Monthly Archives: January 2012

Horse Races, Real and Political: Intrade’s Favorite-Longshot Bias

Having grown up just south of Saratoga, NY, I spent many teenage summer days sitting in the picnic area of the majestic Saratoga Race Course and many August nights bar-hopping the small-town, mardi-gras-like atmosphere on the streets of downtown Saratoga. You get some funny looks in most of the rest of the country when it’s revealed that you know how to calculate the payout on a $2 exacta ((total exacta pool – takeout)/(total winning dollars bet * 2)) or can name the horse that beat Secretariat in the ’73 Whitney (Onion), but it’s neither trashy nor rare to know horse racing where I come from.

One thing you become quite familiar with at Saratoga, virtually by intuition, is the economic concept of the favorite-longshot bias: horse bettors seem to vastly prefer betting longshots rather than favorites, independent of the true odds on the horses. And since the odds are set by the betting market at the track, this creates an attenuation: horses that should be massive longshots by their true (but unknown) odds of winning (like 150-1) end up selling as only big longshots (perhaps 75-1), while horses that should be ridiculous favorites by the true odds (say, 1-9) end up going off for much less (perhaps 1-2).

As a result, most longshots are absolutely horrible bets (since their pay odds are vastly less than their true odds), while there’s usually a fair amount of value in just betting the favorites (because they pay much better than their true odds would imply). And despite having a century-old reputation as the “graveyard of  favorites” — just ask Man ‘O War, whose only career loss came at Saratoga to, yes, a horse named Upset — savvy horseplayers at Saratoga know that longshots are still for suckers.

Favorite-longshot bias has a long-known and well-documented empirical history in the economic study of the gambling world: using past performances, it has been shown over and over again that bets on longshots lose much more money, on average, than bets on favorites. For example, in the linked study of 6 million horse races between 1992 and 2001, bets on all 100-1 or bigger longshots returned -61%, while bets on all favorites returned -5.5% and utterly random bets returned -23%. Uninformed betting is expected to have a negative return because of the state’s take from the prize pool, which in NY is 16% on win bets. But that only highlights how good blindly betting the favorites can be: if the state wasn’t removing 16% of the prize pool, blindly betting the favorites would generate a significant positive return!

There are two theories about why gamblers tend to behave this way. The first is known as “risk-love.” In this view, gamblers are rational utility-maximizers, and get utility from the excitement of the risk of the longshots, whereas betting the favorite, well, sucks. Anyone who has ever cashed a winning $2 bet at Saratoga for a return of $2.40 (and thus a profit of 40 cents) knows how that feels. The other theory is behavioral: people are not good at discerning between two extreme sizes. And thus gamblers don’t distinguish between 200-1 and 100-1, they are cognitively the same odds. And therefore bettors systematically take 100-1 prices on 200-1 true odds.  And the betting market responds.

I say all this because longshot bias is at least a partial explanation of what you see on Intrade right now, for both the Democratic and GOP nomination markets. Let’s start with the Democratic market:

Intrade Democratic Nomination Market (1/5/2012)

Obama: 94.5
Clinton: 3.0
Biden: 0.5

These prices reflect only the functioning market — where there are actually sellers and buyers — and does not include candidates who have no current offers to buy at any price. As a reflection of the true odds, this seems certifiably insane. I would guess the odds on Obama are much closer to 99.5 (leaving a tiny amount of space for death, massive scandal, or incredible political turn in the party), which means the sum of the true odds of all other plausible candidates can’t be more than 0.5. I would suspect that neither Clinton’s or Biden’s true odds are greater than 0.1.

But the observed odds are easily explained by favorite-longshot bias. Right now, in order to bet Obama, you are effectively laying approximately 17-1 (i.e. bet $17 now and return $1 profit this summer). That might be a nice investment strategy — it looks like a pretty darn stable 5.5% return to me — but it’s absolutely no fun as a gamble. Conversely, Biden at 0.5 looks like a horrible financial investment (a 1 in 200 chance Joe B is the nominee? No way.), but one heck of an exciting gamble — think of the psychological utility you could get from $10 on Biden, which could get you dreaming about two grand every time President Obama has to go the doctor. The Democratic market seems very much to be reflecting a risk-love bias.

