representation as agency and the pork barrel paradox

Public Choice 78: 3-21, 1994. © 1994 Kluwer Academic' Publishers. Printed in the Netherlands.

Representation as agency and the Pork Barrel Paradox*

T H O M A S SCHWAR TZ

Department o f Poh'tical Science, UCLA, Los Angeles, CA 90024

1. Introduction

Among the quirks of Congress that have exercised scholars, one of the most

puzzling is u n i v e r s a l i s m , the tendency of distributive legislation to command unanimous or near unanimous majorities. 1 Such legislation uses general revenues to finance water projects, rent subsides, school construction, or other separate benefits for the constituencies of the winning majori ty - to bake a pie and distribute slices to the bakers ' households. Unanimity on any issue would be remarkable enough: in the House, the unanimous majori ty is one of 2434 possible majorities, and those of 90 percent or more are fewer than 4.10 -17 of that total. Winning majorities are not random, of course. Often they are partisan (Weisberg, 1978), as well they might be in a body elected and organized by party label. Yet the majori ty party embraces the opposition on distributive issues. When not acting as party animals, congressmen sometimes fo rm region- al, sectoral, and other cross-cutting coalitions (Schattschneider, 1942), which

they can expand by vote trading. Once a majori ty is reached, however, there is no evident reason to keep expanding. Occasionally, I like to think, congress-

men act as Burkean trustees, sacrificing partisan and parochial interests for the wider public interest. Then one might expect unanimity or something close, but not distributive legislation. More frequently, perhaps, congressmen act as Burkean delegates, promoting the interests o f their several constituencies (Mayhew, 1974), par ty and public be damned. Then one expects a bounty of distributive legislation, but nothing like unanimity. Then, predicts Riker 's Size Principle, distributive issues should be decided by particularly small majorities: each of few households can 'have a bigger slice of pie than each of many. 2

* Thanks to Nathaniel Beck, Leonard Binder, Gary Cox, James DeNardo, Shale Horowitz, Gary 3acobson, Shefali Jha, Sam Kernell, Mathew McCubbins, Gary Miller, John Mulcaire, Douglass North, Peter Ordeshook, Ronald Rogowski, Norman Schoefield, George Tsebelis, Gordon Tul- lock, Michael Wallerstein, and Barry Weingast for comments on ancestral versions over the years. Research supported by NSF grant SES 8896228 and UCLA Senate grants.

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The puzzle is only aggravated by the conventional impression, captured in the epithet pork barrel, that distributive legislation is characteristically inefficient. 3 One explanation is fiscal illusion: the concentrated benefits of distributive legislation are more salient to voters than the diffuse costs (Buchanan, 1960: 59-64; Wagner, 1976; Goetz, 1977). That does not explain universalism, of course. If anything, a good explanation of universalism would help explain the persistence of fiscal illusion by accounting for the absence of a legislative opposition bent on exposing the illusion. Another explanation is that the concentrated beneficiaries of distributive legislation are better organized than the mass of taxpayers, who bear the cost (Wilson, 1973: 333-334). But under universalism the coalition of beneficiary representatives also represents all taxpayers, maybe not well but as well as may be. The unanimity (or voluntarist) school of political economy from Wicksell and Lindahl to Buchanan and Tul- lock attributes inefficient government spending to the external cost imposed by winning majorities on losing minorities. 4 But the unanimous majority responsible for the congressional pork barrel has no losers to exploit - whence the irony of this school's prescription of unanimity as the cure for public-sector inefficiency.

In a path-breaking essay whose debtors include this one, Barry Weingast (1979) deduces universalism from a rational-choice model based on John Rawls's (1971) "veil of ignorance" idea. But far from explaining inefficiency, he assumes efficiency. Far worse, he assumes that any nonunanimous winning majority would irrationally punish itself for not being unanimous. Hidden behind a veil of notation, this assumption is inherited by Fiorina (1981), Shepsle and Weingast (1981), and Niou and Ordeshook (1985).

Here I deduce the combination of universalism and inefficiency - the Pork Barrel Paradox - f rom a model of legislators as perfect agents of their constituencies: like an ideal employee, each seeks to maximize his marginal product for his employer-constituents - not their welfare, as in Weingast's model, but that portion of their welfare for which he is responsible. 5 This result helps identify the institutional prerequisites of the Pork Barrel Paradox, chief among which are the absence of a disciplined partisan majority and the absence of anti-careerist devices that would induce representatives to act more as exemplars than as agents of their constituencies. It also highlights a neglected problem of agency: several agents of different principals can together produce an outcome to which another is preferred by all principals, though there be no shirking, no uncertainty, and no want of coordination or cooperation by agents. It shows as well that direct and indirect democracy differ more deeply than had been thought. And it shows that recent studies of congressional shirking use misspecified models of legislative agency.

