Survey Proposal

Electoral Systems. A Survey and anApplication to the Italian Case1

Sandro Brusco2

Comments welcome.

August 2008

1Manuscript prepared for the conference ‘Riformare l’Italia. Una cosprazioneliberista’, organized by the blog noisefromamerika.org and held at Villa La Pietra,Florence, July 3-4 2008. I would like to thank Gianfranco Pasquino, GiovanniGuzzetta and all the participants to the conference for useful comments on aninitial draft. New York University provided much appreciated logistic and financialsupport. The opinions expressed in this manuscript, as well as all the remainingmistakes, are the sole responsibility of the author.

2Department of Economics, State University of New York at Stony Brook. E—mail: [email protected]

Contents

Preface ix

1 Introduction 1

2 Electoral Systems in Practice 72.1 Proportional vs. Majoritarian . . . . . . . . . . . . . . . . . . 82.2 ‘Ordinal’ or ‘Preference’ Systems . . . . . . . . . . . . . . . . 8

2.2.1 Main Preference Systems . . . . . . . . . . . . . . . . . 92.2.2 An Example . . . . . . . . . . . . . . . . . . . . . . . . 10

2.3 Mixed Systems . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3 Political Consequences 153.1 The Number of Parties . . . . . . . . . . . . . . . . . . . . . . 16

3.1.1 Duverger’s Law and FPTP . . . . . . . . . . . . . . . . 163.1.2 Other Electoral Systems . . . . . . . . . . . . . . . . . 19

3.2 Empirical Evidence . . . . . . . . . . . . . . . . . . . . . . . . 203.3 Electoral Systems and the Left—Right Divide . . . . . . . . . . 21

4 Economic Consequences 254.1 Public Spending . . . . . . . . . . . . . . . . . . . . . . . . . . 25

4.1.1 Composition of Public Spending . . . . . . . . . . . . . 264.1.2 Level of Public Spending . . . . . . . . . . . . . . . . . 27

4.2 Redistribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.3 Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

5 The Italian Case 335.1 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335.2 The Current Situation . . . . . . . . . . . . . . . . . . . . . . 35

v

vi CONTENTS

5.2.1 Lower House . . . . . . . . . . . . . . . . . . . . . . . . 365.2.2 Senate . . . . . . . . . . . . . . . . . . . . . . . . . . . 375.2.3 Regions . . . . . . . . . . . . . . . . . . . . . . . . . . 385.2.4 Towns and Provinces . . . . . . . . . . . . . . . . . . . 38

6 A Proposal for Reform 416.1 Instant Runoff Voting . . . . . . . . . . . . . . . . . . . . . . . 426.2 Details of the Proposal . . . . . . . . . . . . . . . . . . . . . . 446.3 Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466.4 The Political Consequences of IRV . . . . . . . . . . . . . . . 476.5 The Economic Consequences of IRV . . . . . . . . . . . . . . . 506.6 Why IRV is Better than the Alternatives . . . . . . . . . . . . 516.7 Why IRV is Possible . . . . . . . . . . . . . . . . . . . . . . . 52

Preface

This document presents an overview of the main theoretical and empiricalresults existing on the literature on electoral systems. We analyze both theconsequences on the political system and the ultimate effects on economicpolicy that different electoral systems have.We then provide a discussion of the Italian case, looking both at the

history of electoral reform in the country and at the current situation.The current Italian situation is highly unsatisfactory, as the system has

neither the benefits of the majoritarian nor of the proportional system. Re-forming the electoral rules is crucial in order to improve the quality of theItalian political system. We argue that the introduction of the a preferen-tial voting system similar to the one currently used for the Australian LowerHouse is the most preferable choice. Furthermore, given the results of the2008 political elections, a reform in this sense seems to be possible.

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Chapter 1

Introduction

Electoral systems have the task of aggregating social preferences in order tomake public choices. Ultimately those choices (how much we are taxed, howmuch we spend on education, pensions etc.) are what really matters, butthe occasions in which the citizens are actually called to choose directly thepolicies implemented are very few. Modern democracies are representativedemocracies, and the role of citizens is largely confined to the choice of theirrepresentatives. The hope, of course, is that the choice of a given represen-tative is linked in a stable and predictable way to the choice of policies.1

Ideally, we would like to design electoral systems so that they are able toproduce ‘good’ results under a wide range of scenarios. We have been know-ing for quite some time that this perfect ideal cannot be achieved. Whenwe allow for full generality in the number of alternative candidates and thepreferences of citizens about the candidates, Arrow’s theorem (see Arrow [2])establishes that it is impossible to aggregate social preferences in a way thatsatisfy some very reasonable and widely accepted axioms; more of interestfor our topic, the Gibbard-Satterthwaite theorem (see Gibbard [45] and Sat-terthwaite [75]) establishes that it is impossible to elicit the preferences of thecitizens in a straightforward and truthful way. This leads to the conclusionthat there is no way in which we can find a perfect electoral system thatfits all countries and periods. All electoral systems generate their share ofparadoxes and undesirable outcomes (see Saari [73] for examples).

1There is a vast literature devoted to the analysis of legislative games. Since our focusin on electoral systems we will ignore this literature, taking for granted that there is astable relationship between the composition of the legislatures and social decisions. SeeBanks and Duggan [8] for a recent paper on legislative games.

1

2 CHAPTER 1 INTRODUCTION

This means that, when choosing electoral systems, empirical and histori-cal consideration will have to enter the calculus. All solutions are inevitablysecond—best, and solutions change depending on the particular character-istics of the industry under consideration. The consequence is that, whendiscussing electoral reform in a given country, it becomes imperative to con-sider carefully the general institutional structure and the political cultureand tradition of that country. Consider for example the traditional trade—off between accountability, commonly associated to majoritarian systems,and consensus—building, commonly associated to proportional systems. Apolity with very deep ethnic or social divisions may well decide that avoid-ing power—grabbing by a single group, an event that may trigger civil strifeand unrest, is well worth the cost of having less accountable legislators. Thepolity may therefore prefer a proportional system. Less divided polities mayinstead place a lower value on avoiding even temporary dominance by a singlegroup, so that the greater accountability afforded by a majoritarian systembecomes the most important criterion in the selection of an electoral system.From an economist’s point of view, the situation is very similar to the

one faced when evaluating the optimal regulation of imperfectly competitivemarkets. Most of the times, in such markets the first best is impossibleto achieve, yet sound economic analysis and careful empirical studies canprovide a solid understanding of what can and should be done to improvemarket outcomes. To reinforce the previous point, the optimal regulatoryintervention (or lack of it) changes depending on the characteristics of themarket; similarly, the optimal electoral system may change depending onthe characteristics of the polity. The rational choice approach to electoralbehavior has therefore tried to establish more precisely what are the featuresof the electoral systems which turn out to be crucial in terms of the outcomesproduced. Different systems provide different incentives, both for politiciansand voters. Usually incentives shape behavior in a pretty straightforwardway; understanding exactly what incentives a given electoral system provides,however, may not be an easy task.Of course the analogy is not perfect and the study of electoral systems

differs from the study of imperfectly competitive markets in some importantways. The first is that, by and large, economists have pretty clear ideas aboutwhat goal a market regulator should pursue: some combination of consumersurplus and producer surplus. This is not necessarily the case for politicalscientists, who may have in mind multiple and diverse objectives that anelectoral system should achieve and, when reasoning on how to optimally

3

design an electoral system, have therefore to engage in the painful calculationof the trade-offs.The second important difference is that in the analysis of imperfect mar-

kets the actors (the firms) and their goals (profit maximization), are usuallywell defined. When analyzing electoral systems, who are the relevant actors?Both voters and politicians in principle qualify, but often it makes sense toconsider only politicians. The objectives of politicians may vary, going frompure office—seeking to the implementation of specific policies. People with dif-ferent goals will react differently to the incentives provided by the electoralsystem.Since in this paper I will offer some recommendation about how to change

the Italian electoral system, at least some brief explanation of the behavioralmodel that I will consider and the social objectives that I will propose pursu-ing is in order. My hypothesis is that the main actors to be considered are themembers of the political elites; most voters tend to behave passively (or, toput a more positive spin on it, ‘sincerely’), casting their ballot for the partythat they feel closer to their positions. In other words, I will ignore strategicbehavior on the part of voters, assuming that the only relevant strategic ac-tors are career politicians (see Degan and Merlo [28] for a discussion of theempirical validity of sincere voting).Members of the political elite may have diverse motivations. Some are

simply guided by the desire to maximize power, as in the standard Downsianmodel, while others are moved mostly by their ideological preferences, as incitizen candidate models. Figuring out exactly who wants what is an hopelesstask, but fortunately enough in many cases the exact motives are not reallyimportant to understand how politicians react to different electoral rules.For example, the prediction that a proportional system will induce moreentry than a majoritarian system should hold no matter what the goals ofpoliticians are. At the end of the day the goal of a politician should be tomaximize power; the exact reason for that, be it pure enjoyment of poweror a strong ethical motive to do the right thing, is not really important toexplain electoral behavior (although it may be important in explaining theparticular policies selected by the politician).Representative democracies are the quintessential example of a principal—

agent model, where voters are the principals and politicians are the agents.Given the pervasive presence of asymmetric information it is inevitable thatthe agents will earn rents and I will assume that one of the goals of society isto minimize those rents. Another goal is to have a varied and ample offer of

4 CHAPTER 1 INTRODUCTION

political options at low cost. By this I mean that the polity is interested inhaving a wide menu of choices and the possibility of actually implementingthose choices. Thus, to put it in the simplest possible way, the goal thatI will have in mind when thinking about the reform of the Italian politicalsystem is to maximize the diversity of actually feasible political choices whileavoiding to pay high incentive rents to politicians.I emphasize that we should be interested only in choices which are actu-

ally feasible and implementable. In fact, an important issue in the analysisof electoral reform is that maximizing entry into a political system is notnecessarily an optimal policy, as it is instead often the case in the analysisof imperfect markets. Excessive entry may impair the decision process andactually reduce the set of feasible political options, increasing the costs forthe polity. For example, if the electoral system foster the entry of manysmall parties which can achieve parliamentary representation, then the onlyfeasible political choice becomes the formation of heterogeneous coalitiongovernments who can only agree on preserving the status quo. This meansthat, although the voter can choose among many different parties, the realchoices in terms of actual policies are quite limited. On the other hand,putting excessive obstacles to entry may increase enormously the rents ofpoliticians, insulating them from effective competition and making them lessresponsive to the desires of voters. When designing an electoral system, thiscrucial trade—off has to be taken into account.In the following I will propose a selective survey of the theoretical and

empirical literature on electoral systems. I will then build on those resultsto discuss a proposal for reforming the Italian electoral system. The surveyis not meant to be exhaustive, this is next to impossible given the sheer sizeof the literature, and in fact some topics been completely ignored. I havetried to concentrate on those issues that, in my opinion, appear to be mostrelevant for the Italian case. Even so, I have been forced to exclude, simplybecause of time and space limitations, a couple of issues which may acquiresome relevance in the not-too-distant future. The first is the issue of electoralparticipation and turnout (see Feddersen [35] and Dhillon and Peralta [29]for recent surveys on the subject). Italy has always had very high turnoutrates, but it is quite clear that different electoral system have an impact onvoters’ participation. The ramifications of this fact may be important, butare not discussed here. Second, I will not discuss problems related to therepresentation of ethnic minorities (see Grofman, Handley and Niemi [49] fora general introduction and Trebbi, Aghion and Alesina [79] for more recent

5

work on the issue). This has never been a serious problem in Italy, a countrywhich up to now has remained ethnically and religiously quite homogeneous,but this is going to change in the future.The rest of the manuscript is organized as follows. The next chapter looks

at the main electoral systems that have been used in the world and the mainvariables that determine the performance of an electoral system. Chapter3 discusses the political consequences of different electoral systems, in par-ticular the number of parties and the political positions that they express,both from the theoretical and from the empirical point of view. Chapter 4performs a similar task, looking this time at the economic consequences ofelectoral systems. Chapter 5 describes the evolution of electoral systems inItaly after the unification and the different systems currently used at differentlevels of government. Finally, chapter 6 is dedicated to a proposal for reform.We argue that, given the current state of Italian politics, the adoption of pref-erence system such as Instant Runoff Voting (also called Alternative Vote)used in the Australian Lower House is likely to produce beneficial effectsboth in political and economics terms. The system also appears to be in theinterest of the main forces currently represented in the Italian Parliament.

