The Locke Institute series
Edited by Ram Mudambi, Pietro Maria Navarra and Giuseppe Sobbrio
Chapter 4: Institutions Matter for Procedural Utility: An Econometric Study of the Impact of Political Participation Possibilities
Alois Stutzer and Bruno S. Frey* 1. INTRODUCTION Comparative institutional analysis judges institutions according to their contribution to human welfare. In economics, human welfare is normally evaluated by looking at individual income or measures such as the gross domestic product. Thus standard analysis only considers the outcome of different mechanisms of decision making. It neglects that people partly judge the process of decision making independent of the outcome. In addition to this alternative conceptual view referring to procedural utility, direct measures of subjective well-being offer new opportunities for empirical research of individual welfare. Here procedural utility reaped from democratic decision making is theoretically discussed and empirically identified. Procedural utility goes beyond the utility gained from the favourable outcome that is generated by democratic institutions. A fundamental characteristic of democracy is the involvement of citizens in political decision making. Citizens have the possibility of participating in politics and thus the public or political sphere becomes responsive to them. This empowerment (see for example World Bank, 2000) is hypothesised to increase citizens’ belief in political influence and, moreover, their subjective well-being. In a cross-regional study for Switzerland, the effects of direct democratic * Address: Institute for Empirical Research in Economics, University of Zurich, Blümlisalpstrasse 10, CH-8006 Zurich, Tel.: 0041–1–634 37 29, Fax: 0041–1–634 49 07, Email: firstname.lastname@example.org, email@example.com. We thank Matthias Benz and Reto Jegen and the participants of the second Messina Conference for valuable comments. This study has been realised using the data collected by...
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