2. Weingast

Weingast and I share this picture: Reps. 1,2 . . . . . n are to choose an allocation of distributive benefits to their districts. Because it is hard to use floor motions

to cobble together a broad congeries of narrow benefits (and eary to sunder the

work by such means), distributive legislation is written and its support secured,

if at all, in advance of voting. 6 If a decisive group of representatives - a

majority or other group empowered to legislate - support a particular alloca-

tion, then that allocation is enacted and that group becomes the winning coali-

tion. Otherwise, no vote is taken and the allocation of zero to every district pre- vails by default.

Weingast assumes majority rule: a group of w legislators is decisive if and

only if w > n/2. He also assumes that every winner - every member of any

winning majority - receives the same benefit b for his district at a cost c that is shared equally by all n districts. And he assumes efficiency: b > c > 0.

For w winners, then, the total benefit is wb and the total cost wc, of which

each district's share is wc/n. So every winner nets b - w c / n for his district, every

loser - wc/n. Because c > 0, net winnings are negative in w: b - w c / n decreases

as w increases. Winners have an incentive, therefore, to keep w as small as

possible.

But Weingast assumes that legislators choose w before legislating and that they do so behind a "veil of ignorance." There, all have the same chance, w/n,

to be one of w winners, so each reackons his district's expected net benefit from any given w as follows:

probability of winning times net benefit to each winner plus probability of

losing times net benefit to each loser

W w c w w e - - - - ( b - - - ) + ( 1 - - - ) .

U n n n

wb W2C w e w 2 c

n n 2 n n 2

w = -- ( b - c).

n w

Because b > c, this expression is positive in w: -- ( b - c) increases as w in- n

creases. So every legislator wants w to be n. Thus universalism.

3. Criticism

This explanation is impaired by three questionable assumptions and ruined by

a fourth. One is that legislators choose the number of winners before they de-

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cide who wins how much of what. Weingast offers no evidence that real legislators have ever adopted this strange procedure and no reason why they would.

Another is that legislators make this choice in utter ignorance of their relative prospects. In Congress, however, the greenest freshman Democrat knows he is somewhat more likely than his Republican classmates to be on the winning side of a typical legislative vote, weak though party discipline may be. Distribu- tive votes are exceptions, but that is to be explained, not assumed. Shepsle and Weingast (1981) rule that the model and its universalistic consequence apply only to the majority party when a sufficiently disciplined one exists, not to the whole legislature. I do not know whether congressional parties are covered by this ukase, but in any case "majori ty-party universalism" is not universalism, not interesting, not found in Congress, and not what we set out to explain.

The third questionable assumption is efficiency: b > c. Granting that economic costs exceed economic benefits, Shepsle and Weingast (1981) argue that political benefits may still exceed political costs because local employment expenditures are economic costs but political benefits, part of b rather than c. What are those "expendi tures"? If they are salaries then they are economic as well as political benefits, and they have long epitomized the economic benefits of the pork barrel. If instead they are the taxes that pay for salaries then they are political as well as economic costs, and Shepsle and Weingast count them as such in their revised derivation of universalism. 7 Better to postulate that legislators discount c on account of fiscal illusion.

The ruinous assumption is that any nonunanimous winning majority would irrationally punish itself for not being bigger. Weingast assumes that a total benefit of nb is available but a winning majority of w < n members would allocate only wb: each member would willingly and inexplicably accept b for his district though he could have got the larger nb/w. No wonder legislators favor an n-fold winning majority.

One might quarrel that there could be some constitutional or technological impediment to allocating more whan wb to w < n districts. But that is no more than a logical possibility: rarely if ever have real legislators been thus con- strained.

One might quarrel that if each of w < n winners raised his district's benefit from b to nb/w, his district's cost also would rise, from wc/n to nc /n = c. But

nb wc his district's net benefit would rise as well: - - - c exceeds b - - - . For

w n

n > w a n d b > c

SO

n b - w c > 0

whence

n b - wc n b - wc

w n

that is

nb wc - - - c > b - - - w n

One might quarrel that the assumption of irrational behavior by nonunani-

mous majorities is not essential to the proof. But it is. For suppose that any

w-fold winning majority would act rationally and allocate the whole available

nb, letting every winner net nb /w - c and making every loser net - c. Now the expected net benefit from any given w is

w nb w - ( - - - c) + ( 1 - - ) . - c n w n

wnb wc wc - - C + - -

nw n n

= b - c .

Because b - c is independent of w, legislators behind the veil do not care how

big w is: all values of w have the same expected utility (b - c) for each of them.

They would not even set w = n to cope with uncertainty, for it is under maxi- mum uncertainty that they are indifferent between any two values of w.

4 . M o d e l

The promised model portrays Reps. 1,2 . . . . . n as perfect agents of their dis-

tricts: the goal of each is a max imum marginalproduct for his district. A sur-

geon seeking income prefers curably ill patients to healthy ones, and a legislator

bent on winning reelection is not concerned with his constituents' welfare as

such but with how much he himself has contributed to protecting or enhancing their welfare, with how big a difference his vote has made on their behalf.

