the party be viewed as shirking.

Consider a situation where a party develops a non-shirking, national policy on an issue, and then, as usual, imposes this policy position on each of its MPs. For the median constituency, the policy position taken will be highly representative of constituent interests. For other constituencies, however, the same policy position may be largely unrepresentative of constituent interests. Clearly, the greater the heterogeneity in the economic and ideological interests amongst various constituencies with respect to a certain policy issue,



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the greater the slack (total constituent preference violation) that results from the imposition on the legislators of those constituencies of a common policy position.

Thus, even if parties do not shirk, constituent-legislator slack will not necessarily be eliminated. Only if the interests of all of a party's constituencies were identical to the interests of the median constituency, would there be no slack. Slack will be greatest for those constituencies whose economic and ideological interests on an issue are furthest away from the interests of the median constituency of the party.

Thus, two types of constituent preference violations must be identified. The first, common to both parliamentary and republic systems, results from legislator shirking. In Congress, legislators shirk by not voting in accordance with the preferences of the median voter in their constituency. In Canada's Parlia- ment, parties shirk by not adopting positions in accordance with the preferences of their median constituency. However, in a parliamentary system, a second type of constituent preference violations are commonly present. These are the constituent preference violations that result from the system itself; in other words, from the imposition of party discipline on individual

legislators.

4. The effects of party discipline on empirical modelling

The empirical model of this paper employs a basic methodology similar to that of Kalt and Zupan (1984). Although the weaknesses of such a method-

ology are well-documented (see, for example, Goff and Grier, 1993), valid

comparisons between the U.S. and Canadian systems requires the Canadi- an modelling to be generally consistent with previous research on the U.S. Congress.

Following Kalt and Zupan, a two-step process is used. The first step is to determine what portion of each legislator's observed voting behavior reflects constituent interests, and what portion are constituent preference violations. The variable PROTRADE represents observed voting behavior and is defined as:

PROTRADE = In r+.5 n-r+.5

where r = the number of times the legislator voted a pro-trade position n = the number of times the legislator voted on trade-related issues

PROTRADE is regressed on a series of variables measuring constituent interests. The predicted values and residuals from this regression are then used in the second step in the process. In this step, a logit model is used to regress each legislator's vote on the U.S.-Canada Free Trade Agreement



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(FTA) on a series of variables relating to constituent interests with respect to the FTA, and on the residuals and predicted values from the step 1 regression.

In the step 1 regression, the predicted value of PROTRADE (representing constituent interests) is denoted by PROHAT, while the regression residual is denoted by RESIDHAT. Equation (1) more formally defines RESIDHAT as:

RESIDHAT = PROTRADE - PROHAT (1)

Just as in the Kalt and Zupan model, RESIDHAT measures the total constituent preference violation for that constituency. Positive values of RESID- HAT indicate the legislator's voting behavior was less protectionist (more pro-trade) than constituents desired, and negative values of RESIDHAT indicate the legislator's voting behavior was more protectionist (less pro-trade) than constituents desired. However, unlike the Kalt and Zupan interpretation, these residuals do not necessarily represent the shirking of individual legislators, since individual legislators, being bound by party discipline, have no ability to independently choose their own voting position on an issue.

Do, then, the residuals represent shirking by political parties, since the party, and not the individual legislator, is the decision unit in the Canadian Par- liament? To answer this question, recall that a party in a parliamentary system shirks if it does not set policy in accordance with the preferences of its median constituency. A party's median constituency, denoted by MEDPROHAT, is found by examining the PROHAT values of each legislator from that party. The median of these PROHAT values is considered to designate the interests of the party's median constituency.

However, as shown earlier, given that parties represent a series of non- homogeneous constituencies, selecting the non-shirking policy position (i.e., MEDPROHAT), and imposing it on all legislators from the party, will not reduce RESIDHAT to zero in any constituency but the median constituency. In fact, the further a constituency's preferences are away from the party's median constituency, the less the adopted policy position will reflect that constituency's preferences. Thus, not all of RESIDHAT for any given constituency is due to party shirking; some is due to constituent preference violations that inevitably arise under systems of rigid party discipline.

Thus, if the Canadian results are to be meaningful, RESIDHAT must be separated into two components. The first component, called SHIRK, is defined in equation (2). It is this component of RESIDHAT which measures shirking in the constituent-legislator relationship.

