Bad Apples: Political Paralysis and the Quality of Politicians

Abstract

Why do elected officials often suffer from political paralysis and fail to implement the best policies available? This paper considers a new yet intuitive explanation that focuses on the quality of the politicians competing to replace the incumbent. The key insight is that a 'good' incumbent with preferences identical to those of a representative voter will want to keep corrupt politicians out of office; she may do so by distorting her policy choices to signal her type and win re-election. The value of signalling and staying in office increases with the fraction of corrupt types in the population of politicians. Electing good types may therefore not be enough to ensure that the best policies are implemented, especially when corrupt politicians are common. This provides a new explanation for why political failure is particularly severe in corrupt democracies.JEL Codes: H1, H54, D7, O10.