Now, let’s turn to the GOP market:

Intrade Republican Nomination Market (1/5/2012)

Romney: 79.9
Gingrich: 5.1
Santorum: 4.8
Huntsman: 4.8
Paul: 2.4
Perry: 2.0
Jeb Bush: 0.3
Bachmann: 0.1
Chris Christie: 0.2
Sarah Palin: 0.1
Paul Ryan: 0.1
Mitch Daniels: 0.1
Buddy Roemer: 0.1

This market strikes me as equally biased, but somewhat different. The existence of the true mega-longshots at 500 or 1000 to 1 seemingly presents a greater possibility that cognitive misperception, rather than risk-love, is at work here, at least for the most extreme candidates. Does Chris Christie have a 1 in 500 chance of being the nominee? I doubt it, but he might very well have a 1 in 5000 chance (0.002%) and definitely a 1 in 50,000 chance (0.0002). Ditto with Bush, Ryan, and Daniels. Those all look like terrible, terrible bets.

But, of course, that’s not the interesting question. What we’d love to know is how the favorite-longshot bias is affecting Romney’s price and the price of the other top tier and second tier candidates. This is, of course, seemingly an imponderable, since we can never know the true odds and we don’t have millions of past performances to empirically examine like we do in horse racing. Still, anyone who’s ever stared up at a 1-4 favorite on the Saratoga board and even passingly thought to themselves “this just isn’t worth it for that return” can probably relate to someone who’s irrationally passing on Romney right now on Intrade.

And the instant you have that feeling, you have proof there’s at least some marginal value in Romney due to the favorite-longshot bias. Now, marginal value is not actual value. Romney’s true odds may be lower than 79.9 for fundamental reasons that are not being captured by the market. But so long as any bettors are passing on Romney in favor of another candidate because it’s just no fun to bet the big favorites, there’s a market distortion that can theoretically be capitalized on.

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In Which A Whig Thinks About Recess Appointments

I’d sure as hell be one pathetic Whig if I didn’t write about recess appointments today. But you already knew that.

Here’s the backfill: last month, the Senate failed to invoke cloture on the nominations of Caitlin Halligan to the D.C. Court of Appeals and Richard Cordray to head the new Consumer Protection Board. Subsequent to that,  there was a lot of criticism about this use of the filibuster, as many observers pointed out that it was being used to deny confirmation to an agency head as a protest against the agency itself, which, while probably not unprecedented, seemed to be a clear strategic escalation of the use of the filibuster. Steven Benen called the tactic “extortion politics.” Jonathan Cohn likened it to antebellum nullification, echoing Tom Mann’s assessment from this past summer. That’s probably, as Seth Masket noted, a bit overheated, but there’s little doubt that it reflects a crumbling Senate norm and a shift toward what Jonathan Bernstein calls hardball (and which I wrote about here).

Numerous observers suggested and/or urged President Obama to respond by using a recess appointment to fill the vacant offices, which would circumvent the Senate entirely. The Constitution, in Article II, section 2, clause 3, says:

The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting commissions which shall expire at the End of their next Session.

And today, the President announced that he will do exactly that, filling the vacancy in the Consumer Protection Board with Cordray, and using similar recess appointments to fill three slots on the NLRB.

The problem and controversy can be discovered from just a plain reading of the text, which raises two puzzling issues: first, do the “vacancies that may happen” have to occur during a recess, or can a vacancy that occurs during a session also be filled? Second, what constitutes a recess? As you might imagine, how these questions are answered has a big impact on both the balance of power between Congress and the Executive, as well as Congressional-Executive relations.