SHIRK = PROTRADE - MEDPROHAT (2)

SHIRK measures the difference between the legislator's actual voting behavior and the median predicted value of PROTRADE for the legislator's



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party. For each legislator, their actual voting behavior, PROTRADE, is controlled by their party. From equation (2), it can be seen that if the party adopts policy positions such that PROTRADE is set equal to MEDPROHAT, no shirking will exist.

If, however, the party adopts policy positions such that PROTRADE is greater than MEDPROHAT, SHIRK will be positive, indicating the party is adopting policy positions that are more pro-trade (less protectionist) than their median constituency prefers. Finally, if the party adopts policy positions such that PROTRADE is less than MEDPROHAT, SHIRK will be negative, indicating the party is adopting policy positions that are more protectionist than their median constituency prefers.

Once this shirking portion of the RESIDHAT has been found, the remain- der of the residual must, by definition, result from the rigidities of the party discipline system. This remaining portion of the residual, defined as DISCP, is caused by the fact that all members of a party must exhibit identical voting behavior on all issues. Alternatively, DISCP can be defined as in equation (3).

DISCP = MEDPROHAT - PROHAT (3)

DISCP measures, for each legislator of a party, the difference between the predicted value of the party's median constituency, MEDPROHAT, and the predicted value for a given constituency (as given by the regression), PRO- HAT.

Notice that a political party cannot influence the magnitude of DISCP, since the party cannot influence either MEDPROHAT or PROHAT. Both are determined by constituent interests; the former by the interests of the party's median constituency, and the latter by the interests of the individual con-

stituency in question. From equation (3), it can be seen that if the interests of a particular con-

stituency are identical to the interests of the party's median constituency, DISCP is zero. This implies that, for the particular constituency in question, their is no constituent preference violation due to the effects of the party discipline system.

If, however, the interests of a particular constituency are more pro-trade (less protectionist) than are the interests of the party's median constituency, DISCP is negative. Conversely, where the interests of a particular constituen-

cy are less pro-trade (more protectionist) than are the interests of the party's median constituency, DISCP is positive. In general, constituencies whose

preferences are further away from the party's median constituency will have

higher absolute values of DISCP. To summarize these methodological complexities associated with the Cana-

dian model, notice that the Kalt and Zupan residual, RESIDHAT, is still



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Table 1. SHIRK and DISCP scenarios

PROTRADE PROHAT MEDPROHAT RESIDHAT SHIRK DISCP

A 3 1 2 2 1 1 B 3 1 3 2 0 2 C 2 3 1 -1 1 -2

employed, it is just that it is disaggregated into two parts. If one sums SHIRK and DISCP, the result is as given in Equation 4.

SHIRK + DISCP = (PROTRADE - MEDPROHAT)+

(MEDPROHAT - PROHAT) = PROTRADE - PROHAT

= RESIDHAT

To more fully explain the situation, consider the scenarios provided in Table 1. Each cell of the matrix represents a value for the corresponding variable. The first three columns are given, while the last three are calculated using the above formulas. Each scenario is independent of the others.

Under scenario A, the legislator's actual voting behavior (determined, of course, by the party) is two units more pro-trade than what the legislator's constituents desire. One unit of this is due to party shirking. The party has adopted a more pro-trade position than that of its median constituency. The other unit is due to the effects of party discipline. The constituency in question prefers a more protectionist policy than does the party's median constituency.

Under scenario B, the legislator's actual voting behavior is again two units more pro-trade than what the legislator's constituents desire. However, since the party has adopted a policy position that is identical to the interests of its median constituency, no shirking is occurring. The entire two units of constituent preference violation are due to the effects of party discipline. The constituency in question prefers a more protectionist policy than does the party's median constituency.

Under scenario C, the legislator, under the party's direction, has adopted a more protectionist position than what the legislator's constituents prefer. Hence, RESIDHAT is negative. The party is shirking, but it is shirking by adopting a policy position that is too pro-trade, rather than too protectionist! This is because the party has adopted a policy position that is more pro-trade than what its median constituency prefers. However, RESIDHAT is still negative for the constituency in question because the constituency has preferences that are much more pro-trade than does the median constituency. Thus, the negative value of DISCP more than offsets the positive value of SHIRK. This



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last scenario shows that, in some cases, the total constituent preference violation for a given constituency may be in an opposite direction to the party shirking.

5. The empirical model

5.1. Step 1 - Measuring party shirking

As discussed in the previous section, PROTRADE represents each legislator's cumulative voting record on a wide range of trade-related bills.7 The variable was constructed from an analysis of fifteen House of Commons votes. All votes occurred during the 1985-1988 time period, and all relate to issues of international trade or foreign investment.