Chapter 2

Electoral Systems in Practice

The main job of an electoral system is to map distributions of votes intodistributions of parliamentary seats. In general terms a vote is any (possiblypartial) representation of the preferences of a voter over the set of candidates.Thus, the space of possible electoral systems is the set of mappings from thepreferences of the voters to the assignment of seats. This is a huge space andan exhaustive analysis of all possible electoral systems is beyond the scopeof this work. Most of the theoretical and empirical literature on electoralsystems has tried to focus on what are the most important aspects of theelectoral systems which have been used in practice. Theoretical models ofelectoral systems, in particular, have explored at some length only the simplerelectoral systems, especially First-Past-the-Post (FPTP).Most electoral systems divide the polity in sub-units (districts), usually

based on geographic criteria1 and allocate the representatives to the differentdistricts. Voters are assigned and they select only the district representa-tives. Systems of this sort tend to be easier to analyze; each district can beconsidered separately. There are however a number of other electoral rulesthat may be superimposed on the districts’ choices. One of the most commonis the presence of thresholds for representation, in the form of a minimumpercentage that a party has to achieve in order to gain parliamentary repre-sentation, but there are many others. Going into the details of the differentelectoral systems used in the world would consume too much space; the in-terested reader can consult Colomer [19] and Pasquino [65] (see also Sartori

1Rarely, other factors may be used. In New Zealand, for example, there are seatsreserved to the Maori population, adding an ethnic dimension to the geographical one.See Nagel [60].

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8 CHAPTER 2 ELECTORAL SYSTEMS IN PRACTICE

[74]). Here I will concentrate on the topics which are of more immediateinterest to the issue of electoral reform in Italy.

2.1 Proportional vs. Majoritarian

One of the most important characteristic of an electoral system is its degreeof proportionality, i.e. how close the share of seats won by each party isto the share of the votes that the party has obtained. When looking atthe structural characteristics of an electoral system that have an impacton the degree of proportionality, the most prominent variable appears tobe the district size. It is often argued that a larger district size induces amore proportional representation; we go from the extreme of single—memberdistricts to the opposite extreme of a single district with a number of membersequal to the entire Parliament. It is trivially true that for a given numberof candidates and distribution of votes, a larger district size induces moreproportional representation. But, at least in the long run, we should expectsome feedback from the electoral system to the number of parties and thepolitical positions that they take, and this may complicate the relationshipbetween district size and the degree of proportionality. For example, if FPTPsystem induces a two-party system with parties located close to the medianof voters’ preferences, the share of seats of each party will be quite close tothe share of the votes. On the other hand, with more than two parties oran unequal distribution of votes across districts the results of FPTP may bevery different from proportionality. The long-run effect of district size on theparty system is one of the main research topics political science. We willdiscuss it more at length in chapter 3.

2.2 ‘Ordinal’ or ‘Preference’ Systems

Electoral systems may differ in the degree to which they allow voters toexpress their complete preferences among candidate. Many electoral systems,such as FPTP and closed-list proportional, only allow the voter to state thetop-preferred candidate or party. Other electoral systems however let votersto express their preferences in a more complete way. i.e. they try to use ina more complete way the vector of preferences of each voter.

2.2 ‘ORDINAL’ OR ‘PREFERENCE’ SYSTEMS 9

2.2.1 Main Preference Systems

Among the systems that are currently used, we have:

• Majority runoff. Candidates run in single—member districts. A candi-date is elected if he or she obtains at least 50% of the votes. If not,a subset of candidates move to a second round, where the most votedcandidate wins the seat. The simplest case in the one in which the twotop vote—getters move to the second round and all other candidates areexcluded. This is, for example, the system which is used to elect theFrench president and the mayors of Italian cities with more than 15,000citizens. However, other alternatives are possible. For example, in theFrench assembly all candidates getting more than 12.5% of the regis-tered voters in the first round move to the second round. In Hungary,second round access is granted to candidates getting more than 15%and in any case to the top three candidates2. Grofman [47] contains ageneral treatment of runoff methods.

• Instant Runoff Voting (IRV), or Alternative Vote3. Candidates run insingle—member districts. Voters express their preferences by rankingthe candidates on the ballot. If one candidate is the top—preferred byat least 50% of the voters then he or she is elected. Otherwise, thecandidate with the lowest number of top-preferences is eliminated andthe votes given to that candidate are assigned to the second-preferredcandidate. If, after the reassignment of the votes, a candidate reaches50% of the votes that he or she is elected. Otherwise, the candidatewith the lowest number of votes among the remaining candidates iseliminated and the votes are assigned to the second—preferred candi-date. The process continues, eliminating one candidate at each round,until one candidate reaches 50% of the votes. Variants of this systemsare used to elect members of the Australian Lower House and the Irishpresident.

• The Single Transferable Vote (STV). This system is similar to IRVbut is applied to multi-member districts. As in IRV, voters rank the

2Hungary uses a complex mixed system, with some seats allocated in a majoritarianway and others in a proportional way. The rule described here refers to the seats allocatedin the majoritarian part. See Benoit [9] for details.

3The terminology ‘instant runoff voting’ is commonly used in the USA, while ‘alterna-tive voting’ is commonly used in England.


candidates on the ballot. A candidate is elected if it meets a certainquota of first-preference votes; for example, in a 5-member districtit may have to get 20% of the votes. If a candidate obtains morevotes than the necessary quota then the extra votes are reallocated tothe second choices according to some criteria (many different criteriacan be used). When the number of seats per district is large, STVproduces results which are close to proportionality. When there is asingle seat STV is equivalent to IRV. Variants of the system are usedto elect members of the Irish Parliament, the Maltese Parliament andthe Australian Senate (see Bowler and Grofman [16]). It has recentlybeen introduced for local elections in Scotland.

Different electoral systems induce the entry of different sets of candidates andmay also induce different strategic behavior on the part of voters. However,even with a fixed set of candidates and sincere voting, the winners underdifferent rules may be different.

2.2.2 An Example

To illustrate the point, consider the following example. There are 4 candi-dates, A, B, C and D, and 1000 voters. The preferences among candidatesare distributed as follows.

370 270 240 120

A B D C

B D B D

C C C B

D A A A

Thus, 370 voters rank the candidates as A Â B Â C Â D, 270 voters rankthe candidates as B Â D Â C Â A and so on. Assuming that all voters casttheir ballot sincerely, who is the winner?If the system is FPTP then A obtains 370 votes and wins. Notice that

this outcome appears to be quite undesirable, since A is actually ranked lastby 63% of the voters. Under runoff, no candidate obtains a majority atthe first round. Suppose first that the system is like the one in the French

2.2 ‘ORDINAL’ OR ‘PREFERENCE’ SYSTEMS 11

presidential election, where only the two top vote getters move to the secondround. In this case the contest is between A and B. Since B is preferred toA by 63% of the voters (all voters except the ones in the first column), B isthe winner.Suppose next that the system is like the one used in the French assembly,

where a party advances to the second round if it gets at least 12.5% of thevote. In this case the only party excluded is C (which obtains 12%) and A,B and D move to the second round. At this point the preferences among thethree remaining candidates are as follows.

370 270 240 120

A B D D

B D B B

D A A A

Thus, A wins with 370 votes, D is second with 360 and B is last with 270.Finally, consider IRV. C obtains the lowest percentage, so it is eliminated

first. The situation becomes as follows.

370 270 240 120

A B D D

B D B B

D A A A

Now the candidate with the fewest top preferences is B, which is thereforeeliminated. Only A and D are left and the preferences are as follows.

370 270 240 120

A D D D

D A A A

Thus, D is selected.The example illustrate one of the main advantages of ordinal systems over

FPTP. With an ordinal system it can never be the case that a candidate who


is ranked last by a majority of voters is elected, while such an outcome ispossible under FPTP. However, the example also shows that different ordinalsystems (and different variants of a given systems, as it happens in the ex-ample for runoff) may well produce different winners. While ordinal systemsallow voters to use the whole profile of preference, it is a consequence of theArrow’s impossibility theorem that no single method can be entirely satis-factory. Furthermore, things become much more complicated if we recognizethat the set of candidates depends on the electoral systems, since differentmethods provide different incentives for entry, and that voters may them-selves act strategically. These considerations will become important whenwe discuss how to reform the Italian electoral system (see chapter 6).We conclude this section pointing out that prominent scholars have ad-

vocated some form of ordinal voting as the optimal reform. Dasgupta andMaskin [27] propose to ask the voters to rank all candidates and then picka Condorcet winner4 whenever it exists, with some supplementary criterionwhen it does not exist. Grofman and Feld [48] analyze an alternative to IRV,known as the Coombs rule. The difference is that, instead of eliminating ateach round the candidate with fewest top-votes, it is the candidate whichis ranked last by most voters is eliminated5. The main problem with thesesystems is that they must ask voters to rank all possible alternatives. Whenthere are many candidates and voters have a limited amount of informationat least about minor candidates these methods may not work well.

2.3 Mixed Systems

Up to now we have discussed ‘pure’ electoral systems, i.e. systems which usethe same criterion to allocate all seats. Many countries have adopted mixedsystems, in which different methods are used for different seats. The list ofcountries with mixed systems include some former Socialist countries (e.g.Russia and Hungary), Latin American countries (e.g. Mexico and Bolivia)and others. The system used in Italy between 1994 and 2001 has also beenmixed. Typically, these systems allocate a portion of the seats according to

4A Condorcet winner is a candidate who can defeat each other candidate in head-to-head contests. Barring ties a Condorcet winner always exists in two-candidate elections,but it may not exist when there are at least three candidates.

5In the example discussed above it can be checked that the application of the Coombsrule leads to the choice of B, which is also the Condorcet winner.

2.3 MIXED SYSTEMS 13

some majoritarian rule, usually but not always FPTP, and the remainingportion proportionally.Mixed systems tend to be compromise solutions. The majoritarian part

is meant to make sure that the winning party (or parties) can form a par-liamentary majority, while the proportional part in meant to make sure thatall different minority opinions present in society are able to get a parliamen-tary voice. However, in terms of entry into the electoral competition mixedsystems tend to provide incentives which are close to the one existing underproportionality, as it has been quite clear in the Italian experience. Moreinformation about mixed systems is contained in the recent books edited byShugart and Wattenberg [77] and Ferrara, Herron and Nishikawa [40]. Also,Ferrara and Herron [39] have analyzed the incentives for strategic entry un-der mixed systems and Ferrara [37], [38] has analyzed the Italian experiencewith a mixed system.