The first question was resolved in the 19th century after numerous court decisions: it does not matter when the vacancy itself was created. The latter question — what constitutes a recess?— is still of much dispute, and is one of the reasons that today’s action by the President is controversial. President Obama is making an appointment during a three-day intra-session recess of the Senate; if allowed to stand, such a precedent would go beyond even the most expansive current reading of the clause, one offered by the Justice Department on behalf of the executive in the past — that the Senate must be in recess for at least three days before a valid intra-session recess appointment can be made. (The President is also apparently arguing that the Senate is not even really in session — insert Whig head explosion here — but we’ll get to that in a minute.)

Ok. There’s a lot of spurious partisan writing out there about this, so let’s talk turkey. Bear in mind I’m a whig with a general inclination toward Congress over the Executive, but I’m coming at this from a good-faith point of view.

1. There are two fundamental values in collision here. The first value is legislative control of the Executive Branch of the government. The Founders were quite clear that the Senate should play a role in the appointment and installation of Executive Branch officials. No one disputes this, nor does anyone really question the propriety of Senate confirmation in contemporary times. It’s an excellent check on the President, and a sensible way to share powers between the political branches.

The second value is smooth and continuous functioning of the government. While Congress may be out of session for long periods of time in any given year, the government of the United States operates continuously. If a vacancy exists in the Executive Branch, then there are certain functions under law which may not be able to be executed. Under the Constitution, only officers of the United States may take substantial executive action, and absent a sitting Senate, the only way to create certain officers of the United States is through a recess appointment. Again, the Founders recognized this and sensible allowed for it in the Constitution. However…

2. History and the Founders may no longer be a helpful guide. Every partisan and their radical brother spent today looking for juicy Founder quotes about recess appointments. But a lot of the Founding thought is no longer relevant, because the structure of the congressional calendar is starkly different than it was in the 19th century, in two ways. First, the recesses between sessions of Congress (inter-session recesses) have dramatically shortened. Whereas Congress would often not meet from March until December in odd-numbered years or from June to December in even-numbered years, contemporary Congresses often have inter-session adjournments of only weeks or even just days. So while the President was routinely presiding alone over the government for months on end in the 19th century, virtually necessitating recess appointments, that is very rarely the case now. In that sense, the most pressing reason to even have recess appointments at all — months on end with no Senate session — is gone.

Second, the number of intra-session recesses has grown significantly in the 20th century. During the 19th century, Congress would often sit in Washington for the duration of a session, with few or no recesses of a week or more. Due to advances in transportation technology and the almost year-round sessions, contemporary Congresses tend to include numerous recesses of substantial length, including an annual August recess that may last close to a month or longer.

This raises some interesting normative questions: does a two-week congressional recess really create a disruption in Senate availability such that the smooth and continuous functioning of the government might be in jeopardy if there is an Executive Branch or judicial vacancy? Maybe, but bear in mind that many appointments submitted to the Senate take longer than that to confirm. Even more to the point, if the recess appointment clause was intended to be used during intra-session recesses, why does it allow the appointments to stand until the end of the next session, effectively allowing a intra-session recess appointment to last up to two years? It seems almost certain that such wording was used with inter-session recess appointments in mind, such that they would last only for the duration of one (i.e. the next) session of Congress.

Now, court decisions have rendered most of the questions these facts raise legally moot. After a long list of 19th century court cases, both inter-session and intra-session recess appointment are perfectly constitutional, although they occupy very different footings. President Obama could have appointed Mr. Cordray yesterday at noon, in the brief  interlude between the first and second session of the 112th Congress, and leaned on the precedent of Teddy Roosevelt’s 160 appointments on December 7, 1903 for inter-session appointments, which seemingly require no span of time to be constitutional. But instead he chose to appoint him today — most likely because this will now allow Mr. Cordray to serve for virtually two years (the next session of Congress not ending until noon on January 3rd, 2014) — raising the question of how short a time period constitutes an intra-session recess long enough to qualify for a recess appointment. That’s tricky because…

3. There’s no solid answer to the question of what constitutes an intra-session recess. The Constitution simply doesn’t tell us what counts as a recess and what doesn’t. No number at all. No guidance at all. So all we have is our normative intuition on the political side, and court decisions on the legal side. The problem is that the court precedents tend to defy most reasonable normative evaluation. I don’t think there’s any question that an appointment can wait two weeks; lots of stuff sits vacant for two weeks while the Senate is considering a nomination. But the courts have upheld an appointment made during a Senate recesses of 11 days, and in the 2004 case challenging President Bush’s appointment of William Pryor, the Eleventh Circuit more or less endorsed appointments during recesses of that length or even shorter (the Supreme Court did not hear the case).

