Survey Proposal

Electoral Systems.
A Survey and an
Application to the Italian Case1
Sandro Brusco2
Comments welcome.
August 2008
1 Manuscript prepared for the conference ‘Riformare l’Italia. Una cosprazione

liberista’, organized by the blog noisefromamerika.org and held at Villa La Pietra,
Florence, July 3-4 2008. I would like to thank Gianfranco Pasquino, Giovanni
Guzzetta and all the participants to the conference for useful comments on an
initial draft. New York University provided much appreciated logistic and financial
support. The opinions expressed in this manuscript, as well as all the remaining
mistakes, are the sole responsibility of the author.
2 Department of Economics, State University of New York at Stony Brook. E—
mail: sandro.brusco@stonybrook.edu
Contents
Preface ix
1 Introduction 1
2 Electoral Systems in Practice 7

2.1 Proportional vs. Majoritarian . . . . . . . . . . . . . . . . . . 8
2.2 ‘Ordinal’ or ‘Preference’ Systems . . . . . . . . . . . . . . . . 8
2.2.1 Main Preference Systems . . . . . . . . . . . . . . . . . 9
2.2.2 An Example . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Mixed Systems . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3 Political Consequences 15
3.1 The Number of Parties . . . . . . . . . . . . . . . . . . . . . . 16
3.1.1 Duverger’s Law and FPTP . . . . . . . . . . . . . . . . 16
3.1.2 Other Electoral Systems . . . . . . . . . . . . . . . . . 19
3.2 Empirical Evidence . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Electoral Systems and the Left—Right Divide . . . . . . . . . . 21
4 Economic Consequences 25
4.1 Public Spending . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.1 Composition of Public Spending . . . . . . . . . . . . . 26
4.1.2 Level of Public Spending . . . . . . . . . . . . . . . . . 27
4.2 Redistribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3 Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5 The Italian Case 33

5.1 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2 The Current Situation . . . . . . . . . . . . . . . . . . . . . . 35
v
vi CONTENTS
5.2.1 Lower House . . . . . . . . . . . . . . . . . . . . . . . . 36

5.2.2 Senate . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2.3 Regions . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.2.4 Towns and Provinces . . . . . . . . . . . . . . . . . . . 38
6 A Proposal for Reform 41

6.1 Instant Runoff Voting . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Details of the Proposal . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.4 The Political Consequences of IRV . . . . . . . . . . . . . . . 47
6.5 The Economic Consequences of IRV . . . . . . . . . . . . . . . 50
6.6 Why IRV is Better than the Alternatives . . . . . . . . . . . . 51
6.7 Why IRV is Possible . . . . . . . . . . . . . . . . . . . . . . . 52
Preface
This document presents an overview of the main theoretical and empirical

results existing on the literature on electoral systems. We analyze both the
consequences on the political system and the ultimate effects on economic
policy that different electoral systems have.
We then provide a discussion of the Italian case, looking both at the
history of electoral reform in the country and at the current situation.
The current Italian situation is highly unsatisfactory, as the system has
neither the benefits of the majoritarian nor of the proportional system. Re-
forming the electoral rules is crucial in order to improve the quality of the
Italian political system. We argue that the introduction of the a preferen-
tial voting system similar to the one currently used for the Australian Lower
House is the most preferable choice. Furthermore, given the results of the
2008 political elections, a reform in this sense seems to be possible.
ix
Chapter 1
Introduction
Electoral systems have the task of aggregating social preferences in order to

make public choices. Ultimately those choices (how much we are taxed, how
much we spend on education, pensions etc.) are what really matters, but
the occasions in which the citizens are actually called to choose directly the
policies implemented are very few. Modern democracies are representative
democracies, and the role of citizens is largely confined to the choice of their
representatives. The hope, of course, is that the choice of a given represen-
tative is linked in a stable and predictable way to the choice of policies.1
Ideally, we would like to design electoral systems so that they are able to
produce ‘good’ results under a wide range of scenarios. We have been know-
ing for quite some time that this perfect ideal cannot be achieved. When
we allow for full generality in the number of alternative candidates and the
preferences of citizens about the candidates, Arrow’s theorem (see Arrow [2])
establishes that it is impossible to aggregate social preferences in a way that
satisfy some very reasonable and widely accepted axioms; more of interest
for our topic, the Gibbard-Satterthwaite theorem (see Gibbard [45] and Sat-
terthwaite [75]) establishes that it is impossible to elicit the preferences of the
citizens in a straightforward and truthful way. This leads to the conclusion
that there is no way in which we can find a perfect electoral system that
fits all countries and periods. All electoral systems generate their share of
paradoxes and undesirable outcomes (see Saari [73] for examples).
1
There is a vast literature devoted to the analysis of legislative games. Since our focus
in on electoral systems we will ignore this literature, taking for granted that there is a
stable relationship between the composition of the legislatures and social decisions. See
Banks and Duggan [8] for a recent paper on legislative games.
1
2 CHAPTER 1 INTRODUCTION
This means that, when choosing electoral systems, empirical and histori-
cal consideration will have to enter the calculus. All solutions are inevitably
second—best, and solutions change depending on the particular character-
istics of the industry under consideration. The consequence is that, when
discussing electoral reform in a given country, it becomes imperative to con-
sider carefully the general institutional structure and the political culture
and tradition of that country. Consider for example the traditional trade—
off between accountability, commonly associated to majoritarian systems,
and consensus—building, commonly associated to proportional systems. A
polity with very deep ethnic or social divisions may well decide that avoid-
ing power—grabbing by a single group, an event that may trigger civil strife
and unrest, is well worth the cost of having less accountable legislators. The
polity may therefore prefer a proportional system. Less divided polities may
instead place a lower value on avoiding even temporary dominance by a single
group, so that the greater accountability afforded by a majoritarian system
becomes the most important criterion in the selection of an electoral system.
From an economist’s point of view, the situation is very similar to the
one faced when evaluating the optimal regulation of imperfectly competitive
markets. Most of the times, in such markets the first best is impossible
to achieve, yet sound economic analysis and careful empirical studies can
provide a solid understanding of what can and should be done to improve
market outcomes. To reinforce the previous point, the optimal regulatory
intervention (or lack of it) changes depending on the characteristics of the
market; similarly, the optimal electoral system may change depending on
the characteristics of the polity. The rational choice approach to electoral
behavior has therefore tried to establish more precisely what are the features
of the electoral systems which turn out to be crucial in terms of the outcomes
produced. Different systems provide different incentives, both for politicians
and voters. Usually incentives shape behavior in a pretty straightforward
way; understanding exactly what incentives a given electoral system provides,
however, may not be an easy task.
Of course the analogy is not perfect and the study of electoral systems
differs from the study of imperfectly competitive markets in some important
ways. The first is that, by and large, economists have pretty clear ideas about
what goal a market regulator should pursue: some combination of consumer
surplus and producer surplus. This is not necessarily the case for political
scientists, who may have in mind multiple and diverse objectives that an
electoral system should achieve and, when reasoning on how to optimally
3
design an electoral system, have therefore to engage in the painful calculation

of the trade-offs.
The second important difference is that in the analysis of imperfect mar-
kets the actors (the firms) and their goals (profit maximization), are usually
well defined. When analyzing electoral systems, who are the relevant actors?
Both voters and politicians in principle qualify, but often it makes sense to
consider only politicians. The objectives of politicians may vary, going from
pure office—seeking to the implementation of specific policies. People with dif-
ferent goals will react differently to the incentives provided by the electoral
system.
Since in this paper I will offer some recommendation about how to change
the Italian electoral system, at least some brief explanation of the behavioral
model that I will consider and the social objectives that I will propose pursu-
ing is in order. My hypothesis is that the main actors to be considered are the
members of the political elites; most voters tend to behave passively (or, to
put a more positive spin on it, ‘sincerely’), casting their ballot for the party
that they feel closer to their positions. In other words, I will ignore strategic
behavior on the part of voters, assuming that the only relevant strategic ac-
tors are career politicians (see Degan and Merlo [28] for a discussion of the
empirical validity of sincere voting).
Members of the political elite may have diverse motivations. Some are
simply guided by the desire to maximize power, as in the standard Downsian
model, while others are moved mostly by their ideological preferences, as in
citizen candidate models. Figuring out exactly who wants what is an hopeless
task, but fortunately enough in many cases the exact motives are not really
important to understand how politicians react to different electoral rules.
For example, the prediction that a proportional system will induce more
entry than a majoritarian system should hold no matter what the goals of
politicians are. At the end of the day the goal of a politician should be to
maximize power; the exact reason for that, be it pure enjoyment of power
or a strong ethical motive to do the right thing, is not really important to
explain electoral behavior (although it may be important in explaining the
particular policies selected by the politician).
Representative democracies are the quintessential example of a principal—
agent model, where voters are the principals and politicians are the agents.
Given the pervasive presence of asymmetric information it is inevitable that
the agents will earn rents and I will assume that one of the goals of society is
to minimize those rents. Another goal is to have a varied and ample offer of
4 CHAPTER 1 INTRODUCTION
political options at low cost. By this I mean that the polity is interested in
having a wide menu of choices and the possibility of actually implementing
those choices. Thus, to put it in the simplest possible way, the goal that
I will have in mind when thinking about the reform of the Italian political
system is to maximize the diversity of actually feasible political choices while
avoiding to pay high incentive rents to politicians.
I emphasize that we should be interested only in choices which are actu-
ally feasible and implementable. In fact, an important issue in the analysis
of electoral reform is that maximizing entry into a political system is not
necessarily an optimal policy, as it is instead often the case in the analysis
of imperfect markets. Excessive entry may impair the decision process and
actually reduce the set of feasible political options, increasing the costs for
the polity. For example, if the electoral system foster the entry of many
small parties which can achieve parliamentary representation, then the only
feasible political choice becomes the formation of heterogeneous coalition
governments who can only agree on preserving the status quo. This means
that, although the voter can choose among many different parties, the real
choices in terms of actual policies are quite limited. On the other hand,
putting excessive obstacles to entry may increase enormously the rents of
politicians, insulating them from effective competition and making them less
responsive to the desires of voters. When designing an electoral system, this
crucial trade—off has to be taken into account.
In the following I will propose a selective survey of the theoretical and
empirical literature on electoral systems. I will then build on those results
to discuss a proposal for reforming the Italian electoral system. The survey
is not meant to be exhaustive, this is next to impossible given the sheer size
of the literature, and in fact some topics been completely ignored. I have
tried to concentrate on those issues that, in my opinion, appear to be most
relevant for the Italian case. Even so, I have been forced to exclude, simply
because of time and space limitations, a couple of issues which may acquire
some relevance in the not-too-distant future. The first is the issue of electoral
participation and turnout (see Feddersen [35] and Dhillon and Peralta [29]
for recent surveys on the subject). Italy has always had very high turnout
rates, but it is quite clear that different electoral system have an impact on
voters’ participation. The ramifications of this fact may be important, but
are not discussed here. Second, I will not discuss problems related to the
representation of ethnic minorities (see Grofman, Handley and Niemi [49] for
a general introduction and Trebbi, Aghion and Alesina [79] for more recent
5
work on the issue). This has never been a serious problem in Italy, a country
which up to now has remained ethnically and religiously quite homogeneous,
but this is going to change in the future.
The rest of the manuscript is organized as follows. The next chapter looks
at the main electoral systems that have been used in the world and the main
variables that determine the performance of an electoral system. Chapter
3 discusses the political consequences of different electoral systems, in par-
ticular the number of parties and the political positions that they express,
both from the theoretical and from the empirical point of view. Chapter 4
performs a similar task, looking this time at the economic consequences of
electoral systems. Chapter 5 describes the evolution of electoral systems in
Italy after the unification and the different systems currently used at different
levels of government. Finally, chapter 6 is dedicated to a proposal for reform.
We argue that, given the current state of Italian politics, the adoption of pref-
erence system such as Instant Runoff Voting (also called Alternative Vote)
used in the Australian Lower House is likely to produce beneficial effects
both in political and economics terms. The system also appears to be in the
interest of the main forces currently represented in the Italian Parliament.
Chapter 2
Electoral Systems in Practice
The main job of an electoral system is to map distributions of votes into