PROTRADE is then regressed on a series of independent variables designed to measure constituent interests. These variables are defined in Appendix A.

The first six variables measure the demographic characteristics of a constituency. Their inclusion implicitly assumes that demographic differences among constituencies proxy differences in policy preferences among those constituencies. The demographic variables are included as control variables, and, as such, no expectations are placed on the signs of these variables.

The fourth variable, NDP, requires some additional explanation. NDP is intended as a broad-based measure of a constituency's ideological preference. The NDP is a social democratic party that is driven by ideology rather than pragmatism (Jackson, Jackson, and Baxter-Moore, 1986), and has never come close to forming a government at the federal level. Thus, no voter could realistically expect any future economic payoff from voting for the NDP. Any votes going to the party, therefore, are viewed solely as attempts to register ideological preferences. Because of its broad-based nature, the inclusion of NDP can also capture the effects of any other demographic variables that may be omitted from the regression.

Variables seven through twelve relate more specifically to a constituency's interests with respect to trade policy. UNION, ESTAB, and LGESTAB measure the opposing influences of groups that have broad-based interests in the trade policy area. These groups are defined as broad-based because their support is derived from workers (in the case of UNION) and firms (in the case of ESTAB and LGESTAB) from a wide variety of industries. UNION is

expected to have a negative sign, while ESTAB and LGESTAB are expected to have positive signs.

With respect to UNION, labor unions are by far the most influential of the broad-based, pro-protectionist groups. Unions, with their concern over the lost jobs and lower wages that may result from increased foreign com- petition, have consistently taken protectionist positions on almost all recent



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trade issues. While there are many other broad-based groups (such as femi- nist groups, anti-poverty groups, and environmentalists) that also have protectionist leanings, these groups have tended to focus their interests on issues other than trade policy.

The influence of the broad-based anti-protection groups is captured by ESTAB and LGESTAB. ESTAB is constructed to proxy the interests of business groups such as the Chamber of Commerce, whose membership is usually dominated by small to medium-sized firms. LGESTAB, on the other hand, is constructed to proxy the interests of those business groups whose membership is more typically dominated by large firms. LGESTAB is included as a separate variable because of the particular importance in Canada of big business in lobbying for freer trade. Since its formation in 1976, the Busi- ness Council on National Issues, which is comprised of the CEOs of the 150 largest corporations in Canada, has been at the forefront of the free trade lobby.

EXDEP and IMPSENS measure the opposing influence of groups that have more specific interests in trade policy issues. The sign on EXDEP is expected to be positive, while the sign on IMPSENS should be negative. EXDEP captures the influence of firms and workers in industries that are export dependent. Industries are classified as export dependent if they meet at least one of the following three criteria: i) they rank among the top ten in net exports, ii) they rank among the top ten in their ratio of exports to total production, iii) they have been active lobbyists supporting freer trade. In practice, most industries that are included in EXDEP meet at least two of the above criteria, and many industries meet all three criteria.

IMPSENS captures the influence of firms and workers in industries that are import sensitive. Industries are classified as import sensitive if i) during the last fifteen years, they have been the beneficiaries of any type of product- specific protectionist legislation before Parliament, or, ii) they have tariff rates (including the tariff equivalent of non-tariff barriers) that exceed ten percent.

The expected sign on IMPORTS is less certain. IMPORTS should be positive to the extent that the constituency's users of the imports (i.e., industrial users, retailers, etc.) will oppose any policies which favor higher-cost domes- tic products over these lower-cost imports. However, IMPORTS should be negative to the extent that these imports compete directly with the products of other firms in the constituency. Thus, the actual sign on IMPORTS will depend on the relative strengths of these two opposing groups. The results of the regression are reported in Table 2. A weighted generalized least squares technique is employed.



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Table 2. Canadian PROTRADE regression results

Independent variable Coefficient t-statistic

1. INCOME .084 2.87* 2. URBAN .516 .69 3. EDUC -.572 -2.52* 4. NDP -9.278 -7.29* 5. AGE .049 1.13 6. WHCOL .401 .15 7. UNION -5.218 -2.93* 8. EXDEP .314 .09 9. IMPSENS -5.438 -1.60

10. IMPORTS .008 E-2 1.31 11. ESTAB -16.935 -.65 12. LGESTAB -16.905 -1.90

R2 =.38 R2 = .35

*Indicates significance at the 5% level.