One potential hard deck is the 3-day period contemplated in the Constitution for either chamber to adjourn without the other chamber’s consent. That might suggest that the Founders didn’t think recesses of one or two or three days were of serious length (this, of course, assumes that the Founders thought any intra-session recess was of appointment-worthy length, but as noted, that ship has sailed), and indeed the Justice Department itself presented this theory while defending a Clinton recess appointment (attached to a longer recess) in 1993. But without further court guidance, this is an imponderable; our normative intuition says things like “when the Senate recesses overnight, that’s not recess-appointment worthy,” but again, our normative intuition might say the same thing about a two-week recess.

4. On the other hand, President Obama doesn’t seem to making an argument for intra-session appointments during recesses less than 3 days. Based on what is emerging from the White House, it seems like the President’s argument here is not that an intra-session recess appointment is valid during any recess of any length. Instead, the President seems to be making a much more troubling argument: that a two-minute pro forma session of the Senate which includes a unanimous consent order to conduct no business is not really a session of the Senate, and therefore the Senate has currently been in recess for several weeks at this point, clearly within the safe-harbor of court rulings on intra-session recess appointments.

As Stephen Smith points out in a comment on an very good Sarah Binder piece on the topic, this is an argument that might very well be a loser in the federal courts. The Senate unambiguously has control over its own agenda (via the Constitution, Article I, section 5) and the courts would be virtually a lock to not “look behind” the Senate’s own assessment of whether or not it was in session, leaving it clear cut that the chamber has been in session every third day. But set that aside. Whatever the merits of Obama’s argument in the courts, it’s certainly an affront to congressional authority; the Senate can consider whatever it wants whenever it wants, and no Presidential decree about what the Senate is considering and not considering can alter the meaning of the Constitution. The President is certainly welcome to hold his own interpretation of the Constitution, but he is not welcome to interpret the Senate rules on behalf of the Senate.

In the bigger picture, however, this raises the political specter of the pro forma sessions. Such sessions have largely come into play only in the last few years, as first Senate Democrats used them to avoid an inter-session recess in which President Bush could make appointments, and then Republicans followed suit to prevent inter-session appointments by President Obama. Most recently, the House Republicans have been using the constitutional provision that prevents either chamber from recessing without the other’s consent to keep the Senate in session. Some have suggested that this is a bridge too far, that if the Senate wants to stay in session to prevent recess appointments, fine, but when the House is forcing them to, that’s over the line. I’m sympathetic to that argument, but I think it ultimately fails. The House need not justify its own proceedings, nor explain why it remains in session. Just as the Senate rules are the prerogative of the Senate, so the House rules are the exclusive province of the House.

In any case, given that the House can prevent Senate adjournment for more than three days simply by not agreeing to such a recess, then control of either chamber may give an opposition party the ability to block recess appointments, assuming no court is going to bless recess appointments made during recesses shorter than 3 days. This may be good or bad, but it certainly is consequential: the growing backlog of Executive Branch and Judicial vacancies can be partially mitigated with recess appointments; if that safety valve is shut off, the Senate might find itself under even more intense pressure to find political or institutional ways to increase the speed of confirmations, or to reduce the number of positions requiring confirmation altogether. In this way, the President’s actions today are potentially bringing on a crisis, or at least a dilemma of sorts: the Senate may be loathe to give the President expanded recess appointment power, but at the same time unable to move traditional confirmations with the necessary speed. That’s a recipe for institutional change; Obama’s actions may be the exogenous shock that jumps starts them.