The model does not assume majority rule or any other specific voting rule, though it presupposes that every group of n or n-1 legislators is decisive. Nor does it assume that costs and benefits are distributed according to Weingast 's egalitarian formula or in any other specific way.

Let L = [ 1,2 . . . . . n ] , and denote members of L by i, j, etc. An outcome is

an ordered n-tuple of non-negative real numbers. It represents a possible allocation of distributive expenditures to Districts 1,2 . . . . . n. Denote such numbers

by x, y, etc., and outcomes by x = (xl, . . . . Xn), Y = (Yl . . . . . Yn)' etc. Define:

W(x) = [ i l x ~ > o l .

If x is enacted then W(x) is the winning coalition. If x is the default outcome then W(x) is empty.

Distributive legislation concentrates benefits and diffuses costs. If x is enacted then District i receives expenditure x i and with it a benefit (welfare increment) Bi(xi) , which is the total benefit it receives and the total benefit produced by x i. But all n districts bear the cost (illfare increment) of x i, Cj(x i) being District j 's share. So the total cost borne by District i is EjCi(xj), the local benefit to District i (what it nets from xi) is Bi(xi)- Ci(xi), and the total net benefit enjoyed by District i is:

NBi(x ) = Bi(xi) - F~jCi(xj).

We may assume there is no cost or benefit without some positive expenditure (Bi(0) = Ci(0 ) = 0), which is locally efficient if small enough (Bi(x) > Ci(x) for some x). I f we further assume as usual that benefits increase in expenditures at a decreasing rate (B~ (x) > 0 > B~'(x)) while costs increase at a constant or increasing rate (C~(x) > 0 __< C~'(x)), this follows:

Bi(x ) _> Bi(0 ) = 0 = Ci(0 ) <_ Ci(x ), and some x > 0 uniquely maximizes Bi(x ) -Ci(x) .

(1)

Here it is enough to assume (1) without imposing more structure on B i and C i or saying more about their content: for all I care, B i and C i represent the merest conjectures by Rep. i, testable if at all in the electoral laboratory. 8

A legislator's maximand is his marginal product for his constituents, the positive difference his vote has made on their behalf. Let U i be Rep. i's utility function, and suppose x is the actual outcome. Then Ui(x) is Rep. i's marginal product for District i, the difference between NBi(x ) and NBi(Y) where y would have been chosen had Rep. i voted differently (so y = x if Rep. i had no effect); call y the i-alternative to x. Here we face a problem. Suppose Rep. i is a member of W(x) but not a necessary member: W(x) - { i } is still decisive. Then there are innumerable outcomes y for which W(y) = W ( x ) - [ i ] , hence innumerable outcomes y that might conceivably have been chosen had Rep. i voted differently. Depending on which such y qualified as the i-alternative to x, Ui(x) = NBi(x ) - NBi(Y ) could be anything. 9 To skirt this problem, I make two assumptions that merely constrain Ui(x) without defining it.

One is that a legislator's marginal product is never greater than it would have been had he been a dictator and is not even that great if he is not a winner. I f Rep. i were a dictator, his marginal product would be the whole net benefit enjoyed by District i, so he would choose an outcome that maximized NB i.

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Hence:

Suppose y maximizes NB i. Then

U i ( x ) < NBi(Y) , and Ui(x) < NBi(Y ) if i ~ W(x).

(2)

N o w suppose x is enacted and W(x) = L. Let y be the i -al ternat ive to x: y would have prevai led had Pep . i quit the winning coali t ion. Then Ui(x) =

NBi(x) - NBi(Y ) and Yi = 0. But because any g roup o f n - 1 legislators is decisive, Rep. i 's depar tu re f r o m L would have left a decisive g roup behind, and it is reasonable to suppose tha t none but District i would have lost any local benefi t thereby: Bj(yj) - Cj(yj ) ~ Bj(xj) - Cj(xj) whenever j ~ i. True, we cannot say exact ly wha t y is. Still we can say tha t s o m e y meets our condit ions:

I f W(x) = L then there exists a y fo r which

Yi = 0, Bj(yi) - Cj(Yi) >__ Bj(xj) - Cj(xj) for all j # i,

and Ui(x ) = NBi(x ) - NBi(Y ). (3)

A final a s sumpt ion is abou t the chosen ou tcome, which I call i :

Suppose tha t x meets these three condit ions:

(a) Ui(x ) >_ Ui(Y ) for all y, i, (b) Ui(x ) > Ui(Y ) for all y with W(y) ;~ W(x)

and some i, and

(C) NBi(Y 1 . . . . . Y i - 1,xi,Yi+ 1 . . . . . Yn) > NBi(Yt . . . . . Yi- Pz,Yi+ 1 . . . . . Yn) for all y , i , z ~ x i •

Then i = x.