distributions of parliamentary seats. In general terms a vote is any (possibly
partial) representation of the preferences of a voter over the set of candidates.
Thus, the space of possible electoral systems is the set of mappings from the
preferences of the voters to the assignment of seats. This is a huge space and
an exhaustive analysis of all possible electoral systems is beyond the scope
of this work. Most of the theoretical and empirical literature on electoral
systems has tried to focus on what are the most important aspects of the
electoral systems which have been used in practice. Theoretical models of
electoral systems, in particular, have explored at some length only the simpler
electoral systems, especially First-Past-the-Post (FPTP).
Most electoral systems divide the polity in sub-units (districts), usually
based on geographic criteria1 and allocate the representatives to the different
districts. Voters are assigned and they select only the district representa-
tives. Systems of this sort tend to be easier to analyze; each district can be
considered separately. There are however a number of other electoral rules
that may be superimposed on the districts’ choices. One of the most common
is the presence of thresholds for representation, in the form of a minimum
percentage that a party has to achieve in order to gain parliamentary repre-
sentation, but there are many others. Going into the details of the different
electoral systems used in the world would consume too much space; the in-
terested reader can consult Colomer [19] and Pasquino [65] (see also Sartori
1
Rarely, other factors may be used. In New Zealand, for example, there are seats
reserved to the Maori population, adding an ethnic dimension to the geographical one.
See Nagel [60].
7
8 CHAPTER 2 ELECTORAL SYSTEMS IN PRACTICE
[74]). Here I will concentrate on the topics which are of more immediate
interest to the issue of electoral reform in Italy.
2.1 Proportional vs. Majoritarian

One of the most important characteristic of an electoral system is its degree
of proportionality, i.e. how close the share of seats won by each party is
to the share of the votes that the party has obtained. When looking at
the structural characteristics of an electoral system that have an impact
on the degree of proportionality, the most prominent variable appears to
be the district size. It is often argued that a larger district size induces a
more proportional representation; we go from the extreme of single—member
districts to the opposite extreme of a single district with a number of members
equal to the entire Parliament. It is trivially true that for a given number
of candidates and distribution of votes, a larger district size induces more
proportional representation. But, at least in the long run, we should expect
some feedback from the electoral system to the number of parties and the
political positions that they take, and this may complicate the relationship
between district size and the degree of proportionality. For example, if FPTP
system induces a two-party system with parties located close to the median
of voters’ preferences, the share of seats of each party will be quite close to
the share of the votes. On the other hand, with more than two parties or
an unequal distribution of votes across districts the results of FPTP may be
very different from proportionality. The long-run effect of district size on the
party system is one of the main research topics political science. We will
discuss it more at length in chapter 3.
2.2 ‘Ordinal’ or ‘Preference’ Systems

Electoral systems may differ in the degree to which they allow voters to
express their complete preferences among candidate. Many electoral systems,
such as FPTP and closed-list proportional, only allow the voter to state the
top-preferred candidate or party. Other electoral systems however let voters
to express their preferences in a more complete way. i.e. they try to use in
a more complete way the vector of preferences of each voter.
2.2 ‘ORDINAL’ OR ‘PREFERENCE’ SYSTEMS 9
2.2.1 Main Preference Systems

Among the systems that are currently used, we have:
• Majority runoff. Candidates run in single—member districts. A candi-
date is elected if he or she obtains at least 50% of the votes. If not,
a subset of candidates move to a second round, where the most voted
candidate wins the seat. The simplest case in the one in which the two
top vote—getters move to the second round and all other candidates are
excluded. This is, for example, the system which is used to elect the
French president and the mayors of Italian cities with more than 15,000
citizens. However, other alternatives are possible. For example, in the
French assembly all candidates getting more than 12.5% of the regis-
tered voters in the first round move to the second round. In Hungary,
second round access is granted to candidates getting more than 15%
and in any case to the top three candidates2 . Grofman [47] contains a
general treatment of runoff methods.
• Instant Runoff Voting (IRV), or Alternative Vote 3 . Candidates run in
single—member districts. Voters express their preferences by ranking
the candidates on the ballot. If one candidate is the top—preferred by
at least 50% of the voters then he or she is elected. Otherwise, the
candidate with the lowest number of top-preferences is eliminated and
the votes given to that candidate are assigned to the second-preferred
candidate. If, after the reassignment of the votes, a candidate reaches
50% of the votes that he or she is elected. Otherwise, the candidate
with the lowest number of votes among the remaining candidates is
eliminated and the votes are assigned to the second—preferred candi-
date. The process continues, eliminating one candidate at each round,
until one candidate reaches 50% of the votes. Variants of this systems
are used to elect members of the Australian Lower House and the Irish
president.
• The Single Transferable Vote (STV). This system is similar to IRV
but is applied to multi-member districts. As in IRV, voters rank the
2
Hungary uses a complex mixed system, with some seats allocated in a majoritarian
way and others in a proportional way. The rule described here refers to the seats allocated
in the majoritarian part. See Benoit [9] for details.
3
The terminology ‘instant runoff voting’ is commonly used in the USA, while ‘alterna-
tive voting’ is commonly used in England.
candidates on the ballot. A candidate is elected if it meets a certain

quota of first-preference votes; for example, in a 5-member district
it may have to get 20% of the votes. If a candidate obtains more
votes than the necessary quota then the extra votes are reallocated to
the second choices according to some criteria (many different criteria
can be used). When the number of seats per district is large, STV
produces results which are close to proportionality. When there is a
single seat STV is equivalent to IRV. Variants of the system are used
to elect members of the Irish Parliament, the Maltese Parliament and
the Australian Senate (see Bowler and Grofman [16]). It has recently
been introduced for local elections in Scotland.
Different electoral systems induce the entry of different sets of candidates and
may also induce different strategic behavior on the part of voters. However,
even with a fixed set of candidates and sincere voting, the winners under
different rules may be different.
2.2.2 An Example
To illustrate the point, consider the following example. There are 4 candi-
dates, A, B, C and D, and 1000 voters. The preferences among candidates
are distributed as follows.
370 270 240 120

A B D C
B D B D
C C C B
D A A A
Thus, 370 voters rank the candidates as A Â B Â C Â D, 270 voters rank

the candidates as B Â D Â C Â A and so on. Assuming that all voters cast
their ballot sincerely, who is the winner?
If the system is FPTP then A obtains 370 votes and wins. Notice that
this outcome appears to be quite undesirable, since A is actually ranked last
by 63% of the voters. Under runoff, no candidate obtains a majority at
the first round. Suppose first that the system is like the one in the French
2.2 ‘ORDINAL’ OR ‘PREFERENCE’ SYSTEMS 11
presidential election, where only the two top vote getters move to the second
round. In this case the contest is between A and B. Since B is preferred to
A by 63% of the voters (all voters except the ones in the first column), B is
the winner.
Suppose next that the system is like the one used in the French assembly,
where a party advances to the second round if it gets at least 12.5% of the
vote. In this case the only party excluded is C (which obtains 12%) and A,
B and D move to the second round. At this point the preferences among the
three remaining candidates are as follows.
370 270 240 120

A B D D
B D B B
D A A A
Thus, A wins with 370 votes, D is second with 360 and B is last with 270.
Finally, consider IRV. C obtains the lowest percentage, so it is eliminated
first. The situation becomes as follows.
370 270 240 120

A B D D
B D B B
D A A A
Now the candidate with the fewest top preferences is B, which is therefore
eliminated. Only A and D are left and the preferences are as follows.
370 270 240 120