Chapter 3

Political Consequences

Electoral rules have far-reaching influence on the political system. They con-tribute, together with other factors, to determine how many parties will enterthe electoral competition and how dispersed the political positions that theyoccupy will be. To put it in a different way, the electoral system determines,for a given distribution of voters’ preferences, how many and which politicalpositions become viable (i.e. are able to get parliamentary representation).The impact of electoral systems on the number of parties and the positionsthat they take have been widely discussed in the literature. This in turnhas important implications for government formation and stability; electoralsystems that favor widespread entry and allow many different political posi-tions to obtain parliamentary representation typically tend to produce coali-tion governments. When governments are based on bargaining agreementsamong many different parties, the probability of government crises usuallygoes up.A huge literature, both theoretical and empirical, has tried to shed light

on the relationship between electoral rules and political systems. Most of theearly attention has centered on the FPTP system, both because of its sim-plicity and its widespread use in the Anglo-Saxon world. Two famous resultsproduced in the Fifties, the Duverger’s Law (see Duverger [32]) and the Me-dian Voter Theorem (see Black [12] and Downs [30]), have generated a hugeliterature. These results yield pretty precise predictions on the political sys-tem induced by FPTP. First, FPTP generates a two—party system. Second,the two parties will occupy the same ‘centrist’ position. In this chapter wewill discuss the main theoretical and empirical results relative to the politicaleffects of electoral rules. We will review the main theoretical developments

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16 CHAPTER 3 POLITICAL CONSEQUENCES

about FPTP after the initial contributions of Duverger and Black, as well astheoretical analyses of different electoral systems. Electoral studies have alsoseen a recent upsurge in empirical work, as many new datasets have becomeavailable. We will also review the main results coming out of the empiricalliterature.

3.1 The Number of Parties

The central hypothesis with regard to the number of parties has long beenthe so-called Duverger’s Law: An FPTP electoral rule produces a two-partypolitical system. Since two is the lowest number at which there is meaningfulpolitical competition, it follows that in environments in which political com-petition is possible there will be more parties under a proportional systemthan under a FPTP system. Duverger talked about a ‘mechanical effect’ anda ‘psychological effect’ of the FPTP system. The mechanical effect is simple:small parties are unlikely to ever be the party winning a plurality in any dis-trict. Thus, under FPTP they are not awarded seats and are mechanicallyeliminated from parliamentary representation. The ‘psychological’ effect iswhat nowadays would be called a strategic effect: When agents optimallychoose their electoral behavior then a two—party system is the outcome ofthe game when the rules are dictated by FPTP. For other electoral systemspredictions on the number of parties are far less clear and serious theoreticalwork has started only recently.

3.1.1 Duverger’s Law and FPTP

The most convincing theoretical explanations of the Duverger’s Law are pro-duced in models where voters behave strategically (Palfrey [64], Feddersen,Sened and Wright [36], Feddersen [34] and Fey [41]). The logic is straightfor-ward. A strategic voter should cast her vote to maximize the impact on thefinal selection of the candidate, so a voter should sort out the two candidateswho have the highest probability of winning and vote for the one she likesmore. In a Nash equilibrium of the voting game only two candidates obtainvotes. Notice however that this argument implies that each district will havetwo major parties; it is not clear why the two parties should be the sameacross districts (Morelli [57] is one of the very few papers dealing with theincentives posed by the presence of multiple districts).

3.1 THE NUMBER OF PARTIES 17

Models based on strategic voting however assume a degree of sophisti-cation for the average voter which is not always realistic, especially in largeelections where the probability that a given vote is pivotal is essentially zero.With sincere voting an argument for the Duverger’s law can still be made,but it has to rely on the strategic behavior of candidates (or parties) decid-ing whether or not to contest an election. The role of parties was in facthighlighted by Duverger, who claimed that

The brutal finality of a majority vote on a single ballot forcesparties with similar tendencies to regroup their forces at the riskof being overwhelmingly defeated.

When the attention shifts from voter to parties the question of what moti-vates parties becomes important. One possibility which has been explored isthat candidates only care about winning and adopt the platform giving thehighest probability of victory (the standard Hotelling—Downs model). With afixed number of parties these models produce ‘median voter’ kind of results1.However Osborne [62] points out that the result is not robust to the possi-bility of entry. He shows that when there are n > 2 potential candidates,for almost all distributions on the political preferences of voters a Nash equi-librium in pure strategies fails to exist. Thus, models in which candidatesonly care about winning are unable to produce interesting insights on thelong-run political configuration that an electoral system is able to produce.The implication is that the Median Voter Theorem does not seem to be veryrobust.It is therefore natural to explore models in which candidates have policy

preferences, as well as an appetite for power. Osborne and Slivinski [63]and Besley and Coate [10] have proposed the citizen candidate model toanalyze the entry problem2. In the citizen candidate model each voter candecide to become a candidate. Each citizen is endowed with an ideal pointover the policy space and implements the policy corresponding to that idealpoint in case of victory. Once a citizen has become a candidate, her politicalpreferences become perfectly known to the players. Thus, citizens can decidewhether or not to run, but once they decide to run they cannot choose

1Duggan [31] surveys models with a fixed number of parties.2An earlier proponent of such models has been Wittman ([81],[82], [83]). His analysis

is restricted to the case of two parties, and it cannot therefore handle the possibility ofentry.


the political platform. The number of parties is determined by the entrycost and by the attractiveness of office (‘ego rent’), much in the same wayin which entry costs and potential profits determine the number of firmsin imperfectly competitive markets. Two-party equilibria exist only underspecial assumptions on the distribution of voters’ preferences. When entrycosts and ego rents are zero Brusco and Roy [18] show that only one—partyequilibria exist, with the party located at the median.Equilibria with multiple parties and differentiated positions can be ob-

tained if we allow for uncertainty about the voters’ preferences. Eguia [33]and Fey [42] assume that the exact outcome of an election is subject to un-certainty, for example because there may be computing errors or externalfactors may prevent some voters from going to the polls. While there isalways a candidate positioned at the median of the voters’ preferences, anadditional candidate close to the median may enter in order to exploit ‘mis-takes’. The prediction is therefore that equilibria with multiple parties exist,but the parties tend to have similar platforms.3 Roemer [70] and Brusco andRoy [18] have introduced uncertainty on voters’ preferences. The first paperassumes that only two parties compete and shows that, depending on thenature of the uncertainty, either the equilibrium does not exist or it has thetwo parties proposing different policies. The second paper allows for entryand assume that parties don’t know whether the preferences of voters aregiven by a left—wing distribution or a right—wing distribution. Under someassumptions two—party equilibria exist. Furthermore, in all two—party equi-libria the parties tend to be ‘extremists’, i.e. they are located respectively tothe left of the left—wing median and to the right of the right—wing median.The reason is that if a party were located at the median then another partycould profitably enter to the immediate left or immediate right and win theelection when the distribution is favorable, since the rest of the vote is splitbetween the other two parties.In the models discussed so far the uncertainty is introduced without al-

lowing for private information on the part of parties or voters. When privateinformation is introduced, the median voter theorem may fail even with pureoffice—seeking parties. In fact, Bernhardt, Duggan and Squintani [11] haveshown that office-seeking parties with private information on the location ofthe median voter choose different policy points.

3Fey [42] assumes a finite number of ideological positions, rather than a continuum.Eguia [33] assumes strategic voting.

3.1 THE NUMBER OF PARTIES 19

3.1.2 Other Electoral Systems

Less attention has been paid to the existence and characterization of equi-libria when systems other than FPTP are used. Cox [22], [23] produces ageneral analysis for the case of office—seeking parties looking at the propertiesof equilibria under many different systems, allowing in particular for multi-member districts. His analysis has two main drawbacks. First, the number ofparties is taken as fixed and entry is not allowed. This implies that the ques-tion ‘how many viable parties does a certain electoral system induce’ cannotbe answered. Second, existence of equilibrium is not generally establishedand this makes some of the characterizations empty. Myerson and Weber[59] also propose a general analysis on voting equilibria that can be appliedto different institutions. They allow for strategic behavior on the part of thevoters and define an equilibrium a situation in which the expectations of thevoters on the relative strength of the parties are correct. Voting equilibriaalways exist and the median voter theorem typically does not apply. Non—median results are also obtained by McGann, Koetzle and Grofman [54], whofocus on how ideologically concentrated minorities can manipulate the elec-toral system; their results apply not only to FPTP but also to run-off andIRV systems.Some effort has also been devoted to proportional representation. Here

the difficulty is that there may not be a clear winner and the policy that endsup being implemented depends on the bargaining occurring after the elec-tion among the parties that obtained parliamentary representation. Entryand positioning decisions at the electoral level thus depend on the expectedoutcome at the bargaining stage. Austen-Smith and Banks [4], Austen-Smith[3] and Baron and Diermeier [5] have analyzed similar models but only with afixed (usually three) number of parties. Of course in these models there is nopresumption that parties converge to the median; the interesting topic is howlikely it is that a coalition government be formed. Hamlin and Hjortlund [50]study a citizen-candidate model with proportional representation and theyallow for free entry, but their analysis is limited to the case in which prefer-ences are uniformly distributed.As argued by Blais and Bodet [13], proportional systems tend on one

hand to produce parties with political positions which are more dispersedand far away from the median voter, but on the other hand tend to imposecoalition governments and compromise solutions that bring the actual policiesimplemented closer to the median. The net effect is an empirical matter.


Summarizing, the general message of the theoretical literature is not asstrong as one would like to see. The Duverger’s Law is difficult to provein general models where free entry is allowed. Furthermore, depending onthe dimensionality of the policy space it may be difficult to prove existenceof equilibria, even when the number of parties is fixed. When free entry isallowed and equilibria exist it is not obvious that the only equilibria involvetwo parties. The Median Voter Theorem also turns out to be far less generalthan one may hope, it typically does not go much beyond the case of twooffice-seeking parties (with no free entry) and sincere voting.

