Financing Elections in an Uncertain Environment and the Rationality of the Macroeconomic Decision-Maker: Implications for Electoral Reform<br>Working Paper No. 02/2021

SUMMARY

This paper examines the problem of a macroeconomic decision-maker who would like a rational financing of elections in the face of uncertainty, while not having the power to decide on their organisation. Starting from a probability tree, the paper highlights the factors likely to increase or reduce the probability that the decision to finance elections is rational from the standpoint of the socio-economic welfare of the population; the latter being measured by the level of national income expected from production.

The paper suggests that different social categories can – by influencing the cost of elections, the incumbent's motivation to organise elections, the conditions for the proper conduct of the vote, and the expected pre- and post-electoral socio-political climate – affect the probability that the decision to finance elections is made rationally.

In conclusion, an electoral reform should select measures in such a way as to avoid cumulative combinations of uncertainties and cost increases. Phasing reform measures over more than one electoral cycle and taking other institutional reforms into account are, moreover, conducive to ensuring a rational decision on the financing of elections.