A D D D
D A A A
Thus, D is selected.
The example illustrate one of the main advantages of ordinal systems over
FPTP. With an ordinal system it can never be the case that a candidate who
is ranked last by a majority of voters is elected, while such an outcome is

possible under FPTP. However, the example also shows that different ordinal
systems (and different variants of a given systems, as it happens in the ex-
ample for runoff) may well produce different winners. While ordinal systems
allow voters to use the whole profile of preference, it is a consequence of the
Arrow’s impossibility theorem that no single method can be entirely satis-
factory. Furthermore, things become much more complicated if we recognize
that the set of candidates depends on the electoral systems, since different
methods provide different incentives for entry, and that voters may them-
selves act strategically. These considerations will become important when
we discuss how to reform the Italian electoral system (see chapter 6).
We conclude this section pointing out that prominent scholars have ad-
vocated some form of ordinal voting as the optimal reform. Dasgupta and
Maskin [27] propose to ask the voters to rank all candidates and then pick
a Condorcet winner4 whenever it exists, with some supplementary criterion
when it does not exist. Grofman and Feld [48] analyze an alternative to IRV,
known as the Coombs rule. The difference is that, instead of eliminating at
each round the candidate with fewest top-votes, it is the candidate which
is ranked last by most voters is eliminated5 . The main problem with these
systems is that they must ask voters to rank all possible alternatives. When
there are many candidates and voters have a limited amount of information
at least about minor candidates these methods may not work well.
2.3 Mixed Systems

Up to now we have discussed ‘pure’ electoral systems, i.e. systems which use
the same criterion to allocate all seats. Many countries have adopted mixed
systems, in which different methods are used for different seats. The list of
countries with mixed systems include some former Socialist countries (e.g.
Russia and Hungary), Latin American countries (e.g. Mexico and Bolivia)
and others. The system used in Italy between 1994 and 2001 has also been
mixed. Typically, these systems allocate a portion of the seats according to
4
A Condorcet winner is a candidate who can defeat each other candidate in head-to-
head contests. Barring ties a Condorcet winner always exists in two-candidate elections,
but it may not exist when there are at least three candidates.
5
In the example discussed above it can be checked that the application of the Coombs
rule leads to the choice of B, which is also the Condorcet winner.
2.3 MIXED SYSTEMS 13
some majoritarian rule, usually but not always FPTP, and the remaining
portion proportionally.
Mixed systems tend to be compromise solutions. The majoritarian part
is meant to make sure that the winning party (or parties) can form a par-
liamentary majority, while the proportional part in meant to make sure that
all different minority opinions present in society are able to get a parliamen-
tary voice. However, in terms of entry into the electoral competition mixed
systems tend to provide incentives which are close to the one existing under
proportionality, as it has been quite clear in the Italian experience. More
information about mixed systems is contained in the recent books edited by
Shugart and Wattenberg [77] and Ferrara, Herron and Nishikawa [40]. Also,
Ferrara and Herron [39] have analyzed the incentives for strategic entry un-
der mixed systems and Ferrara [37], [38] has analyzed the Italian experience
with a mixed system.
Chapter 3
Political Consequences
Electoral rules have far-reaching influence on the political system. They con-
tribute, together with other factors, to determine how many parties will enter
the electoral competition and how dispersed the political positions that they
occupy will be. To put it in a different way, the electoral system determines,
for a given distribution of voters’ preferences, how many and which political
positions become viable (i.e. are able to get parliamentary representation).
The impact of electoral systems on the number of parties and the positions
that they take have been widely discussed in the literature. This in turn
has important implications for government formation and stability; electoral
systems that favor widespread entry and allow many different political posi-
tions to obtain parliamentary representation typically tend to produce coali-
tion governments. When governments are based on bargaining agreements
among many different parties, the probability of government crises usually
goes up.
A huge literature, both theoretical and empirical, has tried to shed light
on the relationship between electoral rules and political systems. Most of the
early attention has centered on the FPTP system, both because of its sim-
plicity and its widespread use in the Anglo-Saxon world. Two famous results
produced in the Fifties, the Duverger’s Law (see Duverger [32]) and the Me-
dian Voter Theorem (see Black [12] and Downs [30]), have generated a huge
literature. These results yield pretty precise predictions on the political sys-
tem induced by FPTP. First, FPTP generates a two—party system. Second,
the two parties will occupy the same ‘centrist’ position. In this chapter we
will discuss the main theoretical and empirical results relative to the political
effects of electoral rules. We will review the main theoretical developments
15
16 CHAPTER 3 POLITICAL CONSEQUENCES
about FPTP after the initial contributions of Duverger and Black, as well as
theoretical analyses of different electoral systems. Electoral studies have also
seen a recent upsurge in empirical work, as many new datasets have become
available. We will also review the main results coming out of the empirical
literature.
3.1 The Number of Parties

The central hypothesis with regard to the number of parties has long been
the so-called Duverger’s Law: An FPTP electoral rule produces a two-party
political system. Since two is the lowest number at which there is meaningful
political competition, it follows that in environments in which political com-
petition is possible there will be more parties under a proportional system
than under a FPTP system. Duverger talked about a ‘mechanical effect’ and
a ‘psychological effect’ of the FPTP system. The mechanical effect is simple:
small parties are unlikely to ever be the party winning a plurality in any dis-
trict. Thus, under FPTP they are not awarded seats and are mechanically
eliminated from parliamentary representation. The ‘psychological’ effect is
what nowadays would be called a strategic effect: When agents optimally
choose their electoral behavior then a two—party system is the outcome of
the game when the rules are dictated by FPTP. For other electoral systems
predictions on the number of parties are far less clear and serious theoretical
work has started only recently.
3.1.1 Duverger’s Law and FPTP

The most convincing theoretical explanations of the Duverger’s Law are pro-
duced in models where voters behave strategically (Palfrey [64], Feddersen,
Sened and Wright [36], Feddersen [34] and Fey [41]). The logic is straightfor-
ward. A strategic voter should cast her vote to maximize the impact on the
final selection of the candidate, so a voter should sort out the two candidates
who have the highest probability of winning and vote for the one she likes
more. In a Nash equilibrium of the voting game only two candidates obtain
votes. Notice however that this argument implies that each district will have
two major parties; it is not clear why the two parties should be the same
across districts (Morelli [57] is one of the very few papers dealing with the
incentives posed by the presence of multiple districts).
3.1 THE NUMBER OF PARTIES 17
Models based on strategic voting however assume a degree of sophisti-

cation for the average voter which is not always realistic, especially in large
elections where the probability that a given vote is pivotal is essentially zero.
With sincere voting an argument for the Duverger’s law can still be made,
but it has to rely on the strategic behavior of candidates (or parties) decid-
ing whether or not to contest an election. The role of parties was in fact
highlighted by Duverger, who claimed that
The brutal finality of a majority vote on a single ballot forces

parties with similar tendencies to regroup their forces at the risk
of being overwhelmingly defeated.
When the attention shifts from voter to parties the question of what moti-
vates parties becomes important. One possibility which has been explored is
that candidates only care about winning and adopt the platform giving the
highest probability of victory (the standard Hotelling—Downs model). With a
fixed number of parties these models produce ‘median voter’ kind of results1 .
However Osborne [62] points out that the result is not robust to the possi-
bility of entry. He shows that when there are n > 2 potential candidates,
for almost all distributions on the political preferences of voters a Nash equi-
librium in pure strategies fails to exist. Thus, models in which candidates
only care about winning are unable to produce interesting insights on the
long-run political configuration that an electoral system is able to produce.
The implication is that the Median Voter Theorem does not seem to be very
robust.
It is therefore natural to explore models in which candidates have policy
preferences, as well as an appetite for power. Osborne and Slivinski [63]
and Besley and Coate [10] have proposed the citizen candidate model to
analyze the entry problem2 . In the citizen candidate model each voter can
decide to become a candidate. Each citizen is endowed with an ideal point
over the policy space and implements the policy corresponding to that ideal
point in case of victory. Once a citizen has become a candidate, her political
preferences become perfectly known to the players. Thus, citizens can decide
whether or not to run, but once they decide to run they cannot choose
1
Duggan [31] surveys models with a fixed number of parties.
2
An earlier proponent of such models has been Wittman ([81],[82], [83]). His analysis
is restricted to the case of two parties, and it cannot therefore handle the possibility of
entry.
the political platform. The number of parties is determined by the entry

cost and by the attractiveness of office (‘ego rent’), much in the same way
in which entry costs and potential profits determine the number of firms
in imperfectly competitive markets. Two-party equilibria exist only under
special assumptions on the distribution of voters’ preferences. When entry
costs and ego rents are zero Brusco and Roy [18] show that only one—party
equilibria exist, with the party located at the median.
Equilibria with multiple parties and differentiated positions can be ob-
tained if we allow for uncertainty about the voters’ preferences. Eguia [33]
and Fey [42] assume that the exact outcome of an election is subject to un-
certainty, for example because there may be computing errors or external
factors may prevent some voters from going to the polls. While there is
always a candidate positioned at the median of the voters’ preferences, an
additional candidate close to the median may enter in order to exploit ‘mis-
takes’. The prediction is therefore that equilibria with multiple parties exist,
but the parties tend to have similar platforms.3 Roemer [70] and Brusco and
Roy [18] have introduced uncertainty on voters’ preferences. The first paper
assumes that only two parties compete and shows that, depending on the
nature of the uncertainty, either the equilibrium does not exist or it has the
two parties proposing different policies. The second paper allows for entry
and assume that parties don’t know whether the preferences of voters are
given by a left—wing distribution or a right—wing distribution. Under some
assumptions two—party equilibria exist. Furthermore, in all two—party equi-
libria the parties tend to be ‘extremists’, i.e. they are located respectively to
the left of the left—wing median and to the right of the right—wing median.
The reason is that if a party were located at the median then another party
could profitably enter to the immediate left or immediate right and win the
election when the distribution is favorable, since the rest of the vote is split
between the other two parties.
In the models discussed so far the uncertainty is introduced without al-
lowing for private information on the part of parties or voters. When private
information is introduced, the median voter theorem may fail even with pure
office—seeking parties. In fact, Bernhardt, Duggan and Squintani [11] have
shown that office-seeking parties with private information on the location of
the median voter choose different policy points.
3
Fey [42] assumes a finite number of ideological positions, rather than a continuum.
Eguia [33] assumes strategic voting.
3.1 THE NUMBER OF PARTIES 19
3.1.2 Other Electoral Systems

