Things Institutionalists Know that You Should: Plott's Equation

Inspired by Hans Noel's "10 Things Political Scientists Know that You Don't," Josh, Jordan, Will and I are rolling out a semi-regular series that borrows the idea  and applies lessons from the new institutionalism to politics.  While Noel's piece generally focuses on lessons from the world of political behavior (that is, lessons primarily gleaned from public opinion research), we are offering the neo-institutional accompaniment (which we see as our blog's niche, after all).  Our focus in this series is on three things: preferences, institutions, and outcomes.  Though the list we plan to compile will be far from exhaustive, we hope to focus on some of the fundamental aspects of neo-institutionalism as well as highlight a few of our favorite studies. Fundamentals & Plott's Equation

This post is pretty simple, but we'll turn it up to 11 over time.  Because institutional theory can be a little complex, it helps to begin with some nomenclature.

Outcomes are pretty easy: they are the result of any decision making process.  Whether it is which restaurant to go to, or whether or not to invade a country, determining outcomes is what politics is all about.

Preferences are rather straightforward as well: they are what each person wants out of a given set of choices.  People will vary in their intensity of preference (ranging from general indifference to overwhelming desire), in their direction of preference (some would rather have geoduck clams, others prefer buffalo wings), and these preferences may change over time.

Institutions are a trickier concept.  While in common parlance the word "institution" often refers to a formal organization such as a university, business or government, institutionalists use a different definition. To Douglass North (1990), the granddaddy of the new institutionalism , institutions are "the constraints that humans devise to shape human interaction."  So, Congress itself is an organization.  The procedural regulations that govern Congressional behavior are institutions.  Put more simply: institutions are the rules of the game.  These rules of the game don't just come out of the ether: they are inherited by actors, or else developed by actors when the need arises.  Institutions can be incredibly simple, such as a carload of people determining which restaurant to go to by simple majority vote; or incredibly complex, such as bargaining in the US Senate.

From the institutionalist perspective, these are the building blocks for understanding politics.  In order to understand political outcomes, you have to know both the preferences of the players, as well as the institutional structure.  Plott (1991) [here, gated] wrote,

Preferences x Institutions => Outcomes

Hinich and Munger (1997) [book here] went on to call this "Fundamental Equation of Politics."  As they point out, this equation means that if preferences change, sometimes outcomes change even if the institutions don't.  Similarly, if institutions change while preferences remain the same, the outcome may also change.   Consider a simple example:

First, the preferences: five friends are riding in the car trying to decide where to eat.  Two want seafood, one wants ribs, one wants Tex-Mex and one (the driver) is vegan.

Now, the institutions: the outcome can be determined by plurality - meaning that the most votes carries the day; the outcome can be determined by majority - meaning that at least 50% of the votes must be lodged for a particular destination; or the outcome could be determined by simple dictatorship.

Now, the outcomes:

  • Scenario One: The destination is decided by  plurality.  The two votes for seafood outnumber the other votes for ribs, Tex-Mex and vegan restaurants respectively; and everyone gets seafood.
  • Scenario Two: The destination is decided by majority.  The two votes for seafood aren't enough to carry the day, and the outcome will be unclear until someone caves and votes with the seafood fans; until the anti-seafood crowd rallies behind a common banner; or the car runs out of gas at a Golden Corral.
  • Scenario Three: The destination is decided by dictatorship, the driver gets to choose a vegan establishment, irrespective of the rest of the car's preferences.

One can easily see that if the preferences changed, though the three institutional arrangements did not, the outcomes would also vary.  Increasing the number of seafood fans doesn't change the outcome in Scenario One or Scenario Three, but it does in Scenario Two.

Although this is an exceedingly simple example, the implications are profound. Take the U.S. Senate as an example. Given the composition of 53 Democrats and 47 Republicans, if outcomes were determined by simple majority vote, Senate output would be far more favorable to the rank-and-file Democratic member.  Of course, our namesake Rule XXII applies, which for all practical purposes raises the threshold for an outcome from a simple majority to a three-fifths vote.  By raising the minimum threshold needed to pass legislation on the floor, the institutional arrangement has had the effect of moving outcomes away from the Democratic party and toward the Republicans.

Another example that often comes up in class when I present this notion to my students is the Electoral College.  To be sure, even if the American electorate's preferences were unchanged in the 2000 election, the outcome would have been different if the rules for presidential selection specified popular vote, rather than aggregating votes by state.

This has been a rather simple exercise, but in the coming weeks, we'll consider more advanced lessons from institutionalism.  In the next post, Jordan will consider how institutions have a status quo bias, and how constant changes in governmental preferences do not lead to rapid policy change (i.e. "cycling").