Policy Decay and Political Competition
Steven Callander, Stanford GSB
Abstract: Modern political systems exist not in a vacuum but in a world of continuous technological, social, and economic change. As a result, policies designed for today's world are likely to provide an imperfect fit tomorrow, a phenomenon we refer to as policy decay. In principle, legislators could act to update legislation in response to changing conditions and remove decay when it appears, but in practice such policy modernizations are the source of political conflict. We investigate this conflict in the context of the classic agenda-setting model of policy formation. We show that the party with proposal power seeks to use decay as leverage to obtain policy gains, while at the same time the out-party has the incentive to block efficiency-enhancing policy improvements if doing so improves its own electoral fortunes. We show that this leads to a rich dynamic of policy making in which 1) decay persists and accumulates on the equilibrium path, 2) alternations of power occur infrequently yet inefficiently often, and 3) the threat of transition sharply constrains but does not eliminate proposal power, exerting a centripetal force on policy within the classical gridlock interval.