Less attention has been paid to the existence and characterization of equi-
libria when systems other than FPTP are used. Cox [22], [23] produces a
general analysis for the case of office—seeking parties looking at the properties
of equilibria under many different systems, allowing in particular for multi-
member districts. His analysis has two main drawbacks. First, the number of
parties is taken as fixed and entry is not allowed. This implies that the ques-
tion ‘how many viable parties does a certain electoral system induce’ cannot
be answered. Second, existence of equilibrium is not generally established
and this makes some of the characterizations empty. Myerson and Weber
[59] also propose a general analysis on voting equilibria that can be applied
to different institutions. They allow for strategic behavior on the part of the
voters and define an equilibrium a situation in which the expectations of the
voters on the relative strength of the parties are correct. Voting equilibria
always exist and the median voter theorem typically does not apply. Non—
median results are also obtained by McGann, Koetzle and Grofman [54], who
focus on how ideologically concentrated minorities can manipulate the elec-
toral system; their results apply not only to FPTP but also to run-off and
IRV systems.
Some effort has also been devoted to proportional representation. Here
the difficulty is that there may not be a clear winner and the policy that ends
up being implemented depends on the bargaining occurring after the elec-
tion among the parties that obtained parliamentary representation. Entry
and positioning decisions at the electoral level thus depend on the expected
outcome at the bargaining stage. Austen-Smith and Banks [4], Austen-Smith
[3] and Baron and Diermeier [5] have analyzed similar models but only with a
fixed (usually three) number of parties. Of course in these models there is no
presumption that parties converge to the median; the interesting topic is how
likely it is that a coalition government be formed. Hamlin and Hjortlund [50]
study a citizen-candidate model with proportional representation and they
allow for free entry, but their analysis is limited to the case in which prefer-
ences are uniformly distributed.
As argued by Blais and Bodet [13], proportional systems tend on one
hand to produce parties with political positions which are more dispersed
and far away from the median voter, but on the other hand tend to impose
coalition governments and compromise solutions that bring the actual policies
implemented closer to the median. The net effect is an empirical matter.
Summarizing, the general message of the theoretical literature is not as

strong as one would like to see. The Duverger’s Law is difficult to prove
in general models where free entry is allowed. Furthermore, depending on
the dimensionality of the policy space it may be difficult to prove existence
of equilibria, even when the number of parties is fixed. When free entry is
allowed and equilibria exist it is not obvious that the only equilibria involve
two parties. The Median Voter Theorem also turns out to be far less general
than one may hope, it typically does not go much beyond the case of two
office-seeking parties (with no free entry) and sincere voting.
3.2 Empirical Evidence

Extensive datasets on elections in many different countries have now be-
come available (see for example Golder [46]). This has allowed economists
and political scientists to test empirically both the traditional Duvergerian
predictions and the relationship between electoral systems and economic out-
comes.
The empirical results are more favorable to the Duvergerian hypothesis,
broadly intended, that the theoretical studies. In fact, the strict Duvergerian
prediction that FPTP yields a two—party system can be somewhat general-
ized, at least for simple systems. In general, even in proportional systems,
we expect a positive effect on the number of parties by factors such as the
total number of seats available and the size of electoral districts, while the
presence of thresholds should work in the opposite direction.
The prediction that majoritarian systems have fewer parties than propor-
tional ones is generally confirmed by the empirical studies. Comprehensive
comparative studies comparing electoral systems across the world, in par-
ticular looking at majoritarian vs. proportional systems, are contained in
Lijphart [52], Shugart and Taagepera [76], Cox [24], Taagepera [78], Colomer
[21] and Norris [61]. The message is in general quite consistent: majoritarian
systems have fewer parties and more stable governments than proportional
ones.
One caveat however is that some variants of electoral systems are not com-
mon enough to provide sufficient data for testing. Thus, empirical analysis
has mostly focused on majoritarian vs. proportional systems, ignoring the
differences inside each category. So, for example, not much attention has
been paid to the distinction between FPTP and Runoff systems. Or, on the
3.3 ELECTORAL SYSTEMS AND THE LEFT—RIGHT DIVIDE21
proportional side, on the effect of introducing thresholds for representation.

It should also be added that some effort has been put in exploring a sort
of reverse causality. It is quite uncontroversial that electoral rules, important
as they may be, are not necessarily the only and exclusive determinants of
the party system that develops in a polity. Historical factors determinanning
the relevant social, ethnic, religious and ideological cleavages in a society
clearly play a role. This factor induce the formation of parties and political
coalitions, which may pre-exist the choice of the electoral rules and in fact
play a crucial role in choosing them. Thus, rather than having electoral rules
shaping the political system, it may be that it is the political and social
system that induces the choice of certain electoral rules. This view has been
particularly promoted by Colomer [20], [21]. Andrews and Jackman [1] have
taken a more skeptical view, claiming that the uncertainty that parties face at
the time of selecting an electoral system makes it difficult for them to choose
optimally. This in turn weakens the empirical link between pre—existing
political conditions and electoral system.
3.3 Electoral Systems and the Left—Right Di-

vide
Apart from the exact configuration of the political system generated by the
electoral rules one may ask whether the adoption of a certain electoral sys-
tems biases systematically the decisions taken by the polity. One simple
way to look at the matter is whether electoral systems induce a partisan
bias along the left—right axis. Rokkan [72] advanced the hypothesis that the
widespread adoption of proportional systems in the first decades of the last
century has been the result of an attempt by right—wing parties to avoid
ceding too much power to the socialist parties then making their strong ap-
pearance on the electoral scene. In many European countries the right was
divided between secular and religious parties. This made the right vulnerable
in many single member districts with a FPTP electoral rule, as a unified left
was able to win many seats even with a share of the vote far below absolute
majority. The adoption of the proportional system eliminated the coordi-
nation problem for the right—wing parties (Boix [14] provides a more formal
account of essentially the same story). It also made it difficult for socialist
parties to achieve self—sufficient parliamentary majorities, thus avoiding rad-
ical policies of income redistribution. Notice however that the argument is

quite agnostic about whether the left or the right is eventually favored by
proportionalism. According to this story the support for proportionalism by
the right was due to its divisions. Those divisions have become less impor-
tant, and in such a scenario it is not clear that the right should benefit from
proportionality.
In fact, Cusack, Iversen and Soskice [25] have pointed out some prob-
lems with this analysis. Proportionalism was not the only possible choice to
avoid the coordination problem that a divided right was facing, as there are
majoritarian formulas different from FPTP that make coordination much
easier. This is for example what happened in Australia, where a divided
right introduced IRV. Furthermore, in many of the countries that eventu-
ally opted for proportionality the electoral formula, while majoritarian, was
runoff (Italy was one of those countries). This formula does not really create
big coordination problems among similar parties. They propose an alterna-
tive interpretation, according to which the introduction of proportionalism
occurred when the right desired to co—opt the left into the political system.
Their result are summarized as follows.
[O]ur model implies that the right chose PR [proportional-

ism]only when it did not fear the left too much and welcomed
opportunities for cross-class collaboration. Conversely, it was
when the organization of the economy made unions and the left
threatening to the core interests of the right that majoritarian
institutions were preserved.
It remains true however that what was convenient for the right at the be-
ginning of the 20th century may not be a good predictor of the impact of
electoral systems a few decades later. We will come back to this discussion
in the next section, where we discuss electoral system and redistribution.
A last study which is worth mentioning here is Bordignon and Tabellini
[15]. Inspired by the experience of Italian mayoral elections, they produce a
simple model to compare policy choices under runoff and FPTP. Assuming
as fixed the number of parties and their political platforms (which is akin
to looking at a short—run equilibrium), and assuming sincere voting and
the possibility of forming coalitions, they predict that runoff increases the
number of competing parties but reduces the influence of extremists. Their
empirical analysis, which exploits the fact that in Italian mayoral elections
3.3 ELECTORAL SYSTEMS AND THE LEFT—RIGHT DIVIDE23
different systems are used depending on the town size (see chapter 5), offers
support to the prediction.
Chapter 4
Economic Consequences
If there is a stable link between electoral rules and the type of economic
interests that are represented in the Parliament, the type of politicians that
end up being elected or the type of governments that end up being formed,
then we may find stable relationships between electoral systems and eco-
nomic outcomes. In principle every aspect of the economy is, one way or
another, subject to political intervention. Theoretical and empirical research
by economists and political scientists has focused on some aspects which
appear to be salient: the general level of government spending, income redis-
tribution and corruption. In this chapter we shortly discuss the theoretical
and empirical research about the effect of electoral rules on these variables.
4.1 Public Spending

Research in this area has addressed two broad questions: the impact of elec-
toral rules on the composition of public spending and the impact on the
absolute level of public spending. Attention has focused mostly on the dif-
ference between proportional and majoritarian rules. There are at least two
channels through which electoral rules have an impact on public expendi-
tures. First, the electoral rule influences the electoral strategy of candidates.
In particular, under different rules the winning candidates will build differ-
ent social and political coalitions by making promises on the composition and
level of spending. Second, electoral rules determine the type of government
that is going to be formed, in particular whether it is a single-party or a
coalition governments. Incentive to control the absolute level of expenditure
25
26 CHAPTER 4 ECONOMIC CONSEQUENCES
are different for coalition and single party governments.
4.1.1 Composition of Public Spending