(4)

Just because (a) - (c) are quite s trong, (4) itself it weak as solut ion assumpt ions go. Accord ing to (a), x is Pa re to op t imal and more: no legislator prefers any

ou tcome to x. Accord ing to (a) and (b), x Pa re to -domina te s every ou tcome in-

volving a di f ferent winning coal i t ion as well as the defaul t ou tcome if it be di f ferent f r o m x: W(x) is the P a r e t o - d o m i n a n t winning coali t ion. A n d according to (c), x gives every district a uniquely op t ima l al locat ion: regardless o f

wha t did or did not happen elsewhere, the denizens o f District i would oppose any unilateral change in x i, the very sort o f change tha t Rep. i might best be able to effect . Because no two ou tcomes can have this last p roper ty , (a) - (c) are satisfied uniquely if at all. But (4) does not say tha t i or any other ou t come satisfies ( a ) - (c). It only says tha t i f any ou tcome uniquely satisfies ( a ) - (c) then f~ does.

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5. Consequences

Thanks to the following consequence, (1) - (4) explain universalism:

W(:~) = L. (5)

In other words, the actual winning coalition is unanimous. An appendix con- tains proofs of this and other consequences.

Assumptions (1) - (4) also explain inefficiency:

Xi = argmax(Bi(x) - Ci(x))" (6)

So xi, the quantity allocated to Rep. i's constituents, is the very quantity they would themselves have chosen if the cost to them were merely Ci(J~i). But in fact the cost to them is EjCi(~j). Therefore, all n districts would have fared better had ~l . . . . ,~n all been lowered somewhat: ~ is Pareto inefficient for the set of districts.

But there is nothing voters can do about their plight. Rep. i's constituents can replace him. But if he or his replacement managed to change District i's allocation in any way while leaving the allocations to other districts unchanged, his constituents would be worse off:

NBi(~) > NBi(x ~ . . . . . Xi_l,Y,Xi+ 1 . . . . . Xn) for all y ~ xi- (7)

Perhaps Rep. i's departure from the winning coalition would somehow affect the allocations to other districts. But his constituents would still be worse off because his marginal product, the difference between his staying and his quit- ting, is positive for them:

Ui(~ ) > 0. (8)

Neither can Rep. i's constituents fault him for any measure of shirking. For his marginal product is as great as it could possibly have been:

Ui(~ ) _> Ui(Y ) for all y. (9)

6. Paradox

By dint of (9), ~ is Pareto efficient for Reps. 1,2 . . . . . n, though not for Districts 1 ,2 , . . . ,n. The short explanation of this apparent paradox is that a legislator and his constituents have different maximands. His is not their welfare but the

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amount he has added to their welfare, the difference he has made on their behalf, and a positive addition is compatible with a negative sum, a positive difference with a net loss.

Objection. Though District i's welfare (NBi) is not the same as Rep. i's marginal contribution to its welfare (Ui), to maximize the one is to maximize the other. That is obvious when Rep. i is not decisive. So suppose he is; say he de- cides between x and y. Then x and y are one another 's i-alternatives, and thus

Ui(x ) = NBi(x ) -NBi(Y ) and Ui(Y ) = NBi(y ) -NBi (x ). Hence, Ui(x ) > Ui(Y ) if and only NBi(x ) > NBi(Y), and likewise with x and y interchanged: whichever option maximizes U i also maximizes NB i.

Reply. That is true once an outcome is placed on the agenda and Rep. i must support or oppose it, choosing between it and its i-alternative (in case they be different). However, some outcomes would, if placed on the agenda, yield greater U i values but smaller NB i values than others would. Take an outcome y that would efficiently benefit a bare majority of districts including i. If placed on the agenda, it would pass, and District i would fare better than under ~: NBi(Y) > NBi(~). But Rep. i would fare worse: Ui(y) < Ui(~ ). For

U i ( ~ ) = Bi(:~i) -- Ci(:~i) , (lO)

and xi = argmax(Bi(x)- Ci(x)) according to (6). But because W(y) is a bare majority, the i-alternative to y is the default outcome, so

Ui(Y) = NBi(Y ) - 0 = Bi(Yi) - ~jCi(yj),

which plainly is less than Ui(i). Hence, legislators would fare better if i rather than y were placed on the agenda, but their constituents would fare worse. It is no long step to the conclusion that our legislature would evolve procedures to keep the likes of y of f the agenda, though without making any legislator bea r the responsibility for doing so.

To extract the sting of paradox, it may help to simplify our picture by im- agining two things: first that all districts have the same benefit and cost func- tions, B and C, and second that our legislature has evolved the procedure whereby every representative dictates his own district's allocation. So each chooses an allocation that maximizes B(x) - C(x). The result is ~, for ~i = argmax(B(x) - C(x)) according to (6). Because Rep. i dictated xi but had no say in any other district's allocation, his marginal product is Ui(~ ) = B(~i) - C(~i): he takes credit for the benefit enjoyed by his district while bearing no blame for his district's share, ( n - 1)C(:~i), of the cost of other districts' benefits. That is why the imagined procedure evolved. But every district would have fared better had all n allocations been lowered from xi = argmax(B(x) - C(x)) to x i = argmax(B(x) - nC(x)): NBi(x*) > NBi(~ ). Witness Table 1.