5. As usual, the partisan divide is working to the advantage of the Presidency at the expense of Congress. If you glance around at the political press releases or the blogsphere, it’s quite obvious what the alignment is over this issue; Democrats and liberals are supporting the President’s actions, and conservatives and Republicans are opposing it. The normative arguments can be filled in quite easily; Democrats are defending the need to get the agency running and decrying the GOP strategy of filibustering the Cordray nomination, while Republicans are worried sick about Presidential power grabs and are trying to defend the prerogatives of the Senate. We can’t say for sure, but it’s likely that in the converse situation, the arguments would be perfectly reversed. I’ve looked in vain for a process hawk among the Democrats or a Republican argument for a smooth-functioning government, but I’ve yet to find one. So don’t delude yourself — this is almost certainly policy preferences disguised as a normative process debate. But as I wrote yesterday, that’s not surprising.

The problem, however, is that I’m not sure how many Senators would favor each position in a vacuum. That is, if everyone was blinded to the specifics of the situation and the party/ideology of the President was unknown as well as the nomination in question, how many Senators would choose the smooth operation of the government (as manifest by the President being able to fill appointments willy-nilly for vacancies upon which the Senate has yet to act) over Senate control of nominations (as manifest by significant delays in appointments but lack of presidential workarounds). My inclination is to think that most Senators would choose the latter. And that’s worrisome, because the likely outcome of the current situation (as was the outcome under Bush) is that the ability of the President to circumvent the Senate will be enhanced.

There’s no need to be a slippery-slope alarmist here, but the trend is nevertheless worrisome. What we don’t want to end up in is a situation in which it has become the norm for the President to use recess appointments as the primary mechanism of filling the judiciary or the Executive Branch with judges/officers. Obviously, we’re still a long, long way off from that. But we shouldn’t disregard the possibility. For one, as discussed above the conditions and context are ripe for Presidents to seek to expand this authority; Senate confirmations have slowed considerably, and the past 20 years have seen an increase in the use of the filibuster in the nominations process, as the norm against such a practice has dissolved. It wouldn’t be hard for President Obama or any future White House occupant to make the political argument that recess appointments are necessary; it’s not like the President was out there on the stump today giving nuanced constitutional arguments. Instead, he just made a political argument in plain English: there’s an agency here to help people, and it can’t start helping them until it has an agency head. Therefore, I’m appointing one under my constitutional authority. Period. That’s a powerful political argument, and one that should scare a Senate institutionalist.

6. Still, the Senate has weapons of its own. While recess appointments are unilateral actions, it’s not the case that the President is playing strictly unilateral hardball here. Even if the recess appointment power was construed to allow appointment during any recess of any length, the President would still be strongly constrained in his actions. This is, after all, a separated system of shared powers, and there are lots of overlaps. Given that the Senate has the power to disregard the President’s agenda, or cut funding to his priorities, or any other of the myriad powers that overlap between the branches, an equilibrium definitely exists that is different than “the President does whatever he wants.” One tactic Congress has used in the past, and which is currently federal law for certain situations, is to deny pay to recess-appointed officers. But any tactic could be used. Of course, the same partisan and ideology cross-winds mentioned above tend to mitigate these powers, so it’s unknown how far toward the Presidency such an equilibrium would land.

How about a lawsuit that stopped the appointment, would that be a good thing for the Senate? On balance, I think it would be. I don’t think the Senate can condone a Presidential maneuver that allows the Executive to make judgments about whether or not a plainly-happening Senate session is actually a session. Having the courts slap back the President on that one (or make him walk back the argument in briefs) might be worthwhile. And it seems like a winnable case, as the 3-day adjourn consent window might just prove to be the magic bullet the courts need to make a firm ruling. On the other hand, all that would do is institutionalize the strategic pro forma session game, and do little to defuse such hardball. Perhaps a better outcome would be…

7. One possibility is that today’s action could (eventually) trigger Senate confirmation reform. There are lots of ideas floating around for improving the confirmation process in the Senate, ranging from bills to reduce the number of Executive Branch positions requiring confirmation all the way up to altering the Senate rules regarding the filibustering of Presidential nomination. And while none come without side effects (and potential unintended consequences), pressure may be growing for such action. If the alternative is a world in which recess appointments become more common as an everyday substitute for routinely filibustered nominees, the Senate may decide that it prefers strong influence in nominations over minority rights in confirmations. Again, I’m not saying we’re there yet — today is just one nomination, and by next week you probably won’t remember it — but as with so many things in the Senate right now, it certainly feels like the cords of institutional stability are growing taut, with no indication of when (or even if) they may snap.