Milesi—Ferretti, Perotti and Rostagno [56] consider a model where public ex-
penditure can be of two types: public goods, such as infrastructures, and
redistributive transfers. Public goods can targeted to geographical locations,
while transfers are targeted to social groups. In majoritarian systems voters
select one representative per district. If the districts are socially homoge-
nous then elected representative will also be socially homogeneous and will
have similar preferences in terms of social transfers. However, they will have
different preferences in terms of public goods. This implies that voters opti-
mally choose representatives who prefer high spending in public goods rather
than redistributive transfers, in order to bias spending towards their district.
The equilibrium outcome is a high level of spending on public goods. In
proportional systems there are multiple representatives per districts, so mul-
tiple social classes end up being represented. Now voters have an incentive
to choose politicians who favor high level of transfers to their social groups.
The equilibrium outcome is a high level of transfers. Thus, the clear pre-
diction of the model is that majoritarian and proportional system will differ
in the composition of public expenditure, with majoritarian countries more
focused on public goods and proportional countries more focused on social
transfers. Whether or not total public spending is higher under one system
or the other is an empirical matter.
Lizzeri and Persico [53] consider a simple model in which two politicians
compete offering either a public good that benefits all voters or a redistrib-
utive program that benefits a fraction of voters. Under proportional rep-
resentation the politicians care about the share of the vote. Their point is
that under proportional representation the higher is the value of the public
good, the more likely it is that the candidate proposing the public good will
win votes, as fewer voters prefer redistribution to public good production.
Instead, under a majoritarian system the share of the vote does not matter:
all that matters is to get 50% of the vote. Their result is that a proportional
system is preferable when the value of the public good is high (more of it is
produced) while a majoritarian system is preferable when the value of the
public good is low.
4.1 PUBLIC SPENDING 27
4.1.2 Level of Public Spending

The issue of the level of public spending is consider in work by Persson and
Tabellini (see e.g. [67] and [68]) and Persson, Roland and Tabellini [66]. In
particular the latter work establishes that proportionalism leads more fre-
quently to coalition governments (see Bawn and Rosenbluth [7] for similar
results) and coalition governments are more likely to increase public expen-
diture. Increased levels of spending for coalition governments come from the
incentives that the parties belonging to the coalition have to differentiate
themselves and gain the consensus of subsets of voters. Each party has to
trade—off the benefit of increased spending today with the cost of increased
taxation tomorrow. In a coalition a party which is able to increase spending
for his constituency will reap all the present benefits but will only partially
pay the cost of future taxation, which will be blamed on all the parties of
the coalition.
Persson, Roland and Tabellini [66] consider a cross—sectional dataset of
parliamentary democracies over the period 1960—1998. They classify democ-
racies according to their electoral system, dividing them in majoritarian,
mixed (i.e. midway between proportional and majoritarian, as it was the
case of Italy during the period 1994—2005) and proportional. The table be-
low shows the average and standard deviation of central government spending
over GDP for each category. An observation corresponds to a legislature in
a given country.
Government spending as % of GDP

Majoritarian Mixed Proportional
25.94 33.45 35.12
Gov. spending
(9.05) (11.30) (9.30)
Observations 138 7 187
Averages, standard deviations in parenthesis.
Observations pooled across countries and legislatures
The difference between majoritarian and proportional democracies is quite

stark. Of course this may be the result of other factors that influence both
the choice of the electoral system and the level of government spending.
Persson, Roland and Tabellini [66] perform a careful econometric analysis to

evaluate the role of government spending. They summarize their conclusion
as follows:
The overall effect is similar in magnitude to earlier empirical re-

sults on reduced form: a full scale shift from majoritarian to
proportional elections raises overall public spending by roughly
5% of GDP.
Similar results had been reported in other studies, such as Persson and
Tabellini [67]. Although the exact magnitude of the effect may be subject
to dispute, it appears to be quite clear that proportional systems lead to a
higher level of public spending.
4.2 Redistribution
Basically all the known distributions of income have means which are higher
than the medians. This, in principle, makes it easy to find a majority for re-
distributive policies. Even if we constrain redistribution schemes to be anony-
mous, so that for example we cannot treat differently people with identical
income, a scheme that redistributes income so that each citizen gets exactly
the mean (completely egalitarian distribution) should have the consensus of
the majority of the population. Notice that this argument is independent of
the particular electoral system which is adopted: when median income is less
than average income it is always the case that more than 50% of voters benefit
from a radical, perfectly egalitarian, redistribution policy. Thus, according
to this argument, any democratic electoral system should deliver radical re-
distribution. This clearly is not true in reality. While modern democracies
usually undertake a certain amount of redistribution, radical egalitarianism
is definitely not the norm.
There are a number of arguments which have been put forward to explain
this fact. A very simple one is that the voters understand the dynamic trade—
off between redistribution and economic efficiency. Excessive redistribution
reduces incentives to produce income by the most productive part of the
population, thus reducing the growth rate. Thus, the citizens may decide that
having a smaller share of a growing pie is better than having a larger share of
a shrinking one. Meltzer and Richard [55], for example, make this argument
in a median voter model in which the median voter trades off the benefit
4.2 REDISTRIBUTION 29
of redistributive spending and the efficiency cost of distortionary taxation.

More complicated arguments can be made when the policy space is multi-
dimensional; see Roemer [71], among others1 . In these cases the equilibrium
outcome is that only partial redistribution occurs. More importantly, the
electoral system becomes important in determining the exact amount of the
redistribution.
Austen—Smith [3] has considered a model in which citizens are endowed
with different amounts of labor and have to decide on the occupation they
choose and on the amount of income redistribution that they want to imple-
ment. The latter is decided through voting. His model predicts that, under
some conditions, proportional systems redistribute more than majoritarian
ones. The intuition is as follows. Citizen will divide into three ‘classes’,
employers, employee and voluntary unemployed, depending on their initial
endowment of labor and on the expectations on how much income will be re-
distributed. With proportional voting three class—based parties are formed,
each one of them aiming at maximizing the utility of their members in the
bargaining to be held in Parliament. The intermediate party, representing
employees, is pivotal in forming alliances and, under certain assumptions, the
relevant pivotal voter in a proportional system becomes the one who is indif-
ferent between voluntary unemployment and employment. This pivotal voter
is in favor of more redistribution than the pivotal voter under a two—party
system, i.e. the voter with median income.
Iversen and Soskice [51] present a similar model and reach similar con-
clusions. The main novelty is that they allow for differential redistribution
among classes, thus making the model multidimensional. In their model
three classes, poor, middle class and rich, vote on taxation and redistribu-
tion. Under proportional voting each class forms its own party and the most
likely outcome is an alliance between the poor and the middle class to tax
the rich and redistribute to themselves. Under majoritarian voting however
the middle class has to decide ex ante whether to ally itself to the rich or
the poor. Two parties will be formed, a center—left and a center—right one,
and the election will be decided by the middle class. The assumption in
Iversen and Soskice is that after the election there is some probability that
the winner will fall prey of the radical wing of the party. The middle class
1
With respect to the US political system Frank [44] has strongly pushed the view that
the Republican party has used non—economic issues to strengthen its influence among
low—income white voters. See Bartels [6] for a more critical view of this argument.
fears radical left—wingers (who would tax middle class to redistribute to the
poor) more than radical right—wingers (who just eliminate redistribution),
thus on average prefers to side with the center—right party. The prediction
therefore is that leftist governments and redistribution of income are more
likely under proportional representation.
All in all, the theoretical arguments linking proportionality of the electoral
system and redistribution appear cleverly constructed but a little bit fragile,
as they rely heavily on particular institutional assumption on what can and
cannot be done with taxes and subsidies. There is some empirical evidence
that proportional systems lead to more redistribution (see Verardi [80]), but
these results seem to be driven mostly by the proportional democracies of
Northern Europe. The evidence presented in Brandolini and Smeeding [17],
on the other hand, shows that the proportional democracies of Southern
Europe, including Italy, do not appear to be particularly egalitarian. This is
surely an area where more research is needed.
4.3 Corruption
The seminal work on the effect of electoral systems on corruption is My-
erson [58]. He considers a model in which voters have different ideologies
but uniformly prefer honest to dishonest politicians. However, a voter may
still prefer a dishonest politician with the same ideology to an honest politi-
cian with a different ideology. He points out that proportional systems may
be more favorable to the election of honest politicians. The reason is that
entry is easier. Thus, if a dishonest politician of a certain ideology is run-
ning, an honest politician of the same ideology can also run.. Since, for a
given ideology, voters prefer honest politicians, in a proportional system the
honests should be able to drive out the dishonest. On the other hand, in
a majoritarian system there may be a coordination problem. Suppose that
in a left-leaning district there are three candidates: a dishonest left-winger,
an honest left-winger and an honest right-winger. If left-wing voters can
concentrate their votes on a single candidate then they will win, but if they
split then the right-winger is elected; furthermore, left-wing voters prefer
the dishonest left-winger to the honest right-winger. In this case there is
an equilibrium in which the dishonest left-winger is elected. This happens
when left-wing voters are convinced that other left-wing voters are going to
vote for the dishonest guy, thus generating a self-fulfilling prophecy. The
4.3 CORRUPTION 31
prediction is that, at least when voter put ideology over competence, propor-
tional systems are better than majoritarian systems at fighting corruption.
More in general, larger district size and lower barriers to entry tend to reduce
corruption. Notice however that a crucial assumption for this argument to
make sense is that voters have sufficient information on the honesty of the
candidates.
A different argument, going in the opposite direction, maintains that in
majoritarian systems it is easier for voters to monitor the behavior of their
representatives, thus making them more accountable. Thus, majoritarian
systems tend to be better than proportional ones. Thus, the crucial issue is
how informed voters can be about the personal characteristic and the actions
of their representatives. Persson, Tabellini and Trebbi [69] have tried to
evaluate empirically the relevance of these effects. They use various measures
of corruption and they find support for the predictions that lower barriers
to entry (including larger district size) and more accountability (including
majoritarian rules) are associated with less corruption. Because of these two
contrasting effects, the net effect on corruption of a change from proportional
to majoritarian rule is very small.
Chapter 5
The Italian Case
Since unification Italy has used a variety of electoral systems. The current
situation appears to be particularly fragmented, with different electoral sys-
tems used for the Lower House, Senate, Regions, Towns and the European
Parliament. In this chapter we quickly review the history of electoral systems
in Italy and the current situation.
5.1 History
The Kingdom of Italy was constituted in 1861. Its institutional and electoral
systems were largely inherited from the Kingdom of Piedmont and Sardinia,
with an elected Lower House and a Senate appointed by the king. The
electoral system for the Lower House was majoritarian, more specifically
runoff in single-member districts. The voting age was 25 and the right to
vote was restricted to males able to read and write and paying a minimum
amount of tax (40 lire). These were severe restrictions for that time and less
than 2% of the adults were eligible.
The system was generally considered quite unsatisfactory. In a political
scenario were parties tended to be weak, the majoritarian rule was seen as
giving too much power to local politicians and local interests. Furthermore,
apart from the electoral formula, the issue of eligibility was considered one
of the most important during the period. The diffusion of public instruction
progressively reduced the mass of the population excluded because unable
to read and write. In 1882 the voting age was reduced to 21 years and
minimum tax to be paid was reduced to 19.8 lire. The electoral reform of
33
34 CHAPTER 5 THE ITALIAN CASE
that year introduced a major change, shifting from the single-member district
to multi-member district and list votes. The proportional effect was however
moderated by the small district size, from 2 to 5 members. The share of
eligible voters over the population moved from 2% to 7%. At any rate, the
change in the electoral system was deemed unsatisfactory, and in 1891 the
former system was reinstated.1
The right to vote was additionally expanded in 1912, eliminating the
requirement to pay taxes and allowing all males older than 30 to vote even
if unable to read and write, coming very close to universal male suffrage.2
A radical change occurred right after World War I. First, in 1918 the right
to vote was extended to all males older than 21, eliminating the few remain-
ing restrictions. More importantly, in 1919 the electoral formula switched
to List PR, strongly advocated by the Socialist and Catholic mass parties.
Differently for the 1882 experiment the district size was large enough to have
really proportional effects; districts coincided with provinces and had a min-
imum of 10 seats.3 The new proportional system however was used only in
two elections, in 1919 and 1921. In 1922 the Fascist coup occurred and in
1923 the system was modified to introduce a ‘majoritarian reward’ (so called
‘Legge Acerbo’). The new law was still nominally proportional, in fact it im-
plemented a single national district, but the radical departure was that the
list with the most votes was automatically awarded two thirds of the seats, as
long as it had more than 25% of the vote.4 This idea of ‘proportional system
plus reward for the winner’ has remained popular with Italian legislators and
it resurfaced in the changes of electoral law introduced in 1953 and 2005.
The law was first used in 1924 and it remained in place during the period of
Fascist dictatorship.
When the democratic Republic of Italy was created after World War
II a proportional system was created for the election of the Constitutional
Assembly in 1946. The new Constitution created a bicameral system. The
electoral systems for the Lower House and the Senate were slightly different,
but they both were essentially proportional. In 1953 the government, led by
the Christian Democrat De Gasperi in alliance with small centrist secular
parties, changed the law to introduce a ‘proportional system plus reward for
the winner’ similar to the one introduced by the Legge Acerbo. According
1
See http://www.camera.it/cost_reg_funz/667/1157/860/documentotesto.ASP
2
See http://www.camera.it/cost_reg_funz/667/1157/1153/documentotesto.asp
3
4
5.2 THE CURRENT SITUATION 35
to the new system a coalition of parties obtaining at least 50% of the vote
would get 66% of the seats. The law was extremely contentious and the
opposition did everything in its power to stop it. It also led to a breakaway by
some centrist politicians who refused to enter the centrist electoral coalition.
Ultimately, the centrist coalition obtained 49.8% of the popular vote, falling
short of the 50% needed to get the extra seats. After the 1953 election the
‘majoritarian reward’ mechanism was eliminated and the previous electoral
law was reinstated.
Italy continued with a proportional system until the beginning of the
Nineties, when widespread unsatisfaction with the political system led to
various attempts to change the electoral law by referendum. In particular a
referendum in 1993 changed the Senate electoral law transforming it into a
FPTP system. In response to the referendum the Parliament modified the
existing law, introducing a mixed system in which three quarters of the seats
were assigned through FPTP in single member districts and one quarter in
multi-member districts with the proportional methods.5 Furthermore, the
electoral laws for local elections (towns, provinces and regions) were also
modified. The law was used for the elections of 1994, 1996 and 2001. In
2005, a few months before the new elections, the center-right government
decided to change the law again, introducing a complicated combination of
thresholds and rewards which will be shortly described in more detail. The
new law has been used in the elections of 2006 and 2008.
5.2 The Current Situation