3.2 Empirical Evidence

Extensive datasets on elections in many different countries have now be-come available (see for example Golder [46]). This has allowed economistsand political scientists to test empirically both the traditional Duvergerianpredictions and the relationship between electoral systems and economic out-comes.The empirical results are more favorable to the Duvergerian hypothesis,

broadly intended, that the theoretical studies. In fact, the strict Duvergerianprediction that FPTP yields a two—party system can be somewhat general-ized, at least for simple systems. In general, even in proportional systems,we expect a positive effect on the number of parties by factors such as thetotal number of seats available and the size of electoral districts, while thepresence of thresholds should work in the opposite direction.The prediction that majoritarian systems have fewer parties than propor-

tional ones is generally confirmed by the empirical studies. Comprehensivecomparative studies comparing electoral systems across the world, in par-ticular looking at majoritarian vs. proportional systems, are contained inLijphart [52], Shugart and Taagepera [76], Cox [24], Taagepera [78], Colomer[21] and Norris [61]. The message is in general quite consistent: majoritariansystems have fewer parties and more stable governments than proportionalones.One caveat however is that some variants of electoral systems are not com-

mon enough to provide sufficient data for testing. Thus, empirical analysishas mostly focused on majoritarian vs. proportional systems, ignoring thedifferences inside each category. So, for example, not much attention hasbeen paid to the distinction between FPTP and Runoff systems. Or, on the

3.3 ELECTORAL SYSTEMSANDTHELEFT—RIGHTDIVIDE21

proportional side, on the effect of introducing thresholds for representation.It should also be added that some effort has been put in exploring a sort

of reverse causality. It is quite uncontroversial that electoral rules, importantas they may be, are not necessarily the only and exclusive determinants ofthe party system that develops in a polity. Historical factors determinanningthe relevant social, ethnic, religious and ideological cleavages in a societyclearly play a role. This factor induce the formation of parties and politicalcoalitions, which may pre-exist the choice of the electoral rules and in factplay a crucial role in choosing them. Thus, rather than having electoral rulesshaping the political system, it may be that it is the political and socialsystem that induces the choice of certain electoral rules. This view has beenparticularly promoted by Colomer [20], [21]. Andrews and Jackman [1] havetaken a more skeptical view, claiming that the uncertainty that parties face atthe time of selecting an electoral system makes it difficult for them to chooseoptimally. This in turn weakens the empirical link between pre—existingpolitical conditions and electoral system.

3.3 Electoral Systems and the Left—Right Di-vide

Apart from the exact configuration of the political system generated by theelectoral rules one may ask whether the adoption of a certain electoral sys-tems biases systematically the decisions taken by the polity. One simpleway to look at the matter is whether electoral systems induce a partisanbias along the left—right axis. Rokkan [72] advanced the hypothesis that thewidespread adoption of proportional systems in the first decades of the lastcentury has been the result of an attempt by right—wing parties to avoidceding too much power to the socialist parties then making their strong ap-pearance on the electoral scene. In many European countries the right wasdivided between secular and religious parties. This made the right vulnerablein many single member districts with a FPTP electoral rule, as a unified leftwas able to win many seats even with a share of the vote far below absolutemajority. The adoption of the proportional system eliminated the coordi-nation problem for the right—wing parties (Boix [14] provides a more formalaccount of essentially the same story). It also made it difficult for socialistparties to achieve self—sufficient parliamentary majorities, thus avoiding rad-


ical policies of income redistribution. Notice however that the argument isquite agnostic about whether the left or the right is eventually favored byproportionalism. According to this story the support for proportionalism bythe right was due to its divisions. Those divisions have become less impor-tant, and in such a scenario it is not clear that the right should benefit fromproportionality.In fact, Cusack, Iversen and Soskice [25] have pointed out some prob-

lems with this analysis. Proportionalism was not the only possible choice toavoid the coordination problem that a divided right was facing, as there aremajoritarian formulas different from FPTP that make coordination mucheasier. This is for example what happened in Australia, where a dividedright introduced IRV. Furthermore, in many of the countries that eventu-ally opted for proportionality the electoral formula, while majoritarian, wasrunoff (Italy was one of those countries). This formula does not really createbig coordination problems among similar parties. They propose an alterna-tive interpretation, according to which the introduction of proportionalismoccurred when the right desired to co—opt the left into the political system.Their result are summarized as follows.

[O]ur model implies that the right chose PR [proportional-ism]only when it did not fear the left too much and welcomedopportunities for cross-class collaboration. Conversely, it waswhen the organization of the economy made unions and the leftthreatening to the core interests of the right that majoritarianinstitutions were preserved.

It remains true however that what was convenient for the right at the be-ginning of the 20th century may not be a good predictor of the impact ofelectoral systems a few decades later. We will come back to this discussionin the next section, where we discuss electoral system and redistribution.A last study which is worth mentioning here is Bordignon and Tabellini

[15]. Inspired by the experience of Italian mayoral elections, they produce asimple model to compare policy choices under runoff and FPTP. Assumingas fixed the number of parties and their political platforms (which is akinto looking at a short—run equilibrium), and assuming sincere voting andthe possibility of forming coalitions, they predict that runoff increases thenumber of competing parties but reduces the influence of extremists. Theirempirical analysis, which exploits the fact that in Italian mayoral elections

3.3 ELECTORAL SYSTEMSANDTHELEFT—RIGHTDIVIDE23

different systems are used depending on the town size (see chapter 5), offerssupport to the prediction.

Chapter 4

Economic Consequences

If there is a stable link between electoral rules and the type of economicinterests that are represented in the Parliament, the type of politicians thatend up being elected or the type of governments that end up being formed,then we may find stable relationships between electoral systems and eco-nomic outcomes. In principle every aspect of the economy is, one way oranother, subject to political intervention. Theoretical and empirical researchby economists and political scientists has focused on some aspects whichappear to be salient: the general level of government spending, income redis-tribution and corruption. In this chapter we shortly discuss the theoreticaland empirical research about the effect of electoral rules on these variables.

4.1 Public Spending

Research in this area has addressed two broad questions: the impact of elec-toral rules on the composition of public spending and the impact on theabsolute level of public spending. Attention has focused mostly on the dif-ference between proportional and majoritarian rules. There are at least twochannels through which electoral rules have an impact on public expendi-tures. First, the electoral rule influences the electoral strategy of candidates.In particular, under different rules the winning candidates will build differ-ent social and political coalitions by making promises on the composition andlevel of spending. Second, electoral rules determine the type of governmentthat is going to be formed, in particular whether it is a single-party or acoalition governments. Incentive to control the absolute level of expenditure

25

26 CHAPTER 4 ECONOMIC CONSEQUENCES

are different for coalition and single party governments.

4.1.1 Composition of Public Spending

Milesi—Ferretti, Perotti and Rostagno [56] consider a model where public ex-penditure can be of two types: public goods, such as infrastructures, andredistributive transfers. Public goods can targeted to geographical locations,while transfers are targeted to social groups. In majoritarian systems votersselect one representative per district. If the districts are socially homoge-nous then elected representative will also be socially homogeneous and willhave similar preferences in terms of social transfers. However, they will havedifferent preferences in terms of public goods. This implies that voters opti-mally choose representatives who prefer high spending in public goods ratherthan redistributive transfers, in order to bias spending towards their district.The equilibrium outcome is a high level of spending on public goods. Inproportional systems there are multiple representatives per districts, so mul-tiple social classes end up being represented. Now voters have an incentiveto choose politicians who favor high level of transfers to their social groups.The equilibrium outcome is a high level of transfers. Thus, the clear pre-diction of the model is that majoritarian and proportional system will differin the composition of public expenditure, with majoritarian countries morefocused on public goods and proportional countries more focused on socialtransfers. Whether or not total public spending is higher under one systemor the other is an empirical matter.

Lizzeri and Persico [53] consider a simple model in which two politicianscompete offering either a public good that benefits all voters or a redistrib-utive program that benefits a fraction of voters. Under proportional rep-resentation the politicians care about the share of the vote. Their point isthat under proportional representation the higher is the value of the publicgood, the more likely it is that the candidate proposing the public good willwin votes, as fewer voters prefer redistribution to public good production.Instead, under a majoritarian system the share of the vote does not matter:all that matters is to get 50% of the vote. Their result is that a proportionalsystem is preferable when the value of the public good is high (more of it isproduced) while a majoritarian system is preferable when the value of thepublic good is low.

4.1 PUBLIC SPENDING 27

4.1.2 Level of Public Spending

The issue of the level of public spending is consider in work by Persson andTabellini (see e.g. [67] and [68]) and Persson, Roland and Tabellini [66]. Inparticular the latter work establishes that proportionalism leads more fre-quently to coalition governments (see Bawn and Rosenbluth [7] for similarresults) and coalition governments are more likely to increase public expen-diture. Increased levels of spending for coalition governments come from theincentives that the parties belonging to the coalition have to differentiatethemselves and gain the consensus of subsets of voters. Each party has totrade—off the benefit of increased spending today with the cost of increasedtaxation tomorrow. In a coalition a party which is able to increase spendingfor his constituency will reap all the present benefits but will only partiallypay the cost of future taxation, which will be blamed on all the parties ofthe coalition.Persson, Roland and Tabellini [66] consider a cross—sectional dataset of

parliamentary democracies over the period 1960—1998. They classify democ-racies according to their electoral system, dividing them in majoritarian,mixed (i.e. midway between proportional and majoritarian, as it was thecase of Italy during the period 1994—2005) and proportional. The table be-low shows the average and standard deviation of central government spendingover GDP for each category. An observation corresponds to a legislature ina given country.

Government spending as % of GDP

Majoritarian Mixed Proportional

Gov. spending25.94

(9.05)

33.45

(11.30)

35.12

(9.30)

Observations 138 7 187

Averages, standard deviations in parenthesis.

Observations pooled across countries and legislatures

The difference between majoritarian and proportional democracies is quitestark. Of course this may be the result of other factors that influence boththe choice of the electoral system and the level of government spending.


Persson, Roland and Tabellini [66] perform a careful econometric analysis toevaluate the role of government spending. They summarize their conclusionas follows:

The overall effect is similar in magnitude to earlier empirical re-sults on reduced form: a full scale shift from majoritarian toproportional elections raises overall public spending by roughly5% of GDP.

Similar results had been reported in other studies, such as Persson andTabellini [67]. Although the exact magnitude of the effect may be subjectto dispute, it appears to be quite clear that proportional systems lead to ahigher level of public spending.

4.2 Redistribution

Basically all the known distributions of income have means which are higherthan the medians. This, in principle, makes it easy to find a majority for re-distributive policies. Even if we constrain redistribution schemes to be anony-mous, so that for example we cannot treat differently people with identicalincome, a scheme that redistributes income so that each citizen gets exactlythe mean (completely egalitarian distribution) should have the consensus ofthe majority of the population. Notice that this argument is independent ofthe particular electoral system which is adopted: when median income is lessthan average income it is always the case that more than 50% of voters benefitfrom a radical, perfectly egalitarian, redistribution policy. Thus, accordingto this argument, any democratic electoral system should deliver radical re-distribution. This clearly is not true in reality. While modern democraciesusually undertake a certain amount of redistribution, radical egalitarianismis definitely not the norm.There are a number of arguments which have been put forward to explain

this fact. A very simple one is that the voters understand the dynamic trade—off between redistribution and economic efficiency. Excessive redistributionreduces incentives to produce income by the most productive part of thepopulation, thus reducing the growth rate. Thus, the citizens may decide thathaving a smaller share of a growing pie is better than having a larger share ofa shrinking one. Meltzer and Richard [55], for example, make this argumentin a median voter model in which the median voter trades off the benefit