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Table 1.

B(x)

t

7. Agency

The Pork Barrel Paradox is attributable in part to the multiplicity of agents serving different principals. Consider five types of agency problem.

Type 1, one agent o f one principal. This is the standard principal- agent problem of two-person game theory: the principal finds it costly to monitor his agent's performance. But the Pork Barrel Paradox is compatible with costless monitoring.

Type 2, one agent o f several principals. This is the Arrovian social-choice problem (Arrow, 1963): the agent must translate the preferences of his several principals into one composite preference ordering to guide his actions. But the Pork Barrel Paradox can arise even when all of each representative's constituents have the same preference ordering, indeed even when each representative has but one constituent, as in the rotten boroughs of yore.

Type 3, several agents o f one principal. This reverse social-choice problem is the twin problem of moral hazard and adverse selection in the theory of the firm (Alchian and Demsetz, 1972), or equivalently, that of individual compliance and responsibility in ethics and law (Schwartz, 1985): in choosing and re- warding his agents, the principal must separate one agent's marginal product, his contribution to the total product, from those of others. Something several agents together produce a suboptimal product in a way that makes it hard to fix blame, to attribute shirking. Imagine two oarsmen rowing as in a sea of syrup. Challenged by their principal, each insists that he, at least, maximized his marginal product: "Had I alone rowed faster, the boat would have gone round in circles." Each did maximize his marginal product, given the other's behavior, but each would have had an even greater marginal product had both rowed at an optimal rate. Assuming no want of information or coordination, then, at least one agent must have shirked, though we cannot say which one absent evidence of intent. But in the legislative case, no agent shirked: none

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could have had a greater marginal product in any circumstance; so says (9). Type 4, several principals and several agents, each of all the principals. This

is just the last two problems combined. It arises most conspicuously when bureaucrats are agents of a legislature or whole polity.

Type 5, several agents of different principals. This, at last, is the Pork Barrel Paradox. It can arise even when the principals of each agent are as one preferentially and find it costless to observe both the total product and the agent's marginal product. The legislative and nautical cases both rest on a contrast between a team's product and each member's product. The essential difference between them is the difference between divided and undivided prin- cipalcy. By unilaterally reducing the inefficient xi = argmax(B(x)- C(x)) of the previous section to the efficient x~ -- argmax(B(x)- nC(x)), Rep. i would do his district no good because the cost to it of ~i is only C(£i), not nC(~i). But an undivided electorate would profit from that reduction because the cost to it of Xi would be nC(~i), not just C(~i).

8. Institutions

Do consequences (5) and (6) depend on assumptions that are sometimes violat- ed in representative democracies? Are any institutional prerequisites of the Pork Barrel Paradox mutable?

The implicit assumptions that ~ is feasible rules out any exogenously imposed budget ceiling lower than ~i(~i). But the U.S. Congress and other na- tional legislatures face no such ceilings, and those sometimes imposed on state and local legislatures constrain total budgets, not particular lines.

From the absence of any ceiling, however, one should not infer the utter want of fiscal discipline. The opportunity cost of spending on one type of distributive benefit is the reduction of resources for other types of distributive benefit, for nondistributive policy benefits, and for private investment and consumption. That puts downward pressure on -Ci (x ) and therewith ~i = argmax(Bi(x)-Ci(x)). So does principled opprobrium toward government spending. The model implies inefficiency, not calamity.

Because the permissibility of distributive legislation is essential to (5) and (6), a constitutional ban would block the Pork Barrel Paradox or (if airtight lan- guage proved elusive) reduce its incidence. A nice example is Art. I, Sect. 8 of the southern Confederate Constitution. This kosher clause revises Art. I, Sect. 8 of the U.S. Constitution by sticking the fecund sow of "general Welfare" and toppling the porcine pillars of Whiggery, protective tariffs and public works. The rub is that a parallel amendment to the U.S. Constitution would require two-thirds majorities in both houses of Congress, and even then it would not ban the newer cuts of pork (Stockman, 1975).

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What about the motivating assumption that representatives are perfect agents? I called them that because to call someone an agent sans phrase is to say nothing about his behavior. But the model itself is not so restrictive as my adjective. Since (1) says little about B i and C i, the benefits and costs measured thereby might attach to the whole of District i or to any of the innumerable majorities therein; they might be fairly or unfairly distributed, real or apparent, expected or actual; and they might consist in the satisfaction of mere whims, settled preferences, or " t r u e " interests. Assumptions (2) and (3) are weak enough, moreover, that we can variously interpret U i as actual, estimat- ed, or perceived marginal product. And unlike bureaucrats and assembly-line workers, legislators who maximize marginal product pay little in foregone

leisure. As we lately saw, the Pork Barrel Paradox does require a multiplicity of

agents serving different principals. It would not occur (though other anomalies might take its place) if there were no principals, no agents, one principal, or one agent. Let us examine each of these conditions.