Italy currently has separate electoral rules for different levels of government.
The only common theme seems to be the mechanism of ‘majoritarian reward
superimposed on an otherwise proportional system’, first introduced by the
Legge Acerbo. As pointed out by D’Alimonte and Chiaramonte [26] this
is a peculiarly Italian idea, very rarely seen elsewhere in the world, and an
idea that Italian politicians seem to like a lot. In fact, the period 1993—2005
in which a different mixed system was used for the Parliament appears to
5
There were important differences between the systems used in the Lower House and the
Senate, the most imprtant being that two separate ballots were used for the proportional
and majoritarian parts in the Lower House, while a single ballot was used in the Senate.
See Ferrara [37], [38] for a description of the two systems and an analysis of their impact
on the strategic behavior of candidates.
be an exception, due to the fact that the referendum of 1993 imposed an

FPTP system for the Senate. During the same period the new laws for the
elections of City Councils and Regional Councils were also largely inspired by
the principle of ‘proportional plus majoritarian reward’. The reform of 2005
reintroduced the principle for the elections of the Lower House and Senate.
Another idea common to the electoral systems used in Italy and which
seems to be very popular among Italian politicians is that of maintaining sep-
arate party identities while favoring the creation of pre-election coalitions.
This is attained through a complex system of pre-electoral formal declara-
tions of alliance and a system of rewards for forming coalitions. Why do
Italian politicians like this idea? During the long period in which almost
pure proportional systems were used at all levels of government, it was cus-
tomary to form governing coalitions only after the elections. Voters were
unsatisfied by this system, which amounted to giving a blank check to party
leaders. Politicians were also unsatisfied, as the system introduced a form
of permanent bargaining among parties that frequently led to government
crises. At the same time Italian politicians have never been willing or able to
give up proportionalism. Pre-electoral alliances seemed a good compromise,
allowing the maintenance of party identities while at the same time reducing
uncertainty about coalition formation. It should be noted however that here
is no formal sanction for politicians or parties which, after the election, defect
from an alliance and move to another. The system relies on the willingness
of voters to punish, at least eventually, ‘unreliable’ parties and politicians;
I am not aware of any strong evidence that such a willingness does in fact
exist.
Let us now describe in detail the systems used. For the Lower House and
the Senate the matter is regulated by the Law 270 of Dec. 21, 2005.
5.2.1 Lower House

The system is closed—list proportional corrected by thresholds and rewards.
Parties decide at the national level whether or not to form coalitions. Even
when a coalition is formed each party runs with its own symbol and votes
go to the party. The country is divided into multi-member districts, but the
distribution of seats is determined at the national level, as if a single national
districts existed. Seats are distributed as follows.
First, in order to obtain seats a party must obtain at least 4% of valid
votes at the national level. However, parties belonging to coalitions obtain-
ing at least 10% of valid votes are eligible as long as they obtain at least 2%
of valid votes. Second, seats are provisionally assigned proportionally among
coalitions. If the most voted coalition obtains at least 340 seats (55% of to-
tal) then the seats are distributed proportionally among parties. Otherwise,
the number of seats assigned to the winning coalition is increased to 340.
Those seats are distributed proportionally among the parties belonging to
the winning coalition. Parties not belonging to the winning coalitions share
proportionally the remaining seats.6
The bottom line is that the system makes sure that the coalition with the
most votes obtains at least 55% of the seats; differently from the 1923 and
1953 laws, the ‘majoritarian reward’ is always applied, there is no requirement
that the winning coalition obtain a minimum percentage of the popular vote.
5.2.2 Senate
The system is superficially similar to the one for the Lower House, but the
distribution of seats is decided at the regional rather than the national level.7
As in the case of the Lower House, the system is closed-list proportional and
parties may form coalitions. Each Region is a separate electoral district8 and
a party can obtain representation only if it gets at least 8% of the regional
vote or at least 3% if it is part of a coalition getting at least 20%. In each
region at least 55% of the seats assigned to the region are given to the first
regional party or coalition. It should be noted that, since the ‘majoritarian
rewards’ are determined at the regional rather than the national level, the
coalition or party most benefitting from the rewards may be different form
the one obtaining the majoritarian reward in the Lower House.
6
This system referes to 617 seats out of 630. An additional seat is assigned in the small
Val d’Aosta region through FPTP. The remaining 12 seats are elected by Italians living
abroad; the system is nominally proportional but the district sizes are very small.
7
The Italian Constitution mandates (art. 57) that the Senate be elected ‘on a regional
basis’. Thus, electoral rules assigning rewards on the basis of the national vote may be
challenged as uncostitutional.
8
This system here described applies to 17 of the 20 Italian regions. Val d’Aosta elects
1 senator through FPTP. Molise elects 2 senators with a proportional system. Trentino
Aldo Adige elects 7 senators with a mixed system designed to protect linguistic minorities.
Italians abroad elect 6 senators in districts of one or two seats.
5.2.3 Regions
In principle each Region can choose its own electoral system, and some have
done so. However, most regions use the system contained Law 43 of Feb.
23,1995 possibly with minor variations. Each Region elects a President,
which retains the executive power, and a Regional Council. The President is
elected with a straightforward FPTP system, while the Regional Council is
elected using a mixed system with a complicated combination of thresholds
and rewards. Each party has to be linked to a candidate to the presidency.
There is a single ballot on which the voter chooses at the same time the
President and the party for the regional council. A fixed number of seats
(roughly equal to 80% of the Council) are distributed proportionally among
the parties obtaining at least 3% of valid votes or are linked to a presiden-
tial candidate who gets at least 5% of valid votes. The remaining seats are
assigned in a majoritarian way to the parties linked to the winning Presi-
dent in the following way. If the coalition of parties supporting the winning
president obtains fewer than 40% of the seats then they are assigned addi-
tional seats until they reach a majority of 55% of the Council. If it obtains
more than 40% but less than 50% of the seats then they are assigned addi-
tional seats until they reach a majority of 60%. Finally, if it obtains more
than 50% of the seats then additional seats equal to 10% of the total seats
are assigned. Notice that this system may produce Regional Council with a
variable number of total seats.
5.2.4 Towns and Provinces