4.2 REDISTRIBUTION 29

of redistributive spending and the efficiency cost of distortionary taxation.More complicated arguments can be made when the policy space is multi-dimensional; see Roemer [71], among others1. In these cases the equilibriumoutcome is that only partial redistribution occurs. More importantly, theelectoral system becomes important in determining the exact amount of theredistribution.Austen—Smith [3] has considered a model in which citizens are endowed

with different amounts of labor and have to decide on the occupation theychoose and on the amount of income redistribution that they want to imple-ment. The latter is decided through voting. His model predicts that, undersome conditions, proportional systems redistribute more than majoritarianones. The intuition is as follows. Citizen will divide into three ‘classes’,employers, employee and voluntary unemployed, depending on their initialendowment of labor and on the expectations on how much income will be re-distributed. With proportional voting three class—based parties are formed,each one of them aiming at maximizing the utility of their members in thebargaining to be held in Parliament. The intermediate party, representingemployees, is pivotal in forming alliances and, under certain assumptions, therelevant pivotal voter in a proportional system becomes the one who is indif-ferent between voluntary unemployment and employment. This pivotal voteris in favor of more redistribution than the pivotal voter under a two—partysystem, i.e. the voter with median income.Iversen and Soskice [51] present a similar model and reach similar con-

clusions. The main novelty is that they allow for differential redistributionamong classes, thus making the model multidimensional. In their modelthree classes, poor, middle class and rich, vote on taxation and redistribu-tion. Under proportional voting each class forms its own party and the mostlikely outcome is an alliance between the poor and the middle class to taxthe rich and redistribute to themselves. Under majoritarian voting howeverthe middle class has to decide ex ante whether to ally itself to the rich orthe poor. Two parties will be formed, a center—left and a center—right one,and the election will be decided by the middle class. The assumption inIversen and Soskice is that after the election there is some probability thatthe winner will fall prey of the radical wing of the party. The middle class

1With respect to the US political system Frank [44] has strongly pushed the view thatthe Republican party has used non—economic issues to strengthen its influence amonglow—income white voters. See Bartels [6] for a more critical view of this argument.


fears radical left—wingers (who would tax middle class to redistribute to thepoor) more than radical right—wingers (who just eliminate redistribution),thus on average prefers to side with the center—right party. The predictiontherefore is that leftist governments and redistribution of income are morelikely under proportional representation.All in all, the theoretical arguments linking proportionality of the electoral

system and redistribution appear cleverly constructed but a little bit fragile,as they rely heavily on particular institutional assumption on what can andcannot be done with taxes and subsidies. There is some empirical evidencethat proportional systems lead to more redistribution (see Verardi [80]), butthese results seem to be driven mostly by the proportional democracies ofNorthern Europe. The evidence presented in Brandolini and Smeeding [17],on the other hand, shows that the proportional democracies of SouthernEurope, including Italy, do not appear to be particularly egalitarian. This issurely an area where more research is needed.

4.3 Corruption

The seminal work on the effect of electoral systems on corruption is My-erson [58]. He considers a model in which voters have different ideologiesbut uniformly prefer honest to dishonest politicians. However, a voter maystill prefer a dishonest politician with the same ideology to an honest politi-cian with a different ideology. He points out that proportional systems maybe more favorable to the election of honest politicians. The reason is thatentry is easier. Thus, if a dishonest politician of a certain ideology is run-ning, an honest politician of the same ideology can also run.. Since, for agiven ideology, voters prefer honest politicians, in a proportional system thehonests should be able to drive out the dishonest. On the other hand, ina majoritarian system there may be a coordination problem. Suppose thatin a left-leaning district there are three candidates: a dishonest left-winger,an honest left-winger and an honest right-winger. If left-wing voters canconcentrate their votes on a single candidate then they will win, but if theysplit then the right-winger is elected; furthermore, left-wing voters preferthe dishonest left-winger to the honest right-winger. In this case there isan equilibrium in which the dishonest left-winger is elected. This happenswhen left-wing voters are convinced that other left-wing voters are going tovote for the dishonest guy, thus generating a self-fulfilling prophecy. The

4.3 CORRUPTION 31

prediction is that, at least when voter put ideology over competence, propor-tional systems are better than majoritarian systems at fighting corruption.More in general, larger district size and lower barriers to entry tend to reducecorruption. Notice however that a crucial assumption for this argument tomake sense is that voters have sufficient information on the honesty of thecandidates.A different argument, going in the opposite direction, maintains that in

majoritarian systems it is easier for voters to monitor the behavior of theirrepresentatives, thus making them more accountable. Thus, majoritariansystems tend to be better than proportional ones. Thus, the crucial issue ishow informed voters can be about the personal characteristic and the actionsof their representatives. Persson, Tabellini and Trebbi [69] have tried toevaluate empirically the relevance of these effects. They use various measuresof corruption and they find support for the predictions that lower barriersto entry (including larger district size) and more accountability (includingmajoritarian rules) are associated with less corruption. Because of these twocontrasting effects, the net effect on corruption of a change from proportionalto majoritarian rule is very small.

Chapter 5

The Italian Case

Since unification Italy has used a variety of electoral systems. The currentsituation appears to be particularly fragmented, with different electoral sys-tems used for the Lower House, Senate, Regions, Towns and the EuropeanParliament. In this chapter we quickly review the history of electoral systemsin Italy and the current situation.

5.1 History

The Kingdom of Italy was constituted in 1861. Its institutional and electoralsystems were largely inherited from the Kingdom of Piedmont and Sardinia,with an elected Lower House and a Senate appointed by the king. Theelectoral system for the Lower House was majoritarian, more specificallyrunoff in single-member districts. The voting age was 25 and the right tovote was restricted to males able to read and write and paying a minimumamount of tax (40 lire). These were severe restrictions for that time and lessthan 2% of the adults were eligible.The system was generally considered quite unsatisfactory. In a political

scenario were parties tended to be weak, the majoritarian rule was seen asgiving too much power to local politicians and local interests. Furthermore,apart from the electoral formula, the issue of eligibility was considered oneof the most important during the period. The diffusion of public instructionprogressively reduced the mass of the population excluded because unableto read and write. In 1882 the voting age was reduced to 21 years andminimum tax to be paid was reduced to 19.8 lire. The electoral reform of

33

34 CHAPTER 5 THE ITALIAN CASE

that year introduced a major change, shifting from the single-member districtto multi-member district and list votes. The proportional effect was howevermoderated by the small district size, from 2 to 5 members. The share ofeligible voters over the population moved from 2% to 7%. At any rate, thechange in the electoral system was deemed unsatisfactory, and in 1891 theformer system was reinstated.1

The right to vote was additionally expanded in 1912, eliminating therequirement to pay taxes and allowing all males older than 30 to vote evenif unable to read and write, coming very close to universal male suffrage.2

A radical change occurred right after World War I. First, in 1918 the rightto vote was extended to all males older than 21, eliminating the few remain-ing restrictions. More importantly, in 1919 the electoral formula switchedto List PR, strongly advocated by the Socialist and Catholic mass parties.Differently for the 1882 experiment the district size was large enough to havereally proportional effects; districts coincided with provinces and had a min-imum of 10 seats.3 The new proportional system however was used only intwo elections, in 1919 and 1921. In 1922 the Fascist coup occurred and in1923 the system was modified to introduce a ‘majoritarian reward’ (so called‘Legge Acerbo’). The new law was still nominally proportional, in fact it im-plemented a single national district, but the radical departure was that thelist with the most votes was automatically awarded two thirds of the seats, aslong as it had more than 25% of the vote.4 This idea of ‘proportional systemplus reward for the winner’ has remained popular with Italian legislators andit resurfaced in the changes of electoral law introduced in 1953 and 2005.The law was first used in 1924 and it remained in place during the period ofFascist dictatorship.When the democratic Republic of Italy was created after World War

II a proportional system was created for the election of the ConstitutionalAssembly in 1946. The new Constitution created a bicameral system. Theelectoral systems for the Lower House and the Senate were slightly different,but they both were essentially proportional. In 1953 the government, led bythe Christian Democrat De Gasperi in alliance with small centrist secularparties, changed the law to introduce a ‘proportional system plus reward forthe winner’ similar to the one introduced by the Legge Acerbo. According

1See http://www.camera.it/cost_reg_funz/667/1157/860/documentotesto.ASP2See http://www.camera.it/cost_reg_funz/667/1157/1153/documentotesto.asp3See http://www.camera.it/cost_reg_funz/667/1157/1153/documentotesto.asp4See http://www.camera.it/cost_reg_funz/667/1157/1154/documentotesto.asp

5.2 THE CURRENT SITUATION 35

to the new system a coalition of parties obtaining at least 50% of the votewould get 66% of the seats. The law was extremely contentious and theopposition did everything in its power to stop it. It also led to a breakaway bysome centrist politicians who refused to enter the centrist electoral coalition.Ultimately, the centrist coalition obtained 49.8% of the popular vote, fallingshort of the 50% needed to get the extra seats. After the 1953 election the‘majoritarian reward’ mechanism was eliminated and the previous electorallaw was reinstated.Italy continued with a proportional system until the beginning of the

Nineties, when widespread unsatisfaction with the political system led tovarious attempts to change the electoral law by referendum. In particular areferendum in 1993 changed the Senate electoral law transforming it into aFPTP system. In response to the referendum the Parliament modified theexisting law, introducing a mixed system in which three quarters of the seatswere assigned through FPTP in single member districts and one quarter inmulti-member districts with the proportional methods.5 Furthermore, theelectoral laws for local elections (towns, provinces and regions) were alsomodified. The law was used for the elections of 1994, 1996 and 2001. In2005, a few months before the new elections, the center-right governmentdecided to change the law again, introducing a complicated combination ofthresholds and rewards which will be shortly described in more detail. Thenew law has been used in the elections of 2006 and 2008.

5.2 The Current Situation

Italy currently has separate electoral rules for different levels of government.The only common theme seems to be the mechanism of ‘majoritarian rewardsuperimposed on an otherwise proportional system’, first introduced by theLegge Acerbo. As pointed out by D’Alimonte and Chiaramonte [26] thisis a peculiarly Italian idea, very rarely seen elsewhere in the world, and anidea that Italian politicians seem to like a lot. In fact, the period 1993—2005in which a different mixed system was used for the Parliament appears to

5There were important differences between the systems used in the Lower House and theSenate, the most imprtant being that two separate ballots were used for the proportionaland majoritarian parts in the Lower House, while a single ballot was used in the Senate.See Ferrara [37], [38] for a description of the two systems and an analysis of their impacton the strategic behavior of candidates.


be an exception, due to the fact that the referendum of 1993 imposed anFPTP system for the Senate. During the same period the new laws for theelections of City Councils and Regional Councils were also largely inspired bythe principle of ‘proportional plus majoritarian reward’. The reform of 2005reintroduced the principle for the elections of the Lower House and Senate.Another idea common to the electoral systems used in Italy and which

seems to be very popular among Italian politicians is that of maintaining sep-arate party identities while favoring the creation of pre-election coalitions.This is attained through a complex system of pre-electoral formal declara-tions of alliance and a system of rewards for forming coalitions. Why doItalian politicians like this idea? During the long period in which almostpure proportional systems were used at all levels of government, it was cus-tomary to form governing coalitions only after the elections. Voters wereunsatisfied by this system, which amounted to giving a blank check to partyleaders. Politicians were also unsatisfied, as the system introduced a formof permanent bargaining among parties that frequently led to governmentcrises. At the same time Italian politicians have never been willing or able togive up proportionalism. Pre-electoral alliances seemed a good compromise,allowing the maintenance of party identities while at the same time reducinguncertainty about coalition formation. It should be noted however that hereis no formal sanction for politicians or parties which, after the election, defectfrom an alliance and move to another. The system relies on the willingnessof voters to punish, at least eventually, ‘unreliable’ parties and politicians;I am not aware of any strong evidence that such a willingness does in factexist.Let us now describe in detail the systems used. For the Lower House and

the Senate the matter is regulated by the Law 270 of Dec. 21, 2005.

