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The Democracy Effect: a weights-based estimation strategy
Pedro Dal Bó1, Andrew Foster2, Kenju Kamei3
1Brown University and NBER.
Journal of Economic Behavior & Organization
|August 13, 2025
Summary
Democracy can enhance policy effectiveness compared to imposed policies. A new estimation strategy, using population prevalence weights, simplifies analysis and eliminates selection effects under specific conditions.
Area of Science:
- Behavioral economics
- Experimental economics
- Political economy
Background:
- Democratic policy selection may yield greater effects than exogenous imposition.
- Previous estimation strategies require detailed voting data from exogenous treatments.
Purpose of the Study:
- Introduce a simpler estimation strategy for the democracy effect.
- Eliminate selection effects in estimating policy effectiveness under democracy.
- Apply the new strategy to existing and novel experimental data.
Main Methods:
- Develop a weights-based estimator using population prevalence.
- Derive the statistical distribution of the new estimator.
- Apply the estimator to Dal Bó et al. (2010) data and a new experiment.
Main Results:
- The new strategy simplifies estimation by removing the need for exogenous treatment vote data.
- A significant democracy effect was found in the Dal Bó et al. (2010) data.
- No significant democracy effect was detected in the new experimental data.
Conclusions:
- The weights-based estimation strategy is a viable alternative for analyzing democracy effects.
- The democracy effect's presence may depend on experimental design and data availability.
- Further research can explore the conditions under which selection effects are eliminated.
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