Table 3. Shirking by party

# of pro-trade votes

Zero

shirking Actual Shirking

Liberals 8 1 -7 NDP 7 0 -7

P.C. 11 15 4

The results indicate that all trade-related variables are of the correct sign except for ESTAB and LGESTAB. Of the trade-related variables, only UNION is statistically significant.

The results, in themselves, provide minimal direct information. However, they do provide some insight into the extent and direction of party shirking. Table 3 shows, for each party, the number of votes (out of fifteen) in which the party adopted a pro-trade position, and the number of times it should have adopted such a position if it were seeking to eliminate all shirking.

The results indicate that there was considerable shirking in the voting patterns of the three parties. The Liberals and NDP both voted a protectionist position seven more times than what their median constituency preferred, while the Progressive Conservatives voted a pro-trade position four more times than what their median constituency preferred.



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The above results address a potential criticism of the median constituency theory. It may be argued by some that, in a three party system, parties may not be concerned about the preferences of their median constituency, but rather with the preferences of their marginal constituency.

Consider Canada's three party system. The Progressive Conservatives (P.C.) are on the right of the political spectrum, the Liberals are in the center of the spectrum, and the New Democrats (NDP) are on the left of the spectrum. It may be argued, for example, that the Progressive Conservatives, knowing that they have assured support of those constituencies on the right, would adopt policies to capture constituencies to the left of their party's median constituency. This would presumably take some constituencies away from the centrist Liberals. Similarly, the New Democrats may elect to adopt policies to the right of their median constituency. Again, they are assured of those constituencies on the left, and by moving policies to the right, may take support from the Liberals.

However, the results indicate that the Progressive Conservatives and New Democrats adopted policies in the opposite direction to what one would predict. The Progressive Conservatives adopted policies that were to the right of their median constituency, while the New Democrats adopted policies to the left of their median constituency. Thus, it cannot be argued that these parties were attempting to capture their marginal constituencies, since their marginal constituencies were in the opposite direction to which the party's policies were moving. Therefore, if, in fact, the zero-shirking policy position requires the party to adopt policies in accordance with the preferences of the party's marginal constituency, rather than its median constituency, the above analysis underestimates the presence of shirking, rather than overestimates it.

5.2. Step 2 - Determining the importance of shirking in FTA voting

The second step in the process is to determine whether Canadian political parties engaged in shirking behavior on the FTA voting issue.

The dependent variable, FTAVOTE, is set equal to one if the legislator voted in favor of the FTA, and is set equal to zero if the legislator voted against the FTA. The independent variables represent four sources of influence: constituent ideological interests, party shirking, constituent preference violations due to party discipline, and constituent economic interests.

The first three sources of influence are all derived from the step 1 regression. Constituent ideological interests, CFIT, are represented by the predicted values of PROTRADE. The next two sources of influence, party shirking (defined as SHIRK) and constituent preference violations due to party discipline (defined as DISCP), are simply the disaggregated components of



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the residual from step 1. Their exact derivation was discussed earlier. The

remaining source of influence, constituent economic interests, is measured

by the set of variables described in Appendix B.

Organized labor and business groups were at the forefront of the FTA debate; the former opposed the FTA, while the latter supported it. Labor interests are captured by UNION and UNCONT, while business interests are captured by ESTAB, LGESTAB, and BUSCONT. However, lobbying by broad-based organizations was not restricted to these two groups. In particular, a broad-based coalition of social, environmental, religious, and ethnic

groups arose in Canada to actively oppose the agreement. OPPOSE captures the combined influence of these groups, and is expected to have a negative sign.

The remaining variables are more directly trade-related. EXDEPUS and IMPORTUS are control variables designed to measure the overall importance to the constituency of trade with the U.S. EXDEPUS is expected to be

positive, while the sign of IMPORTUS is indeterminate for the same reasons as the sign on IMPORTS is indeterminate in step 1 above.

The final two variables, FTAGAIN and FTALOSE, measure more precise- ly the lobbying influence of industries directly affected by the FTA. Indus- tries were assigned to FTAGAIN and FTALOSE based on an analysis of

transcripts of hearings before House of Commons committees investigating the FTA issue. Industries that lobbied in favor of the FTA are included in FTAGAIN, while industries that lobbied against the FTA are included in FTALOSE. The sign on FTAGAIN is expected to be positive, while the sign on FTALOSE is expected to be negative.