5.2.1 Lower House

The system is closed—list proportional corrected by thresholds and rewards.Parties decide at the national level whether or not to form coalitions. Evenwhen a coalition is formed each party runs with its own symbol and votesgo to the party. The country is divided into multi-member districts, but thedistribution of seats is determined at the national level, as if a single nationaldistricts existed. Seats are distributed as follows.First, in order to obtain seats a party must obtain at least 4% of valid

votes at the national level. However, parties belonging to coalitions obtain-


ing at least 10% of valid votes are eligible as long as they obtain at least 2%of valid votes. Second, seats are provisionally assigned proportionally amongcoalitions. If the most voted coalition obtains at least 340 seats (55% of to-tal) then the seats are distributed proportionally among parties. Otherwise,the number of seats assigned to the winning coalition is increased to 340.Those seats are distributed proportionally among the parties belonging tothe winning coalition. Parties not belonging to the winning coalitions shareproportionally the remaining seats.6

The bottom line is that the system makes sure that the coalition with themost votes obtains at least 55% of the seats; differently from the 1923 and1953 laws, the ‘majoritarian reward’ is always applied, there is no requirementthat the winning coalition obtain a minimum percentage of the popular vote.

5.2.2 Senate

The system is superficially similar to the one for the Lower House, but thedistribution of seats is decided at the regional rather than the national level.7

As in the case of the Lower House, the system is closed-list proportional andparties may form coalitions. Each Region is a separate electoral district8 anda party can obtain representation only if it gets at least 8% of the regionalvote or at least 3% if it is part of a coalition getting at least 20%. In eachregion at least 55% of the seats assigned to the region are given to the firstregional party or coalition. It should be noted that, since the ‘majoritarianrewards’ are determined at the regional rather than the national level, thecoalition or party most benefitting from the rewards may be different formthe one obtaining the majoritarian reward in the Lower House.

6This system referes to 617 seats out of 630. An additional seat is assigned in the smallVal d’Aosta region through FPTP. The remaining 12 seats are elected by Italians livingabroad; the system is nominally proportional but the district sizes are very small.

7The Italian Constitution mandates (art. 57) that the Senate be elected ‘on a regionalbasis’. Thus, electoral rules assigning rewards on the basis of the national vote may bechallenged as uncostitutional.

8This system here described applies to 17 of the 20 Italian regions. Val d’Aosta elects1 senator through FPTP. Molise elects 2 senators with a proportional system. TrentinoAldo Adige elects 7 senators with a mixed system designed to protect linguistic minorities.Italians abroad elect 6 senators in districts of one or two seats.


5.2.3 Regions

In principle each Region can choose its own electoral system, and some havedone so. However, most regions use the system contained Law 43 of Feb.23,1995 possibly with minor variations. Each Region elects a President,which retains the executive power, and a Regional Council. The President iselected with a straightforward FPTP system, while the Regional Council iselected using a mixed system with a complicated combination of thresholdsand rewards. Each party has to be linked to a candidate to the presidency.There is a single ballot on which the voter chooses at the same time thePresident and the party for the regional council. A fixed number of seats(roughly equal to 80% of the Council) are distributed proportionally amongthe parties obtaining at least 3% of valid votes or are linked to a presiden-tial candidate who gets at least 5% of valid votes. The remaining seats areassigned in a majoritarian way to the parties linked to the winning Presi-dent in the following way. If the coalition of parties supporting the winningpresident obtains fewer than 40% of the seats then they are assigned addi-tional seats until they reach a majority of 55% of the Council. If it obtainsmore than 40% but less than 50% of the seats then they are assigned addi-tional seats until they reach a majority of 60%. Finally, if it obtains morethan 50% of the seats then additional seats equal to 10% of the total seatsare assigned. Notice that this system may produce Regional Council with avariable number of total seats.

5.2.4 Towns and Provinces

The electoral system for mayors and city councils is regulated by Law 81of March 25 1993 and subsequent modifications. The system depends onthe town size. Towns with fewer than 15,000 people elect the mayor and thecouncil with a relatively straightforward FPTP system. For towns with morethan 15,000 people the system is more complicated. The mayor is electedthrough a runoff system. In the first round a candidate is elected only if he orshe gets 50% of the votes. Otherwise, a new election is held after two weeksbetween the two candidates who received the highest percentages. Seats onthe City Council are again distributed with a mixed system. Parties presentlists which are linked to candidates for mayor. While there is a single ballot, avoter can vote for a candidate for mayor and for a party supporting a differentcandidate. Again, the general structure is proportional with thresholds and


rewards for the parties linked to the winning mayor.Only parties with more than 3% of the votes can obtain seats. When

the mayor is elected at the first round, seats are provisionally assigned ina proportional way. If the parties supporting the winning mayor obtain atleast 60% of the seats then the allocation is final (i.e. in this case seatsare assigned proportionally). Otherwise, the seats assigned to the winningcoalition are increased up to the point at which they reach 60%. This ‘ma-joritarian reward’ however is not applied in 2 cases: a) when another party,not backing the winning mayor, reaches 50% of the votes9 b) when the par-ties backing the winning mayor obtain less than 40% of the votes. In suchcases seats are distributed proportionally. Another important twist is that,when a second round is reached, a candidate for mayor can enlist some ofthe losing parties to support her or him. This is done through formal recip-rocal declarations and it allows smaller parties to join belatedly a winningcoalition, thus benefiting from the majoritarian reward.The system for Provinces is similar to the one for towns with more than

15,000 people; given the limited relevance of provinces in the Italian institu-tional structure I will not discuss them further.

9Remember that a voter can vote for a certain mayoral candidate and at the same timefor a party not supporting that candidate.

Chapter 6

A Proposal for Reform

When discussing proposals of electoral reform it is necessary to keep in mindtwo things. First, no electoral system is perfect. Each system has problemsand shortcomings, so the choice must look at what goals seem to be mosturgent in the medium—long run for the country. Second, existing partiescan usually wield an enormous agenda—setting power. Episodes in whicha country has adopted reforms that go against the interests of the existingparties are exceedingly rare. Thus, any realistic proposal for reform musttake into account the impact that such reform would have on the existingpolitical system, making sure that the relevant political actors do not havestrong incentives to derail the reform process.This is not the place for a long and exhaustive analysis of the main eco-

nomic and political problems that affect Italy. I will content myself withmaking a few, simple and hopefully not too controversial, observations anddiscuss how the choice of the electoral system may help to improve the sit-uation. I will start from the premise that one of the major problems of thecountry at the present moment and, presumably, for a long time to come, isthe high level of public spending coupled with the high level of public debt.This in turn induces a high level of taxation and creates huge problems foreconomic growth. All the evidence available at the international level (seee.g. Persson and Tabellini [68]) points to a connection between the level ofpublic spending and proportionality of the electoral system. In Italy this linkshould be particularly obvious to any observer of the political and economicsystem. The proportional, or semi—proportional, electoral system has givensmall and medium—sized parties pivotal status for most of the history of theItalian Republic. That power has clearly been used to resist much needed

41

42 CHAPTER 6 A PROPOSAL FOR REFORM

cuts in public spending or to push for new expenditures favoring interestgroups that the small parties were, and are, pandering to. While the politi-cal and economic causes of the increase in public spending are complex, andpart of the blame should surely be placed on the major parties as well, itseems clear that the proportionality of the electoral system has exacerbatedthe problem. A switch to a majoritarian system would decrease the numberof parties represented in Parliament and it would favor the creation of stablegovernments formed by one or two parties. Although nothing can be taken forgranted in Italian politics, more stable and homogeneous government shouldbe more likely to resist pressure to increase public spending.A switch to a majoritarian system is not without problems. The intro-

duction of a majoritarian system may help the entrenchment of incumbentpoliticians, making entry more difficult. Furthermore, majoritarian systemswork well in two—party systems but they may produce results wildly at oddwith the popular vote when more than two parties compete. Given the cur-rent fractious state of the Italian political system this is a risk that shouldbe taken in serious consideration. However the crucial observation here isthat not all majoritarian systems are equal. The problems just discussedare particularly acute under the FPTP system. ‘Ordinal’ systems, discussedin chapter 2, reduce or eliminate these problems. It is therefore importantto understand better the details of different majoritarian systems and theincentives that they provide to voters and politicians, looking specifically atthe current Italian situation.In this section I would like to illustrate the reasons why I believe that

the Parliament elected on April 13—14 2008 is uniquely positioned to pass anelectoral reform which can be good for the country and at the same time inthe interest of most of the parties currently represented. More specifically, Iwill try to explain why the adoption of Instant Runoff Voting (IRV) can yielda remarkable improvement over the current system and why its adoption maybe in the interest of the main political parties.

6.1 Instant Runoff Voting

Electoral rules are part of the general institutional design, so it is temptingto discuss electoral reforms as part of more general constitutional reform.I will try to resist that temptation, limiting myself to discuss electoral re-form assuming an unchanged constitution. The last two decades have seen

6.1 INSTANT RUNOFF VOTING 43

endless discussions in Italy over constitutional reform. One reform was ac-tually implemented in 2001 by the center—left government. The center—rightgovernment tried to pass another reform in 2006, but the proposal was de-feated in a referendum. Both reforms did not appear fully adequate and it isclear that promoting a good and decent constitutional reform in the currentpolitical environment is next to impossible.Even so, there is a consideration relating the electoral rules and con-

stitutional design which is worth making. One long overdue reform is theelimination of perfect bicameralism. One of the problems of perfect bicamer-alism in Italy is that it risks introducing paralysis when different majoritiesform in the two chambers. While a serious solution to this problem requiresconstitutional reform, the electoral system should at least try not to makethe problem worse. The current law does exactly that, using two differentrules for the two chambers. Thus, even an identical distribution of votes forthe two representative bodies may produce different majorities. This is aproblem which absolutely needs to be fixed, and the solution is simple: usethe same system for both chambers. The Constitution establishes that theSenate electoral system should be ‘Region—based’, so in order to unify thetwo systems we have to give up national colleges. This can be easily doneif a majoritarian system is adopted. In fact, any majoritarian system withsingle—member districts will do1. Once a majoritarian system is adopted forboth chambers, there will be no need to change the system again if and when,at long last, perfect bicameralism ends up being ditched.Why is IRV preferable? From an abstract point of view IRV allows voters

to use their whole preference ordering, rather than just a subset of it. For ex-ample, both FPTP and proportional system only let voters to communicatetheir top preference, and all the remaining information is completely lost.While we know that aggregating preferences is problematic, there is reallyno good reason why the electoral system should ignore a large part of thepreference ordering of voters. There are many conceivable systems in whichvoters may be asked to express their whole preference ordering, but IRV is asystem which is simple and predictable in its consequences. It has also been

1An additional problem remain. Quite absurdly, the Italian Constitution requires ahigher age limit (25 years) for the right to vote at the Senate. This implies that theelectorates of the two chambers are different, so that even if the two chambers were electedwith the same system and all voters expressed the same preferences in the two chamberswe could still have different majorities. This problem can only be solved changing theConstitution, so I’ll not discuss it further.


actually used for a long time, most notably in the Australian lower house.As all systems based on single—member districts, IRV cannot guarantee

that a parliamentary majority will be formed or even that the parliamentarymajority will be the same as the popular vote majority. This is a problem,but dealing effectively with it would require constitutional changes. At thisstage it seems prudent simply to ignore the issue and count on the fact that,in the given political situation and presumably for some time to come, IRVwill strengthen the formation of two coherent political blocks.