8. As a last thought, don’t let the partisans fool you. Recess appointments have been used strategically and regularly by Presidents since the 1790’s; this isn’t something that was invented by President Obama. Or President Bush. Virtually all Presidents have routinely made recess appointments. On the other hand, today’s action by President Obama is almost certainly an unprecedented extension of the recess appointment power, and it is, while perhaps constitutional, nothing to waive away like so much nonsense. It’s true that this is just one appointment on one day, but these sorts of presidential actions tend to become the precedential basis for future actions, especially when they go unchallenged.

Update (8:35pm): Somehow I failed in all of this writing to link to any of Jon Bernstein’s various posts on the matter over the last few months. That’s an obvious oversight, and I recommend starting with his excellent post from today, which has jumping off points for his older stuff. I disagree slightly with his take (he’s somewhat more receptive to the idea that Obama’s actions today are reasonable, constitutional, and good), but I agree with the thrust of his piece, especially as it regards the possibility of this propelling institutional reform in the confirmation process.

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The Difficulty of Institutional Reform

Happy New Year!

I’m not going to comment much on Iowa/caucuses today, because it’s so far from my field of competence that my thoughts probably have no marginal value, and definitely none in reference to the value of your time. I do want to, however, point you toward a few posts that I think are definitely worth reading: Nate Silver did his final prediction round-up here, Jonathan Bernstein explained how to think about Iowa here and here, Brendan Nyhan made a key point about media coverage here, and Ezra Klein had a nice distillation of everything already mentioned here. For a bit more whimsy, you might also want to try Dave Weigel’s post on the twitter cliches of Iowa coverage, which got me laughing.

I’d also refer you to Bernstein’s election day patriotism post. That stuff always gets me. As you probably know, I’m a total romantic sucker for the pageantry and symbolism and raw logistics of the democratic process, even the messy parts. But I’m also a pretty hard-nosed realist about the fragility of open societies and the difficulty of instituting and maintaining a stable democracy. It’s absolutely a blessing for modern America that such a government has been handed down to us, and it’s a triumph for human freedom every time another nation of people successfully unshackles from authoritarianism and realizes such a system.** I don’t think there’s any question that democracy is objectively the least-worst real-world system known to man. And so while I’m a huge supporter of citizens criticizing our political leaders and government institutions and electoral processes, I also think it’s important that people remember how fortunate we are to live under such an imperfect form of government. And there’s no better time for that than election day.

This also brings me to what I want to discuss today: institutional reform. And I mean that in the widest sense possible — everything from the above-mentioned toppling of dictators in favor of democracy all the way down to changing chamber rules in Congress or the partisan primary calendars. Now, there’s always a lot of talk about institutional reform, but I can’t really remember a time when it seemed so constantly at the forefront of the political agenda. Maybe I’m just a hammer seeing a lot of nails, but I feel like it has become a secondary story to just about everything: in foreign policy, you’ve got the shakeout of the U.S. leaving Iraq, plus the Arab Spring in Egypt and elsewhere, all encased within a continuing debate over whether regime change is a legitimate or successful basis for a foreign policy of the United States. Back at home, we’ve got the ever-more-simmering debates over the filibuster in the Senate, the quadrennial rancor over the primary process for presidential nominations, and, oh yes, seemingly everyone and their radical-moderate brother trying to undo the partisan tension in Washington.