The electoral system for mayors and city councils is regulated by Law 81
of March 25 1993 and subsequent modifications. The system depends on
the town size. Towns with fewer than 15,000 people elect the mayor and the
council with a relatively straightforward FPTP system. For towns with more
than 15,000 people the system is more complicated. The mayor is elected
through a runoff system. In the first round a candidate is elected only if he or
she gets 50% of the votes. Otherwise, a new election is held after two weeks
between the two candidates who received the highest percentages. Seats on
the City Council are again distributed with a mixed system. Parties present
lists which are linked to candidates for mayor. While there is a single ballot, a
voter can vote for a candidate for mayor and for a party supporting a different
candidate. Again, the general structure is proportional with thresholds and
rewards for the parties linked to the winning mayor.

Only parties with more than 3% of the votes can obtain seats. When
the mayor is elected at the first round, seats are provisionally assigned in
a proportional way. If the parties supporting the winning mayor obtain at
least 60% of the seats then the allocation is final (i.e. in this case seats
are assigned proportionally). Otherwise, the seats assigned to the winning
coalition are increased up to the point at which they reach 60%. This ‘ma-
joritarian reward’ however is not applied in 2 cases: a) when another party,
not backing the winning mayor, reaches 50% of the votes9 b) when the par-
ties backing the winning mayor obtain less than 40% of the votes. In such
cases seats are distributed proportionally. Another important twist is that,
when a second round is reached, a candidate for mayor can enlist some of
the losing parties to support her or him. This is done through formal recip-
rocal declarations and it allows smaller parties to join belatedly a winning
coalition, thus benefiting from the majoritarian reward.
The system for Provinces is similar to the one for towns with more than
15,000 people; given the limited relevance of provinces in the Italian institu-
tional structure I will not discuss them further.
9
Remember that a voter can vote for a certain mayoral candidate and at the same time
for a party not supporting that candidate.
Chapter 6
A Proposal for Reform
When discussing proposals of electoral reform it is necessary to keep in mind

two things. First, no electoral system is perfect. Each system has problems
and shortcomings, so the choice must look at what goals seem to be most
urgent in the medium—long run for the country. Second, existing parties
can usually wield an enormous agenda—setting power. Episodes in which
a country has adopted reforms that go against the interests of the existing
parties are exceedingly rare. Thus, any realistic proposal for reform must
take into account the impact that such reform would have on the existing
political system, making sure that the relevant political actors do not have
strong incentives to derail the reform process.
This is not the place for a long and exhaustive analysis of the main eco-
nomic and political problems that affect Italy. I will content myself with
making a few, simple and hopefully not too controversial, observations and
discuss how the choice of the electoral system may help to improve the sit-
uation. I will start from the premise that one of the major problems of the
country at the present moment and, presumably, for a long time to come, is
the high level of public spending coupled with the high level of public debt.
This in turn induces a high level of taxation and creates huge problems for
economic growth. All the evidence available at the international level (see
e.g. Persson and Tabellini [68]) points to a connection between the level of
public spending and proportionality of the electoral system. In Italy this link
should be particularly obvious to any observer of the political and economic
system. The proportional, or semi—proportional, electoral system has given
small and medium—sized parties pivotal status for most of the history of the
Italian Republic. That power has clearly been used to resist much needed
41
42 CHAPTER 6 A PROPOSAL FOR REFORM
cuts in public spending or to push for new expenditures favoring interest

groups that the small parties were, and are, pandering to. While the politi-
cal and economic causes of the increase in public spending are complex, and
part of the blame should surely be placed on the major parties as well, it
seems clear that the proportionality of the electoral system has exacerbated
the problem. A switch to a majoritarian system would decrease the number
of parties represented in Parliament and it would favor the creation of stable
governments formed by one or two parties. Although nothing can be taken for
granted in Italian politics, more stable and homogeneous government should
be more likely to resist pressure to increase public spending.
A switch to a majoritarian system is not without problems. The intro-
duction of a majoritarian system may help the entrenchment of incumbent
politicians, making entry more difficult. Furthermore, majoritarian systems
work well in two—party systems but they may produce results wildly at odd
with the popular vote when more than two parties compete. Given the cur-
rent fractious state of the Italian political system this is a risk that should
be taken in serious consideration. However the crucial observation here is
that not all majoritarian systems are equal. The problems just discussed
are particularly acute under the FPTP system. ‘Ordinal’ systems, discussed
in chapter 2, reduce or eliminate these problems. It is therefore important
to understand better the details of different majoritarian systems and the
incentives that they provide to voters and politicians, looking specifically at
the current Italian situation.
In this section I would like to illustrate the reasons why I believe that
the Parliament elected on April 13—14 2008 is uniquely positioned to pass an
electoral reform which can be good for the country and at the same time in
the interest of most of the parties currently represented. More specifically, I
will try to explain why the adoption of Instant Runoff Voting (IRV) can yield
a remarkable improvement over the current system and why its adoption may
be in the interest of the main political parties.
6.1 Instant Runoff Voting

Electoral rules are part of the general institutional design, so it is tempting
to discuss electoral reforms as part of more general constitutional reform.
I will try to resist that temptation, limiting myself to discuss electoral re-
form assuming an unchanged constitution. The last two decades have seen
6.1 INSTANT RUNOFF VOTING 43
endless discussions in Italy over constitutional reform. One reform was ac-
tually implemented in 2001 by the center—left government. The center—right
government tried to pass another reform in 2006, but the proposal was de-
feated in a referendum. Both reforms did not appear fully adequate and it is
clear that promoting a good and decent constitutional reform in the current
political environment is next to impossible.
Even so, there is a consideration relating the electoral rules and con-
stitutional design which is worth making. One long overdue reform is the
elimination of perfect bicameralism. One of the problems of perfect bicamer-
alism in Italy is that it risks introducing paralysis when different majorities
form in the two chambers. While a serious solution to this problem requires
constitutional reform, the electoral system should at least try not to make
the problem worse. The current law does exactly that, using two different
rules for the two chambers. Thus, even an identical distribution of votes for
the two representative bodies may produce different majorities. This is a
problem which absolutely needs to be fixed, and the solution is simple: use
the same system for both chambers. The Constitution establishes that the
Senate electoral system should be ‘Region—based’, so in order to unify the
two systems we have to give up national colleges. This can be easily done
if a majoritarian system is adopted. In fact, any majoritarian system with
single—member districts will do1 . Once a majoritarian system is adopted for
both chambers, there will be no need to change the system again if and when,
at long last, perfect bicameralism ends up being ditched.
Why is IRV preferable? From an abstract point of view IRV allows voters
to use their whole preference ordering, rather than just a subset of it. For ex-
ample, both FPTP and proportional system only let voters to communicate
their top preference, and all the remaining information is completely lost.
While we know that aggregating preferences is problematic, there is really
no good reason why the electoral system should ignore a large part of the
preference ordering of voters. There are many conceivable systems in which
voters may be asked to express their whole preference ordering, but IRV is a
system which is simple and predictable in its consequences. It has also been
1
An additional problem remain. Quite absurdly, the Italian Constitution requires a
higher age limit (25 years) for the right to vote at the Senate. This implies that the
electorates of the two chambers are different, so that even if the two chambers were elected
with the same system and all voters expressed the same preferences in the two chambers
we could still have different majorities. This problem can only be solved changing the
Constitution, so I’ll not discuss it further.
actually used for a long time, most notably in the Australian lower house.
As all systems based on single—member districts, IRV cannot guarantee
that a parliamentary majority will be formed or even that the parliamentary
majority will be the same as the popular vote majority. This is a problem,
but dealing effectively with it would require constitutional changes. At this
stage it seems prudent simply to ignore the issue and count on the fact that,
in the given political situation and presumably for some time to come, IRV
will strengthen the formation of two coherent political blocks.
6.2 Details of the Proposal

In Italy the Lower House has 630 seats. Of these, 618 are elected by Italian
residents, while 12 are elected by the Italians abroad in special colleges. I
will not discuss the vote of the Italians abroad and concentrate my discussion
on the 618 seats elected by residents2 . The proposal is simple.
• The territory is divided into 618 electoral districts, each one of them
electing a single member.
• Each voter can rank the candidates on the ballot, assigning numbers
from 1 to n, where n is the number of candidates in the district. A
vote is valid if the elector assigns exactly one ‘1’ on the ballot. The
voter does not need to rank all candidates, it can rank only a subset of
them3 if he or she so desires.
• All candidates are initially ranked according to the first preferences

received. If one candidate receives more than 50% of the valid votes
then he or she is elected. Otherwise, the candidate placed at the nth
place, say Mr. Lastguy, is ignored in all ballots and the ranking of
2
The introduction of seats reserved to Italians living abroad (12 in the Lower House and
6 in the Senate) is relatively recent, the result of a Constitutional law passed in 2000. The
main problem of this law is that it has created constituencies where the ‘representation
without taxation’ principle applies. In my opinion the system needs radical change, but
since it is matter regulated at the constitutional level I will not discuss it further.
3
Requiring voters to rank all candidates tends to increase the number of invalid ballots.
In Italy it is usual to observe many irrelevant candidates to run for office. Asking voter to
rank all of them would impose on them a high informational burden.
6.2 DETAILS OF THE PROPOSAL 45
candidates accordingly changed4 . This means that on each ballot each

candidate ranked below Lastguy moves up one position. In particular,
those voters who gave their first preference to Lastguy will now have a
new first preference, i.e. their initial second preference. The ballots of
those who voted only for Lastguy, without further preferences, become
invalid.
• Following the elimination of Lastguy a new count of valid votes follows.