The results of the logit estimation are provided in Table 4. SHIRK is the only independent variable that is significant. In fact, it is sig-

nificant at the 1% level, while all other independent variables are insignificant at the 10% level, and most are insignificant at even the 40% level. Further- more, even with SHIRK as the only significant variable, the model has close to perfect explanatory power, as indicated by the McFadden R2 of .96.

The insignificance of everything but shirking in explaining FTA voting in Canada is particularly revealing when one considers that the FTA issue was one of the most debated, controversial, and publicized political issues in Canadian history. Even on an issue as important as the FTA, constituent interests had no significant effect on legislative voting. Thus, this is not simply the case where legislator ideology is but one of many variables significantly influencing FTA voting, as it has been in many studies of U.S. Congressional voting, but a case where ideology is the only variable significantly influencing FTA voting.



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Table 4. Canadian FTA regression results


1. UNION -4.96 -.62

2. ESTAB 61.77 .64

3. LGESTAB -1.53 -.04

4. EXDEPUS 2.48 .13

5. IMPORTUS .04 E-3 .14

6. OPPOSE -.51 -.10

7. FTAGAIN 3.62 .31

8. FTALOSE 10.03 .96

9 UNCONT -.75 E-5 -.14

10 BUSCONT .27 E-5 .77 E-2

11. CFIT 2.20 1.36

12. DISCP 1.61 1.13

13. SHIRK 3.77 3.89

CONSTANT -3.35 -.54

Likelihood ratio = 264.0

McFadden R2 =.96

% of right predictions = 1.00.

6. The source of party shirking

The empirical results show that shirking was the only significant explanatory variable in FTA voting in Canada. It was discussed how this shirking behavior was attributable to parties, and not to individual legislators, since the latter cannot directly control their voting behavior.

However, while legislators cannot independently choose their voting positions on specific issues, their personal preferences may still be at least par- tially served, albeit in an indirect manner. First, prospective politicians can choose which party they will join. Presumably, they will join parties whose existing ideological beliefs are closest to their own. Second, individual legislators may be able to influence the policy choices of the party to which they belong. Thus, even though party discipline may dictate that they follow the

party line, the individual legislator may have had input into the formation of that party line.

This subsection attempts to test the degree to which differences in party shirking reflects underlying differences in the personal ideologies of the legislative members of those parties. To do this, a model is constructed where the dependent variable is SHIRK. Recall that SHIRK is found by disaggre- gating the residuals from the step 1 regression. SHIRK measures the effect



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Table 5. Legislator ideology and party shirking


1. AGE -.24 -2.87

2. OCCBUS .62 2.18 3. OCCFARM .40 .91 4. OCCLAW .39 1.08 5. MALE -.17 -.50 6. EDBACH -.65 -2.07

7. EDMAST -1.05 -2.48

8. EDDOC -.86 -1.94 9. MARR .11 .36

10. CHILD .06 .87

11. RELNONE -.57 -2.10 12. CATH -.43 -1.84

13. JEWISH -1.36 -2.37 14. FUND .14 .23

CONSTANT 1.54 4.26

R2 = .22

R2 = .18 F = 4.57

of party shirking on the constituency, but to what degree does it also measure

shirking by that constituency's legislator? To answer this question, SHIRK is regressed on a series of independent variables used to proxy legislator ideology. The variables are defined in Appendix C.

The independent variables serve the same basic purpose as variables 1-6 in step 1 of the model (i.e., the control variables). Their inclusion assumes that differences amongst legislators in their personal characteristics proxy differences amongst those legislators in their ideological preferences (see Fort et al., 1993). However, due to the nature of the variables, no prior expectations are placed on their signs. The results of the regression are provided in Table 5.

The results indicate that about 20% of the variation in SHIRK across constituencies is explained by differences in legislator ideology. Since SHIRK varies primarily across legislators from different parties (rather than across

legislators from the same party), the results indicate that there is some coin- cidence of ideology between individual legislators and the parties they represent. That is, legislators are receiving some of the benefits of party shirking. Either because of their decision to join a party with similar ideology to themselves, or because of their ability to influence party policy once they join the

party, the ideological preferences of legislators are, at least in part, represented by the policies of the parties to which they belong.



