Direct Democracy and Public Policy

An extensive literature seeks to measure the effect of the initiative and referendum on public policies. Several conclusions emerge: The initiative and referendum have different effects on policy. Requiring popular approval of fiscal policies (mandatory referendums) results in lower expenditure, taxes, and debt. The initiative process gives voters more power and results in policies closer to the median voter preference; this often has reduced spending (American states, Swiss cantons), but sometimes has increased spending (cities). The initiative is associated with more socially conservative policy choices. Spurious correlation is a concern in many studies, and more research on causality is needed.