Condition 1, no principals. Reps. 1,2 . . . . ,n are unelected peers, priests, philosophers, or whatnot. Even in a democracy, one might argue, this condition is well enough approximated to block the Pork Barrel Paradox if the acts of an elected assembly are subject to veto by an unelected upper house or an independent executive. But the power to veto distributive legislation is an in- valuable bargaining threat. As such, it has failed of its prized purpose once ex-

ercised. Condition 2, no agents, citizens vote directly on policy. The or thodox view

is that direct and indirect democracy would amount to much the same thing but for the coarseness of constituency divisions and the want of complete information all around. But the Pork Barrel Paradox, which afflicts only indirect democracy, does not require coarseness or incomplete information on any side: it can arise in a world of one-voter constituencies and universal omniscience. What it does require is indirectness itself, the intervening role of representatives. Indirectness itself significantly distinguishes indirect f rom direct democracy when nothing else does.

Although direct democracy is not practicable, Condition 2 might be approximated well enough if elected representatives were exemplars rather than agents of their districts, elected and reelected for their resemblance rather than their service to their constituents, for what they were like rather than what they had done or would do. 1° I f Rep. i were a perfect exemplar, he would maximize NB i rather than U i, voting much as his constituents would have voted in a referen- dum. One might contend that a House of Exemplars could not be elected unless candidates were effectively forbidden to tout their accomplishments and promise more. But tough term limits or other anti-careerist devices might well have much the same effect.

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A fashionable line of research investigates the extent of legislative shirking by asking how much of a legislator's voting record can be explained by constituency characteristics: the rest is supposed to evince shirking. 11 But this line confuses agency with exemplification: the voting record of a perfect agent will deviate systematically f rom that of a perfect exemplar, a perfect instatiation of constituency characteristics. A perfect agent can be counted on to vote his constituents' interests only when his vote makes a difference, and even then he will often vote for legislative packages his constituents find too costly.

Condition 3, one principal. This condition is fulfilled in a dictatorship with a subservient parliament. It is approximated well enough in a democracy when every legislator regards the whole electorate, not just one district or party or other division, as his constituency. But that is unlikely unless legislators are elected at large, each by a majority or large plurality, and that is practicable only in small polities.

Condition 4, one agent. This condition is satisfied when a tyrant is elected for a limited term, but also when a majority party or coalition is fully disciplined. Then, individual legislators are agents of parties, not of districts, and the partisan majority is itself a single agent of the whole electorate. 12 Dis- cipline is essential. For a caucus of likeminded district agents who were not compelled to vote as instructed would not be a single agent: voters could not hold it responsible for the whole public product. It is also essential that some disciplined bloc command a majority of seats. For if there were disciplined minority parties but no disciplined majority, we could reinterpret "Reps. 1,2 . . . . . n " as those parties and still derive (5) and (6). True, we could not then assume majority rule for "Reps. 1,2 . . . . . n . " But we never did. All we assumed was that any group of n or n - 1 representatives is decisive, and that is true when "representatives" are minority parties.

A system that produced a disciplined partisan majority would block the Pork Barrel Paradox, and among the practicable arrangements, it alone would do so absent anti-careerist reforms. 13 In Congress, therefore, we should observe universalism and inefficiency most when partisan voting is least. For universalism, that is exactly what Collie (1988) found.

Not that greater partisanship would perforce be good in all ways. Some may prefer inefficient universalism on grounds of equity. Well designed anti- careerist reforms promise a better mix of equity and efficiency than either of ~;hese alternatives.

Notes

1. The observation is made by Matthews (1960), Polsby (1968), Mayhew (1974: 88-113), and Collie (1988) for distributive legislation generally, by Schattschneider (1935) for the traditional tariff, by Maas (1951) and Ferejohn (1974) for public works, by Froman (1967: 44-45) for

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members' bills, by Plott (1968) for urban-renewal policy, by Manley (1970: 78-84) for tax policy, by Stern (1973: 298) for minerals policy, by Fenno (1973) for land-use policy, and by Stock- man (1975) for social and educational policy. Cox and Tutt (1984) find universalism in a local legislative body. Miller and Oppenheimer (1982) find it in experimental committees. Fiorina (1981) shows that committee reciprocity is universalism writ large (or larger). For the general concept of distributive legislation as well as the observation of overwhelming majorities, see Lowi (1964: 690-695). Wilson (1973: 327-345) refines Lowi's typology.

2. For the theoretical basis of this idea, see esp. Riker (1962), but also Gamson (1961), Leiserson (1970), Riker and Ordeshook (1973), and Ferejohn, Fiorina, and McKelvey (1987). Riker assumed a constant-sum game with side payments. But once the size of the pie has been chosen, the legislative game always becomes constant sum. And "side payments" are automatically available when the pie is divisible any which way (when the social opportunity set is convex); then they are the same as policy benefits. Riker's work has spawned a prodigious literature, supportive and critical; see Hinckley (1981) and Panning (1985: 670-673) for surveys of coalition theory. Apart from the literature on universalism (note 1), the critical literature on the Size Principle, such as Axelrod (1970), has not so much denied that a Rikerian tendency exists as it has affirmed that other factors also are at work: it still gainsays universalism.

