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Consequences of direct democracy

In the final analysis, the question is, of course, whether and how direct democracy functions, and also whether it performs well for the economy and for the citizens’ personal situations in everyday life. This question has above all been studied by economists. They have exploited the variations that exist at the cantonal

Probability of government support, argument-based opinions and level of awareness (for propositions supported by the centre-right and opposed by the left)

Figure 2.6 Probability of government support, argument-based opinions and level of awareness (for propositions supported by the centre-right and opposed by the left)

(regional) level within Switzerland with regard to the institutionalization of direct-democratic instruments and their practical use. Thus, in some, but not all, cantons there exist direct-democratic instruments in the area of fiscal policy that provide the citizens with the possibility of exerting a direct influence on the taxes and the expenditures of the cantonal states. Based on a comparison of the twenty-six cantons, one can draw conclusions about the consequences of direct- democratic institutions.

Such comparisons lead to the conclusion that direct-democratic institutions have mainly positive effects with regard to the economy (Kirchgassner et al. 1999; see also Geissel in this volume). Thus, they increase the macro-economic performance - the gross domestic product (GDP) per capita is higher in cantons that allow for direct-democratic interventions of the citizens in fiscal policy by as much as 3.6 per cent. Moreover, in cantons that apply the referendum in fiscal matters, the public expenditures correspond more closely to the citizens’ preferences, and - ceteris paribus - they are also lower than in more representative systems. To the extent that they have a right to co-decide about fiscal matters, the citizens apparently deal more economically with their own tax money than their elected representatives. Cantons with elaborate direct-democratic institutions also have a lower public debt, higher tax morale and better public services. Finally, direct-democratic institutions also have a legitimating and an integrative function (Papadopoulos 1998: 156-60; 2001), and they increase the general level of life satisfaction among the citizens. The higher satisfaction with life in states with elaborate direct-democratic procedures not only results from their higher level of public performance, but also, as is argued by Stutzer and Frey (2006), is a direct consequence of the greater legitimacy of public decisions that involve such procedures. Citizens value the possibility of participating in political decision making in and of itself, independently of their implications for the performance of the state, which increases the perceived fairness of political decisions that are taken by direct-democratic procedures. Based on an original comparison of Swiss citizens and foreign residents of Switzerland, Stutzer and Frey succeed in empirically separating the effects of direct-democratic institutions on public performance from their purely procedural effects and to confirm their hypotheses. The opportunity for direct-democratic participation has, indeed, a direct effect on the general life satisfaction of the Swiss citizens. While they could not definitely confirm the positive consequences for the individuals’ beliefs about their political influence, the effect on the satisfaction with life proved to be highly robust.

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