In the abstract, it seems great that there are well-organized efforts to deliver institutional change to American politics; it’s almost certainly the sign of a healthy democracy (or at least a sign against a democracy in fast decay). But it’s hard to get enthused when you read the specific reform proposals of such outfits as No Labels or Americans Elect. In fact, it’s rather depressing. Take the 12 point action plan of No Lables, for example. All of their proposals tend to fall into one of three categories: ultimately useless ( i.e. having Members of Congress not sit by party during the State of the Union address; barring Members from taking pledges; off-the-record bipartisan gatherings; joint leadership committees; 5-day congressional workweeks; nonpartisan fiscal report to Congress), plausibly good but not exactly novel (i.e. end the filibuster; presidential question time; anonymous discharge petitions), and horrible ideas and/or dangerous cures and/or unconstitutional (no negative campaigns; automatic confirmation of presidential nominees absent Senate up/down action; blocking Member pay until appropriations are done).

And those are just the proposals, forget about how on Earth you’d get them implemented. And this leads to the question at hand: why is institutional change so difficult? I would suggest that, with the broadest brush, there are three answers to this question: conflicts between normative values and strategic self-interests; the wide scope of institutional reform; and biases against change. I think that most people assign greater weight to the latter (the anti-change biases), but my sense is that the first two are much more fundamental. Let’s take a closer look:

1. Conflict between normative values and strategic self-interests. In a nutshell, the idea here is that your reform proposal might be a great idea that everybody loves in a vacuum, but it’s almost certainly going to result in political outcomes that are different than they otherwise would have been. And therefore, it’s going to make political actors consider how the outcomes differ in the short-run and weigh that against the normative long-term value of the reform. And you will not get much support for your reform from short-term outcome losers.

This isn’t rocket-science, but I don’t think you can overestimate how important it is in all situations of potential institutional change. It’s almost so obvious that it goes unspoken. After all, the implicit purpose of institutional reform is to affect how fixed preferences are translated into outcomes. If the outcomes aren’t going to change, then your proposed reform isn’t good or bad, it’s just a waste of time, like the proposal to have Members sit in a bipartisan fashion at the State of the Union Address. But when the outcomes are going to change, in many cases the normative value of the reform ceases to even be a consideration among political actors or voters. Interests dominate. (And that’s probably a good thing, but it’s definitely a consequential thing). Like Bryan said, the people of Nebraska are for silver and I’m for silver, I’ll look up the arguments later.

Similarly, trying to assess the normative value of an institutional change is really hard, because of the strategic interests of the actors. Good government altruism aside, institutional change is often proposed specifically for the purpose of adjusting particular outcomes. Again, this is so obvious it’s barely mentioned. But it has an important effect: the normative value of the reform itself is difficult to gauge. Is it being proposed for pure intentions, or to shift short-term outcomes? Likewise, the motivations of the short-term winners are going to be questioned: do they really think it’s a good idea to get rid of the filibuster and have some other state besides Iowa go first int he primary process, or will those things just help them pass their current legislation and give their preferred candidate a better chance at the nomination and their home state more say in the process?

Consider something like the voting age. It would be (and was) a significant institutional change to raise or lower it. And there might very well be strong normative arguments for letting 14 year-olds vote, or for returning the constitutional maximum-minimum voting age to 21. But there’s little chance such normative arguments would play the role of anything but just that, arguments. Much more likely is that the outcome of such a move would be a prime consideration of any supporter or opponent. How would a lower or higher voting age play out? It’s not obvious, but the general intuition is that a lower age might help liberals, while a higher age might help conservatives. And you can bet dollars to donuts that one sentence would be a better predictor of opinion than almost anything else. And the normative arguments would simply flow from there.

And thus the situation almost always becomes one in which normative values cannot be trusted: they may be genuine or they may be strategic rationalizations for underlying short-term interest winners. From the point of view of an individual political actor or voter, the inability to trust the normative information creates an incentive to rely on an evaluation of the strategic outcomes. And thus, when universalized, you end up in a situation where everyone may be safer relying on their interests to evaluate a reform, rather than normative concerns. Which reduces institutional change to a process fundamentally about short-term outcomes, which are guaranteed to be in conflict.