3. Inefficiency is not directly observable, of course, but Ferejohn (1974: Ch. 1) makes a strong case on the basis of straightforward cost-benefit calculations. Because it rests on a plausible model that explains other observations, the explanation that I shall offer of the inefficiency of distributive legislation alsoserves as an argument that the inefficiency exists.

4. The classics of voluntarist public-finance theory are Wicksell (1962) and Lindahl (1962), origi- nally published in 1896 and 1919, resp. Where these are about tax schemes, Tullock (1959) and Buchanan and Tullock (1962) change the focus to voting rules.

5. In effect, Schwartz (1983) and Niou and Ordeshook (1985) contend that the marginal-product idea explains universalism, but neither offers a hard, general result. Both argue that legislators who maximize marginal product prefer unanimous majorities to bare ones. Schwartz then falls back on a host of informal considerations to rule out intermediate majorities. Niou and Or- deshook simply ignore intermediate majorities by postulating that each legislator adopts a strategy favoring either minimal or maximal majorities. That suits their limited purpose, however, which is to show how sensitive universalism and inefficiency are to strategic assumptions. The idea that politicians maximize marginal product goes back at least to Fiorina and Noll (1978). It is similar to Mayhew's (1974) celebrated reelection hypothesis, of which my model might be regarded as a partial formalization.

6. Fiorina (1981: 204-206) nicely develops this point. By contrast, Ferejohn, Fiorina, and McKel- vey (1987) investigate noncooperative strategic voting on distributive legislation with unres- tricted floor motions, deriving the Size Principle.

7. McCubbins and Sullivan (1984) and Niou and Ordeshook (1985) make much the same point by charging Shepsle and Weingast with double counting of benefits. Tullock (1982) had raised this objection to Weingast, Shepsle, and Johnsen (1981).

8. But (1) implicitly assumes that argmax(Bi(x)- Ci(x)) does not depend on ambient factors, such as other costs and benefits borne or enjoyed by District i, and the definition of NB i implicitly assumes that there are no spillover benefits and that costs are additively separable. It is certainly worth investigating how these assumptions might be generalized. The problem is very like that of moving from partial to general equilibrium (from a solution to y = argmax(Bi(x ) - Ci(x)) to a set of n simultaneous solutions to Yi = argmax(Bi(x) - Ci(x)- ]~j¢i Ci(Yj) ) with certain complementarities allowed). It is best to start with the partial case.

9. This problem is an instance of the notorious philosophical problem of interpreting counter- factual conditionals (had X happened, Y would have happened). The classic text is Goodman (1965).

17

10. In the apt argot of Pitkin (1967), agents "act for"; exemplars "stand for ." I I. Kau and Rubin (1979), Carson and Oppenheimer (1984), Kalt and Zupan (1984), Netter (1985).

Shirking is equated with on-the-job consumption, often in the form of ideological gratifi- cation.

12. One might contend that a disciplined partisan majority is an agent, not of the Whole electorate, but of some targeted majority therein. One might have said the same, however, of district agents. The issue is verbal.

t3. There is a nice parallel here to Atchian and Demsetz's (1972) celebrated argument that agency problems in team production are best solved when there is a central principal, a common con- tractor and residual claimant, the owner of the classical firm.

References

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Froman, L.A., Jr. (1967). The congressional process: Strategies, rules and procedures. Boston: Little, Brown.

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Goodman, N. (1965). Fact, fiction, and forecast, 2nd ed. Indianapolis: Bobbs-Merrill. Hinckley, B. (1981). Coalitions andpotitics. New York: Harcourt Brace Jovanovich. Kalt, J. and Zupan, M. (1984). Capture and ideology in the economic theory- of politics. American

Economic Review 74: 279-300.

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Kau, J. and Rubin, P. (1979). Self-interest, ideology, and logrolling in congressional voting. Jour- nal o f Law and Economics 22: 365-384.

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Lindahl, E. (1962). Just taxation - a positive solution. Trans. from German by E. Henderson. In R.A. Musgrave and A.T. Peacock (Eds.), Classics in the theory of public finance, 168-176. New York: Macmillan.