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Table 6. Canadian FTA regression results with SHIRK disaggregated


1. UNION -4.51 -.57

2. ESTAB 44.69 .45

3. LGESTAB -.82 -.02

4. EXDEPUS .51 .03

5. IMPORTUS .10 E-4 .03

6. OPPOSE 1.03 .18

7. FTAGAIN 3.01 .25

8. FTALOSE 9.95 .94

9. UNCONT .15 E-5 .39 E-2

10. BUSCONT .38 E-6 .71 E-2

11. CFIT 2.15 1.35

12. DISCP 1.70 1.20

13. SHIRKLEG 4.53 3.13

14. SHIRKPART 3.67 3.85

CONSTANT -3.42 -.54

Likelihood ratio = 264.0

McFadden R2 = .96

% of right predictions = 1.00.

For example, a legislator who has pro-trade preferences would be more

likely to join the Progressive Conservatives, rather than the Liberals or New Democrats, since the former party's pro-trade ideology is much stronger than that of the latter two. Furthermore, a legislator with a pro-trade ideology is much more likely to be able to influence policy in his preferred direction in the Progressive Conservative party than in the Liberal or New Democratic

parties. The remaining 80% of the variation in SHIRK that is not explained by

legislator ideology must be explained by other forces within the party. The sources of party ideology are many, and include the party's leader, the party's Cabinet (or "shadow" Cabinet if the party is in opposition), the party's mem-

bership at large, and the party's non-elected directors, officials, and policy makers. It is the ideological preferences of these groups that is represented by the unexplained (80%) portion of the above regression.

Given that SHIRK has now been separated into two components, the regression explaining FTA voting was re-run to account for this disaggregation. The variable SHIRK in the original regression was replaced with two variables, SHIRKLEG and SHIRKPART. SHIRKLEG measured the fitted component of the above regression (i.e., it measures legislator-specific ideological inter-



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ests), whereas SHIRKPART measures the ideological preferences of all other groups within the party. The results of the regression are reported in Table 6.

The results indicate that both SHIRKLEG and SHIRKPART are significant. The significance of SHIRKLEG means that legislator-specific ideology did influence FTA voting, albeit indirectly. Legislators were not explicitly voting in accordance with their personal ideologies, since party discipline forced them to vote the party line. However, their personal ideologies were implicitly influencing FTA voting because these personal ideologies were, at least in part, consistent with the ideological positions of the party to which they belonged.

This latter point raises an interesting issue. The system of tight party discipline may actually benefit individual legislators to the extent it allows these legislators to shirk, and yet not have to suffer the blame for such shirking. If constituents complain to a legislator about his voting record, the legislator can sympathise with the constituents, but claim he is not responsible for the record since his voting patterns are completely dictated by the party. Howev- er, to the extent the legislator's ideological preferences are congruent with the ideological stance of the party, the legislator is capturing some of the benefits of party shirking.

The significance of SHIRKPART means that there are others in the party, besides the individual legislators, that are also benefitting from the shirking. Those that are able to influence party policy, such as the Prime Minister, Cabinet, the party membership, and the party's non-elected officials, are able to direct the policies to suit their ideological preferences.

7. Non-ideological shirking by parties

To extend the above discussion, SHIRKPART may not be entirely attributable to ideological shirking by those who influence party policy. Some of SHIRKPART may be caused by the very nature of Canadian parliamentary politics.

To explain, parliamentary politics is characterized by an extremely adversarial relationship between the parties. If the government brings forth a major piece of legislation, the opposition parties usually oppose that bill, regardless of the bill's content. Opposition parties do not carefully weigh the benefits and costs of the bill to their constituents before making a decision on whether or not they should support the bill; instead, their decision is much more auto- matic. These parties take the term "opposition" literally; they feel it is their duty to oppose government legislation, even if that legislation may, on net, be beneficial to their constituents.



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The econometric implications of such behavior are straightforward. First, consider that, with regard to PROTRADE, all fifteen votes that were used to derive the variable were pro-trade in nature, and all had identical party voting patterns. The government would introduce and support the bills, and the two opposition parties would automatically oppose the bills (except for one bill where the Liberals voted with the government). The result of this behavior, as was shown in an earlier section, is that the Conservatives (i.e., all legislators from the Conservative party) adopted an overall position that was more pro-trade than the preferences of their median constituents, while the two opposition parties (i.e., all legislators from those parties) adopted overall positions that were more protectionist than the preferences of their median constituents.