This is one reason that reformers sometimes propose blind or random change. For instance, one popular suggestion for abolishing the filibuster is to have the abolition take place 12 years down the road, when no one knows which party will be in the majority in the Senate or who will control the Presidency. The appeal of such a suggestion is obvious: it is explicitly trying to remove the short-terms strategic interests calculation from the decision-making process. By blinding the political actors from knowledge of how the reform will affect outcomes, people are bound to put more weight on their normative judgements about the value of the reform. Proposals to randomize the primary calendar offer the same benefit: with the exception of the existing winners (like Iowa and New Hampshire), strategic support based on outcome is less likely to jeopardize the success of the reform.

Of course, the converse is also true. Without short-term winners, it’s often hard to find people who will work hard for institutional change. There are definitely people out there who just want to Do The Right Thing, but they are (1) rare, (2) hard to identify, and (3) not usually backed with a ton of money or resources or hard-working volunteers. Now, I’m not trying to discredit reform or reformers here. But it’s simply true that even the normatively best reformers are usually sponsored and midwifed by the sweat of those who stood to benefit from the short-term changes to the outcomes.

2. The wide scope of institutional change. None of what was said above, of course, is either groundbreaking or limited to institutional change. It’s just as plausibly applicable to policymaking as it is to the electoral and institutional structures which provide the rules for policymaking. And as I’ve written about before, one of the fundamental blind spots of democracy is the difficulty of dealing with issues that entail long-term benefits but short-term costs.

But institutional reform is particularly tricky because any individual change has the ability to affect a whole array of policy outcomes.  And therefore, those who perceive the short-term outcomes to be against them can be quite diverse indeed. This is often carried through the reality of varying intensity of preference among political actors. Consider the filibuster: when Senators contemplate whether or not to abolish it, they are not just thinking about whether their party is currently in the majority or whether they want the current policy agenda to pass, but instead they are thinking about the individual policies most dear to them that they do not want to change.

In effect, changes to current institutional arrangements do not just have the ability to create short-term losers, they have the ability to transform everyone into a short-term loser at the same time. This partially explains why serious filibuster reform has failed to get a majority vote in the Senate the few times it has successfully been brought to the floor. Most Senators don’t want to reform the system, regardless of who the short-term winners will be, because they worry (perhaps correctly) that they will be made a short-term loser because reform will endanger the outcomes they care most about.

3. Biases against change. This is perhaps the most commonly-cited reason that institutional change is difficulty. There are at least two flavors. First, there’s the institutional structure itself: most institutional reforms are going to require supermajority support at some point or another, or at least will run into multiple veto-players along the way. A bare majority is rarely good enough for serious institutional reform. In one sense, it’s odd that we even call this a bias. Because it actually makes strong normative sense. It’s would be a strange world indeed where the a bare majority could always adjust the rules of the game willy-nilly. And that’s as true for meetings in a church basement as it is for amending a national constitution. So part of the bias is simply a different bias we have, one that favors majoritarianism.

Second, there seems to be a cognitive bias in most people against extreme negative outcomes. And therefore, people will usually take mildly worse average results to avoid uncertainty that will yield better average results but also high variance that may occasionally result in strongly negative outcomes. As discussed above, institutional reform is resides in the world of uncertainty; not only are there unintended consequences to any institutional change, but information about those consequences is very difficult to trust. Therefore, actors are likely to judge the status quo more favorably than it might deserve. Marginally improving things is great, but unless the status quo is highly untenable, individual actors often prefer to maintain it rather than choose an alternative that might results in strongly negative results.

Of course, all of this leaves the $64k question: how does institutional change actually happen? That’s best left to another post. Maybe next week.

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**Please don’t mistake me for a neo-conservative here. I’m not interested in using war to build democracies. In fact, I’m not really interested in war at all. Or in trying to build democracies through destabilization of non-democratic regimes. I simply mean that we should cheer without reservation when it happens, or modestly help when asked.

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