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ty and Quantity 18: 299-319. Manley, J.F. (1970). The politics o f finance. Boston: Little, Brown. Matthews, D.R. (1960). U.S. Senators and their world. New York: Vintage. Mayhew, D.R. (1974). Congress: The electoral connection. New Haven: Yale University Press. Miller, G.J. and Oppenheimer, J.A. (1982). Universalism in experimental committees. American

Political Science Review 76: 561-574. Netter, J. (1985). An empirical investigation of the determinants of congressional voting on federal

financing of abortions and the ERA. Journal o f Legal Studies 14: 245-257. Niou, E.M.S. and Ordeshook, P.C. (1985). Universalism in Congress. American Journal o f Politi-

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and M.E. Jewelt (Eds.), Handbook o f legislative research, 669-697. Cambridge, MA: Harvard. Pitkin, H. (1967). The concept o f representation. Berkeley: University of California Press. Plott, C.R. (1968). Some organizational influences on urban renewal decisions. American Eco-

nomic Review 58: 306-311. Polsby, N.W. (1968). The institutionalization of the House of Representatives. American Political

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Cliffs, NJ: Prentice-Hall. Schattschneider, E.E. (1935). Politics, pressures, and the tariff. Englewood Cliffs, NJ:

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tion. American Journal o f Political Science 25: 96-111. Stern, P.M. (1973). The rape of the taxpayer. New York: Random House. Stockman, D. (1975). The social pork barrel. The Public Interest 39: 3-30. Tullock, G. (1959). Problems of majority voting. Journal of Political Economy 67: 571-597. Tullock, G. (1982). The political economy of benefits and costs. Journal of Political Economy 90:

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Weingast, B.R., Shepsle, K.A. and Johnsen, C. (1981). The political economy of benefits and costs: A neoclassical approach to distributive politics. Journal o f Political Economy 89: 642-664.

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Appendix

Assume (1 ) - (4); to deduce (5 ) - (10). Thanks to (1), we may construct x* so that

x~ = argmax(Bi(x)- Ci(x))

whence

Bi(x i ) - Ci(xi) > Bi(Y ) - Ci(Y ) Vy ~ x i

and thus

Bi(J~* ) - Ci(x1) - ~j;~ifi(zj) > Bi(Y ) - Ci(Y ) - ~j~iCi(zj) Vy ~ x~ Vz

that is

NBi(z 1 . . . . . Zi_l,X~,Zi+ 1 . . . . . z n) > NBi(z 1 . . . . . Zi_l,Y,Zi+ 1 . . . . . Zn) Vy ~ Y~* Vz.

In particular,

NBi(x* ) > NBi(x ~ . . . . . x~ l,Y,Xl+l . . . . . Xn) Vy ~ x~.

But according to (1), x~ > 0 and Bi(0 ) -C i (0 ) = 0. By (A), then,

B~(xD - Ci(xD > o.

And because x~ > 0 for all i,

W(x*) = L.

It follows from (3) and (E) that for every i there exists a y for which

Y i = 0

Bj(yj) - Cj(yj) _> Bj(xj) - Cj(xi)vj ~ i

and

(A)

(B)

(c)

(D)

(E)

(*)

(**)

20

Ui(x* ) = NBi(x* ) - NBi(y )

that is

Ui(x* ) = Bi(x~) - ~jCi(x;) - [Bi(Yi) - ZiCi(Yj) 1.

But f rom (A) and (**) we have

yj = x ~ v j ; ~ i

so y = (x~ . . . . . X*_l,0,X~+l . . . . . X~

whence

Ui(x* ) = Bi(x~) - ~iCi(xi*) - [Bi(0 ) - Ci(0 ) - Ej~iCi(xj*)l

= B i ( ~ ) - G(x~) - ~j~iCi(x~ - o + o + ~j~iQ(x~

and thus

***)

by (*)

by (***)

by (1)

U i ( x * ) = B i ( x D - c i ( x ~ ) . (F )

For any x, let Zi(x) be the outcome whose ith coordinate is x and whose others are all 0. Then

for all y, i,

NBi(Zi(x~')) > mBi(Zi(Yi) ) by (B)

= Bi(Yi) - Ci(Yi) - Ci(0 ) _ Bi(Yi) - Ci(Yi) - ]2jgiCi(Yj) by (1) = NBi(Y ).

Tha t is, Zi(x~) ~ argmax(NBi(Y)). By (2), then, for all y, i,

Ui(Y) -<- NBi(Zi(x~))

and Ui(Y ) < NBi(Zi(~)) if i ~ W (y).

But NSi(Zi(x~)) = Bi(xi*) - Ci(x*) - Ci(0) = Bi(x~' ) - Ci(x~) by (1) = Ui(x* ) by (F)

Consequent ly ,

Ui(y ) < Ui(x* ) for all y, i (G)

and

Ui(Y ) < Ui(x* ) for all y and i ~ W(y)

whence

Ui(y ) < Ui(x* ) for all y with W(y) ;~ W(x*) and some i. (H)

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According to (O), (H), and (B), x* satisfies (a) - (c) of (4). So i = x*. Substituting i for x*, we have

W(i) = L

"~i = argmax(Bi(x) - Ci(x))

NBi(x) > NBi(Xl,'" ",Xi-l ,Y,~+l . . . . . X'n) Vy ~ x i

Ui(~) > 0

Ui(~) > Ui(Y ) Vy

and Ui(~ ) = Bi(~i) - Ci(~i)

That is, ( 5 ) - (10) hold.

from (E)

from the definition of x*

from (C)

from (D), (F)

from (G)

from (F)

representation as agency and the pork barrel paradox

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