However, since voting on the FTA issues followed an identical pattern to voting on the bills comprising PROTRADE (i.e., all Conservatives voting in favor of the FTA and all opposition members voting against the FTA), SHIRK should be a very effective variable in explaining FTA voting. That is, the same group of legislators who shirked in favor of freer trade on the PROTRADE votes (i.e., Conservatives), were also the only ones who voted in favor of the FTA, and vice-versa.

8. Summary and conclusions

Constituent preferences violations in the Canadian Parliament have two sources: those which inevitably arise due to the system of party discipline, and those which arise due to the shirking of political parties. The party discipline forces individual legislators to frequently vote against the best interests of their constituents. This requirement results in constituent preference violations at the individual constituency level, but does not, in itself, imply that the legislator (party) is shirking. Parties shirk when they fail to adopt policy positions which are in the best interest of their median constituency.

Wide-scale shirking was, in fact, found in the policy positions of the parties. It was shown that this shirking element was the only significant variable influencing parliamentary voting on the FTA issue. Upon further analysis, it was discovered that a portion of this party shirking was attributable to underlying legislator ideology, but a portion was also attributable to the other actors who may influence party policy, and to the adversarial nature of Canadian parliamentary politics. This adversarial relationship leads opposition parties to oppose the policy proposals of the government, regardless of the effects of those proposals on the constituents of the opposition parties.

The causes of constituent-legislator slack in the Canadian Parliament imply that the major findings of the paper are likely not peculiar to the FTA case,



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but rather are common to a whole range of issues, both trade and non-trade related, which are put before Parliament. Further study is needed to determine whether this assertion is true.

Notes

1. Kalt and Zupan (1984) were the first to model the constituent-legislator relationship in a principal-agent framework. Their ground-breaking article has generated a wealth of sub- sequent research on the issue; research that has tested, extended, and critiqued Kalt and Zupan's original work. A remarkable consistency, however, throughout the literature is an almost exclusive focus on the U.S. Congress as the entity of study.

2. The agency theory literature has generally assumed that party discipline in the U.S. Congress is absent. However, some have challenged this notion that parties are unimportant. Coker and Crain (1994), for example, contend that a legislator's votes may be influenced by the preferences of party leaders. According to Coker and Crain, because party leaders control committee assignments, legislators seek to please these leaders in order to enhance the probability of gaining a favourable committee assignment.

Thus, Coker and Crain argue that the traditional agency theory approach to the constituen legislator link must consider a third force influencing legislator voting. Rather than view- ing legislator voting as being influenced only by the legislator's personal ideology and by constituent preferences, they suggest that the preferences of party leaders must also be considered.

3. "Free" votes (i.e., those votes where party discipline is not strictly enforced) are extremely rare in the Canadian Parliament. Only on issues that have strong "moral" overtones, such as abortion and capital punishment, do parties ever allow free votes to occur.

4. The importance of internal promotion rewards to creating strong party discipline is empha- sized by Franks (1987).

Franks notes that party discipline is much stronger in the Canadian Parliament than in the British Parliament. He attributes this difference, in part, to differences in the way cabinet appointments are valued in each of the two countries.

According to Franks, some backbenchers in Britain, particularly those in one of that country's many "safe" seats, are content to live the "quiet life" and serve on parliamentary committees, rather than to strive to become a cabinet minister. He contends that this moti- vation is much less present in Canada because Canadian MPs face shorter political careers (i.e., there are fewer "safe" seats), and because committee work in Canada is politically unrewarding.

He reasons that this greater importance Canadian MPs place on attaining a cabinet

position causes them to display greater loyalty to their parties. 5. During the reign of Brian Mulroney's Progressive Conservative government, three mav-

erick MPs were expelled from the Progressive Conservative caucus. 6. The only principal-agent relationship analyzed in this paper is one where constituents are

viewed as the principals and political parties are viewed as the agents. However, it is possible to identify other principal-agent relationships within the par-

liamentary system. For example, individual MPs can be viewed as agents for the political parties they represent. Given the complete party discipline that exists in Canada, it would seem that Canadian political parties are very effective in controlling the behavior of their agents. Analysing this relationship, however, is beyond the scope of this study, and is best left for a separate paper.

7. Numerous analyses of U.S. Congressional voting have also employed trade-related bills as the focus of study. See, for example, Marks (1993), Nollen and Iglarsh (1990), and Tosini and Tower (1987).



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References

Dyck, R. (1993). Canadian Politics. Scarborough, Ontario: Nelson Canada. Fort, R., Hallagan, W., Lamoreaux, D. and Stegner, T. (1993). Why Senators cannot vote ide-

ologically on abortion. Unpublished manuscript. Department of Economics, Washington State University, Pullman, WA.