6.2 Details of the Proposal

In Italy the Lower House has 630 seats. Of these, 618 are elected by Italianresidents, while 12 are elected by the Italians abroad in special colleges. Iwill not discuss the vote of the Italians abroad and concentrate my discussionon the 618 seats elected by residents2. The proposal is simple.

• The territory is divided into 618 electoral districts, each one of themelecting a single member.

• Each voter can rank the candidates on the ballot, assigning numbersfrom 1 to n, where n is the number of candidates in the district. Avote is valid if the elector assigns exactly one ‘1’ on the ballot. Thevoter does not need to rank all candidates, it can rank only a subset ofthem3 if he or she so desires.

• All candidates are initially ranked according to the first preferencesreceived. If one candidate receives more than 50% of the valid votesthen he or she is elected. Otherwise, the candidate placed at the nth

place, say Mr. Lastguy, is ignored in all ballots and the ranking of

2The introduction of seats reserved to Italians living abroad (12 in the Lower House and6 in the Senate) is relatively recent, the result of a Constitutional law passed in 2000. Themain problem of this law is that it has created constituencies where the ‘representationwithout taxation’ principle applies. In my opinion the system needs radical change, butsince it is matter regulated at the constitutional level I will not discuss it further.

3Requiring voters to rank all candidates tends to increase the number of invalid ballots.In Italy it is usual to observe many irrelevant candidates to run for office. Asking voter torank all of them would impose on them a high informational burden.

6.2 DETAILS OF THE PROPOSAL 45

candidates accordingly changed4. This means that on each ballot eachcandidate ranked below Lastguy moves up one position. In particular,those voters who gave their first preference to Lastguy will now have anew first preference, i.e. their initial second preference. The ballots ofthose who voted only for Lastguy, without further preferences, becomeinvalid.

• Following the elimination of Lastguy a new count of valid votes follows.The remaining n − 1 candidates are again ranked according to thenew first preferences. If one candidate obtains more than 50% of thevote than he or she is elected. Otherwise, the candidate placed at then−1th place, say Mrs. Nexttolast, is eliminated and the same proceduredescribed above is applied.

• The same algorithm is applied repeatedly until one candidate receivesat least 50% of the valid votes.

This is clearly computationally more complex than just counting the firstpreferences, but it is still quite manageable. With about 40 million eligiblevoters and 618 equally divided districts, the number of votes in each districtwould be around 65.000. There should be no problem in properly applyingthe algorithm, although it may require in some districts a couple of days. Innormal situations most districts should be able to declare a winner after twoor three rounds at most.The same system can be used to elect Senators. Once the number of

senators that each region has to elect is established, the region is divided insingle—member districts and then the system is applied in each district.A last important observation is that a system with single—member dis-

tricts is incompatible with multiple candidacies by politicians. In Italy thishas been usual practice, especially for party leaders both before and after the2005 reform5. This practice would automatically disappear.

4There may be multiple candidates in last position. Ties can be broken in a number ofways, for example eliminating the older candidates first.

5Before 2005 political leaders usually were placed at the top of party tickets in multipledistricts on the proportional share of seats, thus ensuring their election. Some of themcould also decide to run in one single member districts. After 2005 all districts are multi—member and multiple candidacies are common.


6.3 Examples

The Italian elections in 1996 was won by the center—left because the center—right was divided, with the Lega Nord going alone. The opposite happenedin 2001, when it was the center—left to be divided. Since 3/4 of the seatswere assigned in single—member districts using FPTP, the divisions mattereda lot. The Instant Runoff system would have avoided these pitfalls.To look at a very simple example, consider the single—member district of

Rho, in the Milan province. In 1996 the situation was the following.

Lower House, election of April 211996.

LOMBARDIA 1-Collegio:RHO

Candidate List Votes %

Monaco Francesco L’Ulivo 39, 444 40.25

Lodolo D’Oria Vittorio Polo per le Libertà 35, 996 37.64

Cozzi Claudio Lega Nord 20, 202 21.12

The center—left candidate was elected, although the sum of the votes of thecenter—right parties was much higher. With IRV, voters of Lega could havedetermined the outcome with their second preferences. Given the small dis-tance between the first and second candidate, a change in result would havebeen likely.In 2001 the situation was the following.

Lower House, election of May 13 2001.

LOMBARDIA 1-Collegio:RHO

Candidate List Votes %

Gianfranco Rotondi Casa delle Libertà 46, 432 49.41

Peluffo Vinicio L’Ulivo 41, 921 44.61

Liboni Albano Lista Di Pietro 5, 618 5.98

This time the center—right was unified and the center—left divided, so thecenter—right candidate won the seat. With IRV, if all the Lista di Pietro

6.4 THE POLITICAL CONSEQUENCES OF IRV 47

voters had indicated Peluffo as their second choice then he would have beenelected.

To a large extent the elections of 1996 and 2001 were decided by the pre—electoral tactics and alliances of the party leaders. IRV would have avoidedthis situation, giving to the voters the power to choose the alliances and theaffinities between parties.

6.4 The Political Consequences of IRV

What kind of political system is likely to emerge in Italy if IRV is imple-mented? While a complete answer would require a fully spelled theoreticalmodel, there are some provisional conclusions that we can draw.

• The system should favor the emergence of two big parties or two coali-tions which seriously compete for the winning the majority and formingthe government.

• The system will allow for representation by smaller parties as longas they are geographically concentrated and can count on the secondpreferences of other parties.

• Smaller parties will not be wiped out, and they are likely to win asignificant share of the votes although (unless they are geographicallyconcentrated) no seats. The reason is that, differently from a FPTPsystem, a voter can give the first preference to the preferred party, thussignalling her preference, and the second preference to the ‘closer’ partywhich seriously compete for the seat.

To see the system at work, it is useful to look at the Australian Lower House,where the IRV is used. The Lower House is elected every three years and thenumber of seats is 150 (148 in the 1998 election). Here are the results of the


last four elections.

2007 election

Party %Votes Seats

Labour 43.38 83

Liberal 36.61 55

National 5.49 10

Greens 7.79 0

Independents 2.23 2

2004 election

Party %Votes Seats

Labour 37.64 60

Liberal 40.81 75

National 5.89 12

Greens 7.19 0

Independents 2.49 3

2001 election

Party %Votes Seats

Labour 37.84 65

Liberal 37.40 69

National 5.61 13

Greens 4.96 0

Independents 2.90 3

One Nation 4.34 0

Democrats 5.41 0

1998 election

Party %Votes Seats

Labour 40.10 67

Liberal 34.21 64

National 5.29 16

Greens 4.96 0

Independents 1.91 1

One Nation 8.43 0

Democrats 5.13 0

The Australian political system is dominated by the Australian Labor Party(ALP) on the center—left and the Liberal—National coalition on the center—right. The Nationals are the minor partners and have their consensus con-centrated in rural areas. All elections since 1946 have given a majority ofseats either to the ALP or to the Liberal—National coalition. Despite thedominance of these two parties/coalitions, there is active entry by third par-ties both on the left and the right. On the left the Green party, formed in1992, has been steadily gaining votes, reaching almost 8% in the last election.On the right the One Nation party, running on a xenophobic platform, hada strong showing in 1998 and has subsequently declined. Furthermore, evenif smaller parties are not represented there are seats won by independents.

6.4 THE POLITICAL CONSEQUENCES OF IRV 49

Active entry by third parties and independents should be seen favorably.It conveys information about the preferences of the electorate and it limitsthe power of incumbents. For example, while the Greens have not obtainedrepresentation in the Lower House they have come close to winning some seatsheld by Labour MPs. At the same time, entry has not produced distributionsof seats at odds with the popular vote, as it happened in Italy in 1996 and2001 and as it is common with an FPTP system. Basically, movements to theright of the electorate yielded Liberal—National majorities and movements tothe left yielded Labour majorities, as it should be. Notice for example thatthe election of 1998 would have gone to Labour under a FPTP system, sinceOne Nation captured more that 8% of the vote and split the right—wing vote.This would have happened despite a clear move to the right of the electorate.Entry is also favored by the fact that the Australian Senate is elected

with a different system, the Single Transferable Vote, which has proportionaleffects. Thus, smaller parties are ensured some parliamentary representationand visibility.Given this information, what are the likely effects of the introduction of

IRV in Italy? In the short term we can expect the following to happen.

• The center—left and a center—right blocks would consolidate, thus com-pleting the transition of the Italian political system to bipolarism. Thecenter—left block would be centered on the Partito Democratico whilethe center—right would be a coalition of Popolo delle Libertà and LegaNord, the second party acting as a geographically concentrated minorparty.

• Both the radical left and small centrist parties such as MpA and UDCwill be excluded from parliamentary representation.

What will happen in the long—run is more difficult to predict. Entry shouldremain fairly possible because at multiple levels of government the electoralsystem has strong elements of proportionality. This is unlikely to change inthe future, so local and European elections will give opportunity to small andmedium sized parties to gain representation and power in Regions, Towns andthe European Parliament. Such parties will also be able to test their strengthat the national elections without excessive fear of dividing the vote. Thus,the variety of electoral systems used at the local level makes sure that partieswith a decent electoral following, say greater than 5%, and a recognizable,


distinct political position will be able to survive even if they don’t earnparliamentary representation. Notice further that the number of seats in theItalian House of Representatives is more than 4 times the number of seatsin the Australian Lower House. This makes it is easier for smaller parties togain parliamentary representation.All this is important because there is a wide perception that Italian politi-

cians tend to be excessively insulated from competition. As previously ob-served, single—member districts usually help in better monitoring politicians,but the higher barriers to entry existing in majoritarian system tend to makethings worse. It is therefore important to keep barriers to entry as low aspossible, so that politicians are kept under pressure to better respond totheir voters. Among majoritarian systems, IRV encourages entry much bet-ter than FPTP. It may also favor the selection of better politicians, especiallyfor smaller parties. Since a small party is unlikely to obtain an outright ma-jority in a district (unless it is geographically concentrated), its only hope togain seats is to obtain many second preferences. This should provide incen-tives for party leaders to look for authoritative candidates capable of drawingvast consensus in the electorate at large. A similar effect may apply to majorparties, although to a lesser degree.

6.5 The Economic Consequences of IRV

The theoretical and empirical research on the economic effect of electoralsystems have mostly looked at the majoritarian/proportional divide, with-out distinguishing between different majoritarian systems. At any rate, thelikely effects of the introduction of IRV would be the ones that we can expectfrom the introduction of any other majoritarian system, i.e. a reduction inpublic spending. This is clearly the most pressing issue, and it will remainso for quite some rime. In fact, given the current political situation in Italy,IRV is likely to cause two-party governments when the center—right wins andone—party governments when the center—left wins. This can be considereda satisfactory situation in terms of incentives to avoid excessive spending.While this effect is likely to happen with other majoritarian system, FPTPis more risky. Given the large number of parties currently existing in Italy, apure FPTP system may end up favoring temporal electoral alliances amongparties maintaining distinct identities, thus leading to the formation of coali-tion governments with many parties.

