Vertical Accountability, Horizontal Accountability, and Legislative Checks and Balances

Political scientists such as O’Donnell (1994, 1998) and Diamond (2008) have long emphasized the crucial distinction between vertical and horizontal accountability. They argue that many new democracies remain dysfunctional because, although they have successfully introduced vertical accountability, horizontal accountability remains weak in these countries. Vertical accountability refers to the ability of citizens to vote down a non performing ruling party and replace it with an opposition party once every few years (when election comes). It is what formally defines a delegative democracy. Horizontal accountability, on the other hand, refers to checks and balances exercised by other agents off the election seasons. The means of horizontal accountability include, among others, (i) legislative checks and balances, which rely to a large extent on members of the opposition parties sitting in the legislature, and (ii) oversight by other state agents such as ombudsman’s offices, anticorruption bodies, public auditors, the judicial system, etc., and relies to a large extent on various kinds of professionals.

While this literature in political science has successfully raised our awareness of the insufficiency of formal elections (which ensure only vertical accountability), and the importance of horizontal accountability, in the proper functioning of any democracy, it has not yet delved deeply enough into the interactions among these different forms of accountability. For example, are they complements or substitutes of each other? Does a country weak in one form of accountability necessarily benefit from strengthening the other form? While political scientists such as O’Donnell (1994, 1998) and Diamond (2008) seem to presume that more accountability, regardless of which form it is, is always better, economists have a natural reason to be cautious. While different agents (voters, opposition parties, professionals, etc.) are responsible for safeguarding different forms of accountability, and these different agents are motivated by different incentive structures, the interplay of these different incentive structures is by no means obvious. Indeed, our preliminary research (to be described in the RESEARCH PLAN and METHODOLOGY section) shows that, for example, when professional oversight is weak, strengthening vertical accountability may generate perverse incentives for opposition parties, and hence can paradoxically hurt legislative checks and balances.

This project plans to apply economists’ theoretical tools to fill this gap in the political science literature. Its methodology is solidly rooted in the economics of incentives. We shall study the incentive structures of different political agents explicitly, and analyze the interaction among different forms of accountability. This project will not only complement the political scientists’ studies on new democracies, but will also shed light on how to implement welfare improving (instead of destabilizing) political reforms in democratizing societies such as China and Hong Kong. We expect that at least one internationally refereed journal article will be resulted from this project.