Franks, C.E.S. (1987). The Parliament of Canada. Toronto: University of Toronto Press. Goff, B. and Grier, K. (1993). On the (mis)measurement of legislator ideology and shirking.

Public Choice 76: 5-20. Jackson, R.J., Jackson, D. and Baxter-Moore, N. (1986). Politics in Canada. Toronto: Prentice

Hall. Kalt, J. and Zupan, M. (1984). Capture and ideology in the economic theory of politics. Amer-

ican Economic Review 74: 279-300. Marks, S. (1993). Economic interests and voting on the Omnibus Trade Bill of 1987. Public

Choice 75: 21-42. Nollen, S.D. and Iglarsh, H.J. (1990). Explanations of protectionism in international trade

votes. Public Choice 66: 137-153. Tosini, S.C. and Tower, E. (1987). The Textile Bill of 1985: The determinants of congressional

voting patterns. Public Choice 54: 19-25.

Appendix A: Independent variables for Canadian "PROTRADE" equation

1. INCOME = the median family income in the constituency 2. URBAN = the percentage of the constituency's population residing in urban

areas 3. EDUC = the median years of education of the constituency's population 4 NDP = the percentage of the constituency's vote going to the New Demo-

cratic Party, above the national average, in the 1984 and 1988 federal elections combined

5. AGE = the median voting age of the constituency's population 6. WHCOL = the percentage of the constituency's workforce employed in white

collar occupations 7. UNION = the percentage of the constituency's workforce that belong to a labor

union 8. EXDEP = the percentage of constituency jobs that are export dependent 9. IMPSENS = the percentage of constituents employed in import sensitive

industries 10. IMPORTS = the per capita imports of the constituency 11. ESTAB = the per capita number of business establishments in the constituency 12. LGESTAB = the per capita number of large business Establishments (defined as

those employing at least 500 people) in the constituency

Note: Further information on data sources and methods is available from the author upon request.



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Appendix B: Variables measuring constituent economic interests in the Canadian FTA equation

1. UNION = the percentage of the constituency's workforce that belong to a labor union

2. ESTAB = the per capita number of business establishments in the constituency 3. LGESTAB = the per capita number of large business establishments (defined as

those employing at least 500 people) in the constituency 4. EXDEPUS = the percentage of constituency jobs that are dependent on exports to

the U.S.

5. IMPORTUS = the constituency's per capita imports from the U.S.

6. OPPOSE = the percentage of the constituency's population that belong to at least one of the coalition of interest groups opposing the FTA

7. FTAGAIN = the percentage of constituents employed in industries that lobbied in

support of the FTA

8. FTALOSE = the percentage of constituents employed in industries that lobbied against the FTA

9. UNCONT = the contributions to the legislator from unions since the last election

10. BUSCONT = the contributions to the legislator from business organizations since the last election

Appendix C: Variables measuring legislator ideology

1. AGE = the age of the legislator 2. OCCBUS = a dummy variable equalling one if the legislator had a career in

a business organization prior to his parliamentary experience; 0 otherwise

3. OCCFARM = a dummy variable equalling one if the legislator had a farming career

prior to his parliamentary experience; 0 otherwise

4. OCCLAW = a dummy variable equalling one if the legislator had a career in law

prior to his parliamentary experience; 0 otherwise

5. MALE = a dummy variable equalling one if the legislator is male; 0 if female

6. EDBACH = a dummy variable equalling one if the legislator's highest earned

degree is a bachelor's degree; 0 otherwise

7. EDMAST = a dummy variable equalling one if the legislator's highest earned

degree is a master's (or law) degree; 0 otherwise

8. EDDOC = a dummy variable equalling one if the legislator's highest earned

degree is a doctorate degree; 0 otherwise

9. MARR = a dummy variable equalling one if the legislator is married; 0 otherwise

10. CHILD = the legislator's number of children

11. RELNONE = a dummy variable equalling one if the legislator lists no religious affiliation; 0 otherwise

12. CATH = a dummy variable equalling one if the legislator is Catholic; 0 otherwise

13. JEWISH = a dummy variable equalling one if the legislator is Jewish; 0 otherwise

14. FUND = a dummy variable equalling one if the legislator belongs to a funda- mentalist religion (Baptist or Mormon); 0 otherwise



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