6.6 WHY IRV IS BETTER THAN THE ALTERNATIVES 51

As discussed in section 4, the impact of electoral rules on other economicvariables is far less clear. As far as income distribution is concerned, pro-portional democracies of Southern Europe tend to be less egalitarian thanproportional democracies of Northern Europe; it is likely that factors otherthan the electoral rule here play a major role. The effect on corruption is alsounclear; however, it should be noted here that the argument put forward byMyerson [58] does not apply to IRV. In fact, with IRV whenever there is arecognizably dishonest of a certain ideology there is no coordination problemif an honest politician with the same ideology enters the electoral contests.Voters of that ideological persuasion can put the honest candidate first andthe dishonest candidate second. They don’t need to fear that a vote for thehonest candidate will split the ideological vote and help elect a candidate ofa different ideological persuasion.

6.6 Why IRV is Better than the Alternatives

There is no need to spend words on why IRV is better than proportionalismor the current bizarre electoral system. While a proportional system mayhave been adequate for the period in which the Italian Republic was beingestablished, it is clearly dysfunctional now.IRV is clearly superior to FPTP in situations where there are more than

two parties. This is the current situation in Italy, and it is likely to staythat way for a long time. Introducing FPTP may produce two outcomes,both undesirable. On one hand, parties may be unable to forge electoralalliances, so that in many districts more than two candidates will compete.This is likely to generate results which depend in a random way on how thevotes are split between parties on the same side of the political spectrum.On the other hand the parties may form tactical electoral alliances. Thiswould produce two—party contests in most district, but would very likelygive enormous bargaining power to small parties. Thus, all the problems ofproportionalism would reappear, with the added disadvantage that not evena clear count of the real strength of each party will be available. IRV avoidsthese problems.The Runoff system has many of the advantages of IR, and it also has

the advantage of being a system Italian electors are already familiar with.However, IRV is superior for three reasons. First, it allows voters to expressthe entire vector of preferences, while Runoff constrains them to express only


the top one and then the top preference among the candidates reaching thesecond round. As an example of what this may imply, consider the outcome ofthe infamous French presidential election of 2002, when extremist candidateLe Pen advanced to the second round because the center—left divided votesamong multiple parties. Had an IRV system been used the outcome wouldhave probably been different, since Le Pen was ranked last by a large majorityof voters. Second, it does not require voters to go to the polls twice in orderto express their preferences. Third, Runoff gives the party leadership of smallparties the opportunity to campaign between the first and second round infavor or against the larger parties. In the current Italian situation this isundesirable, as it provides the leaders of small parties with more bargainingpower. Although it is a purely theoretical proposal, the kind of ‘Condorcetvoting’ proposed by Dasgupta and Maskin [27] has many advantages but itis impractical because it requires complete ranking of the candidates.

6.7 Why IRV is Possible

Is there any hope for a decent electoral reform in the current political envi-ronment? Italy has a long history of frustrated expectations on this count(see Floridia [43] for a discussion of the difficulties in implementing electoralreforms in Italy), so why should we expect something different this time?It is always foolish to be optimistic in Italian politics, but there are somereasons why the situation this time the situation may be different.In the last two decades the main obstacle to the adoption of a fully co-

herent majoritarian electoral law has been the influence exercised by smalland medium—sized parties located pretty much everywhere along the politi-cal spectrum. It is quite obvious that for these forces avoiding the adoptionof a majoritarian law was essentially a matter of life and death. Mediumand small sized parties have been pivotal in forming both center—left andcenter—right governments. The only possibility for changing the electoral lawthrough parliamentary action was to reach an agreement between the biggerparties on the center—left and the center—right. No such alliance howeverwas possible without at the same time causing the government to fall, as thesmaller parties would have strenuously opposed any such agreement. Thepredictable result has been stalemate.On top of this, both the center-left and the center-right had two major

parties (beside the smaller ones), DS and Margherita on the left and Forza

6.7 WHY IRV IS POSSIBLE 53

Italia and Alleanza Nazionale on the right. While the support for a ma-joritarian reform by DS and AN has always been quite consistent, the samecannot be said of Margherita and, especially, Forza Italia. In such a scenariothe only hope for electoral reform was extra-parlamentarian action in theform of referendum initiatives, but such attempt have been unsuccessful.The last few months however have produced a completely different sce-

nario. DS and Margherita have merged and formed the Partito Democratico,so that now there is now a single large party on the left. Quite unexpectedlythe same is happening on the right; while the merger between FI and ANhas not been fully completed yet, it is well on its course and for the momentit is advancing without major obstacles. This newly formed parties have anobvious interest into a majoritarian reform of the electoral system.But the really important event is that, for a curious accident of history,

the last election has produced the first Parliament in a long time in whichno small—medium sized party with diffuse territorial support is crucial forforming a majority. While Lega Nord is small in terms of the national popularvote, its votes are concentrated in the North of the country, especially inthe regions of Lombardia and Veneto. This implies that the Lega is wellpositioned to profit from a well—designed majoritarian law.The center—right will not promote any serious electoral reform if this

jeopardizes the government, exactly as the center—left did. As of the time ofthis writing the numbers for the center—right in the current Parliament arethe following:

Camera dei Deputati Current membership of parliamentary groups.

• Popolo delle Libertà: 273.• Lega Nord: 60.• Movimento per le Autonomie: 8.

Senato Current membership of parliamentary groups.

• Popolo delle Libertà: 146.• Lega Nord: 26.• Movimento per le Autonomie: 2.


The opposition to a majoritarian reform are more likely to come from theMovimento per le Autonomie (MpA). This is a small Sicilian—based regionalparty. While most of its votes are concentrated in Sicily it is not strongenough to compete seriously in a majoritarian system (it collected 7.9% ofthe votes in Sicily at the last senatorial election). Some additional oppositionis likely to come from a few congressmen formally belonging to Popolo delleLibertà (PdL) but coming from smaller parties (e.g. Gianfranco Rotondi andAlessandra Mussolini), as the option of re-activating their small parties givesto these politician more bargaining power. Clearly, a switch to a majoritariansystemwould dramatically decrease their leverage. It’s hard to make an exactestimate of how many of such congressmen are in the Lower House, but theirnumber is not large and in all likelihood below ten6. The situation in theSenate is even better, since the center—right concentrated the candidacies ofpolitician coming from small parties to the Camera dei Deputati, where itwas sure to get a comfortable majority.The bottom line is that PdL and Lega alone have a total of 333 seats in

the Camera (where 315 are needed for majority) and 172 in the Senate (where161 are needed for majority). Therefore the two parties do not depend on theMpA to guarantee the survival of government and can in fact easily affordthe dissent of the few politicians coming from smaller parties. Moreover,the leader of the MpA has just become Governor of Sicily with the supportof a center—right coalition. It is therefore unlikely that MpA will retaliatecreating mischief at the local level. In short, PdL and Lega can expect verylittle trouble if they decide to push for a majoritarian electoral system.Another important observation is that the adoption of Instant Runoff

Voting is politically more convenient for PdL and Lega than a FPTP sys-tem. The two parties split the center—right votes in Lombardia and Veneto,the two regions in which Lega is stronger. Both parties prefer to retain theirbrand and would be uncomfortable if a FPTP system were to force them tofield a single candidate for each electoral district; this was a clear factor inthe 2001 election, in which the center—right obtained 4% less in the majori-tarian part than in the proportional part. The situation, in these regions,is therefore similar to the one that led the conservative Australian govern-ment to introduce the IRV in 1918 substituting the previously used FPTP.7

6A couple of congressmen, coming from a small centrist party (the one controlled by L.Dini) have already left Pdl to go into the Gruppo Misto. The numbers given in the maintext already take into account these defections.

7At the time the newly formed Country Party was causing a split of the right—wing

6.7 WHY IRV IS POSSIBLE 55

An additional important advantage for the center—right coalition is that IRVwould probably let the PdL to absorb (as second preference) the votes ofthe Unione Democratica di Centro (UDC), whose voters can be expected tobe ideologically quite conservative. It would also undermine the bargainingposition of MpA and other smaller right—wing parties, thus strengtheningespecially the PdL.On the center—left, the Partito Democratico (PD), the main opposition

party on the center—left, would be clearly favored by a majoritarian systemand can be expected to support it. The last center—left government hasbeen undermined by the large number of parties composing the governmentcoalition. The leadership of the PD seems now convinced that only a morepolitically homogeneous coalition can hope to achieve majority and form aneffective government in the future. A change to a majoritarian electoral lawwould clearly help the PD to achieve its goals.The PD is also better off with IRV than with FPTP. The reason is the

that small parties on the left (such as the various Communist parties and theSocialist party) are likely to present candidates even if they have no chance togain any seat. With an FPTP system this would force PD either to bargainwith these parties or to accept splitting the center—left vote, thus reducingits chances of victory. IRV would avoid this problem.The obvious losers would be the small parties of the center, such as UDC

and MpA, as well the radical left and the remnants of the Socialist party.UDC is currently at the opposition and surely unable to block an electoral re-form supported by the major parties. As previously observed MpA, althoughpart of government coalition, is not pivotal and not in a position create seri-ous problems should PdL and Lega decide to push for a majoritarian system.The radical left is not currently represented in Parliament; the only bargain-ing power that it can exercise is at the local level, threatening the PD withbreaking center—left coalitions controlling many local governments. This isunlikely to be a serious threat for two reasons. First, PdL and Lega can passa majoritarian law even without the PD, so that pressing the PD is only oflimited utility. Second, such a strategy would risk pushing the radical leftout of many local governments, something very costly for parties currently

vote, especially in rural areas where the party had most of its support. With an FPTPsystem this was likely to give victory to the Australian Labor Party, even if such partycontrolled only a minority of the vote. The IRV system allowed Country Party supportersto give the first preference to their preferred party and their second to other center-rightcandidates, thus avoiding minority victories by Labor.


lacking representation in Parliament.Does all this imply that the PdL and Lega will actively push for electoral

reform? Not necessarily, but something will have to be done. A referendumon the electoral law is still pending and it will be held in the Spring of2009 if no reform is passed. The referendum, if successful, would generate asystem similar to the current one except that the parties will be unable toform coalitions. Given the current political scenario this will probably createmore problems on the right than on the left. In particular, it would put in anawkward position the Lega Nord. The party would have to decide betweengoing alone in the regions in which it is strong, thus splitting the right—wingvote, or joining the PdL and present unified lists. Both alternatives havedrawbacks, that would be avoided by adopting the alternative vote.The center—right parties may boycott the referendum8, asking their sup-

porters not to go to the polls. This tactic has been used in the past to defeatelectoral reform promoted through referendum. However, it is not clear thatthis would be better for the center—right than adopting a majoritarian elec-toral system. The current electoral system it’s not particularly favorable tothe center—right and it was adopted because UDC, at the time part of thecenter—right coalition, pushed for more proportionalism. The political sit-uation has changed and the main parties on the center—right have now nospecial interest in promoting proportionalism.To conclude, the situation seems to be as favorable as it can get to pass a

majoritarian electoral law. This situation will not last forever. The incentivesof the current electoral systems favors fragmentation and it is likely that,unless a new electoral law is passed, the next Parliament will be as fracturedas the previous one. Seizing the opportunity is therefore crucial. Discussionand legislative action on electoral reform should start immediately.

8In Italy a referendum is valid only if at least 50% of eligible voters cast their ballot.

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