The remaining n − 1 candidates are again ranked according to the
new first preferences. If one candidate obtains more than 50% of the
vote than he or she is elected. Otherwise, the candidate placed at the
n−1th place, say Mrs. Nexttolast, is eliminated and the same procedure
described above is applied.
• The same algorithm is applied repeatedly until one candidate receives

at least 50% of the valid votes.
This is clearly computationally more complex than just counting the first
preferences, but it is still quite manageable. With about 40 million eligible
voters and 618 equally divided districts, the number of votes in each district
would be around 65.000. There should be no problem in properly applying
the algorithm, although it may require in some districts a couple of days. In
normal situations most districts should be able to declare a winner after two
or three rounds at most.
The same system can be used to elect Senators. Once the number of
senators that each region has to elect is established, the region is divided in
single—member districts and then the system is applied in each district.
A last important observation is that a system with single—member dis-
tricts is incompatible with multiple candidacies by politicians. In Italy this
has been usual practice, especially for party leaders both before and after the
2005 reform5 . This practice would automatically disappear.
4
There may be multiple candidates in last position. Ties can be broken in a number of
ways, for example eliminating the older candidates first.
5
Before 2005 political leaders usually were placed at the top of party tickets in multiple
districts on the proportional share of seats, thus ensuring their election. Some of them
could also decide to run in one single member districts. After 2005 all districts are multi—
member and multiple candidacies are common.
6.3 Examples
The Italian elections in 1996 was won by the center—left because the center—
right was divided, with the Lega Nord going alone. The opposite happened
in 2001, when it was the center—left to be divided. Since 3/4 of the seats
were assigned in single—member districts using FPTP, the divisions mattered
a lot. The Instant Runoff system would have avoided these pitfalls.
To look at a very simple example, consider the single—member district of
Rho, in the Milan province. In 1996 the situation was the following.
Lower House, election of April 211996.

LOMBARDIA 1-Collegio:RHO
Candidate List Votes %
Monaco Francesco L’Ulivo 39, 444 40.25
Lodolo D’Oria Vittorio Polo per le Libertà 35, 996 37.64
Cozzi Claudio Lega Nord 20, 202 21.12
The center—left candidate was elected, although the sum of the votes of the
center—right parties was much higher. With IRV, voters of Lega could have
determined the outcome with their second preferences. Given the small dis-
tance between the first and second candidate, a change in result would have
been likely.
In 2001 the situation was the following.
Lower House, election of May 13 2001.

LOMBARDIA 1-Collegio:RHO
Candidate List Votes %
Gianfranco Rotondi Casa delle Libertà 46, 432 49.41
Peluffo Vinicio L’Ulivo 41, 921 44.61
Liboni Albano Lista Di Pietro 5, 618 5.98
This time the center—right was unified and the center—left divided, so the
center—right candidate won the seat. With IRV, if all the Lista di Pietro
6.4 THE POLITICAL CONSEQUENCES OF IRV 47
voters had indicated Peluffo as their second choice then he would have been
elected.
To a large extent the elections of 1996 and 2001 were decided by the pre—
electoral tactics and alliances of the party leaders. IRV would have avoided
this situation, giving to the voters the power to choose the alliances and the
affinities between parties.
6.4 The Political Consequences of IRV

What kind of political system is likely to emerge in Italy if IRV is imple-
mented? While a complete answer would require a fully spelled theoretical
model, there are some provisional conclusions that we can draw.
• The system should favor the emergence of two big parties or two coali-
tions which seriously compete for the winning the majority and forming
the government.
• The system will allow for representation by smaller parties as long

as they are geographically concentrated and can count on the second
preferences of other parties.
• Smaller parties will not be wiped out, and they are likely to win a
significant share of the votes although (unless they are geographically
concentrated) no seats. The reason is that, differently from a FPTP
system, a voter can give the first preference to the preferred party, thus
signalling her preference, and the second preference to the ‘closer’ party
which seriously compete for the seat.
To see the system at work, it is useful to look at the Australian Lower House,
where the IRV is used. The Lower House is elected every three years and the
number of seats is 150 (148 in the 1998 election). Here are the results of the
last four elections.
2007 election 2004 election

Party %Votes Seats Party %Votes Seats
Labour 43.38 83 Labour 37.64 60
Liberal 36.61 55 Liberal 40.81 75
National 5.49 10 National 5.89 12
Greens 7.79 0 Greens 7.19 0
Independents 2.23 2 Independents 2.49 3
2001 election 1998 election

Party %Votes Seats Party %Votes Seats
Labour 37.84 65 Labour 40.10 67
Liberal 37.40 69 Liberal 34.21 64
National 5.61 13 National 5.29 16
Greens 4.96 0 Greens 4.96 0
Independents 2.90 3 Independents 1.91 1
One Nation 4.34 0 One Nation 8.43 0
Democrats 5.41 0 Democrats 5.13 0
The Australian political system is dominated by the Australian Labor Party
(ALP) on the center—left and the Liberal—National coalition on the center—
right. The Nationals are the minor partners and have their consensus con-
centrated in rural areas. All elections since 1946 have given a majority of
seats either to the ALP or to the Liberal—National coalition. Despite the
dominance of these two parties/coalitions, there is active entry by third par-
ties both on the left and the right. On the left the Green party, formed in
1992, has been steadily gaining votes, reaching almost 8% in the last election.
On the right the One Nation party, running on a xenophobic platform, had
a strong showing in 1998 and has subsequently declined. Furthermore, even
if smaller parties are not represented there are seats won by independents.
6.4 THE POLITICAL CONSEQUENCES OF IRV 49
Active entry by third parties and independents should be seen favorably.

It conveys information about the preferences of the electorate and it limits
the power of incumbents. For example, while the Greens have not obtained
representation in the Lower House they have come close to winning some seats
held by Labour MPs. At the same time, entry has not produced distributions
of seats at odds with the popular vote, as it happened in Italy in 1996 and
2001 and as it is common with an FPTP system. Basically, movements to the
right of the electorate yielded Liberal—National majorities and movements to
the left yielded Labour majorities, as it should be. Notice for example that
the election of 1998 would have gone to Labour under a FPTP system, since
One Nation captured more that 8% of the vote and split the right—wing vote.
This would have happened despite a clear move to the right of the electorate.
Entry is also favored by the fact that the Australian Senate is elected
with a different system, the Single Transferable Vote, which has proportional
effects. Thus, smaller parties are ensured some parliamentary representation
and visibility.
Given this information, what are the likely effects of the introduction of
IRV in Italy? In the short term we can expect the following to happen.
• The center—left and a center—right blocks would consolidate, thus com-

pleting the transition of the Italian political system to bipolarism. The
center—left block would be centered on the Partito Democratico while
the center—right would be a coalition of Popolo delle Libertà and Lega
Nord, the second party acting as a geographically concentrated minor
party.
• Both the radical left and small centrist parties such as MpA and UDC
will be excluded from parliamentary representation.
What will happen in the long—run is more difficult to predict. Entry should
remain fairly possible because at multiple levels of government the electoral
system has strong elements of proportionality. This is unlikely to change in
the future, so local and European elections will give opportunity to small and
medium sized parties to gain representation and power in Regions, Towns and
the European Parliament. Such parties will also be able to test their strength
at the national elections without excessive fear of dividing the vote. Thus,
the variety of electoral systems used at the local level makes sure that parties
with a decent electoral following, say greater than 5%, and a recognizable,
distinct political position will be able to survive even if they don’t earn
parliamentary representation. Notice further that the number of seats in the
Italian House of Representatives is more than 4 times the number of seats
in the Australian Lower House. This makes it is easier for smaller parties to
gain parliamentary representation.
All this is important because there is a wide perception that Italian politi-
cians tend to be excessively insulated from competition. As previously ob-
served, single—member districts usually help in better monitoring politicians,
but the higher barriers to entry existing in majoritarian system tend to make
things worse. It is therefore important to keep barriers to entry as low as
possible, so that politicians are kept under pressure to better respond to
their voters. Among majoritarian systems, IRV encourages entry much bet-
ter than FPTP. It may also favor the selection of better politicians, especially
for smaller parties. Since a small party is unlikely to obtain an outright ma-
jority in a district (unless it is geographically concentrated), its only hope to
gain seats is to obtain many second preferences. This should provide incen-
tives for party leaders to look for authoritative candidates capable of drawing
vast consensus in the electorate at large. A similar effect may apply to major
parties, although to a lesser degree.
6.5 The Economic Consequences of IRV

The theoretical and empirical research on the economic effect of electoral
systems have mostly looked at the majoritarian/proportional divide, with-
out distinguishing between different majoritarian systems. At any rate, the
likely effects of the introduction of IRV would be the ones that we can expect
from the introduction of any other majoritarian system, i.e. a reduction in
public spending. This is clearly the most pressing issue, and it will remain
so for quite some rime. In fact, given the current political situation in Italy,
IRV is likely to cause two-party governments when the center—right wins and
one—party governments when the center—left wins. This can be considered
a satisfactory situation in terms of incentives to avoid excessive spending.
While this effect is likely to happen with other majoritarian system, FPTP
is more risky. Given the large number of parties currently existing in Italy, a
pure FPTP system may end up favoring temporal electoral alliances among
parties maintaining distinct identities, thus leading to the formation of coali-
tion governments with many parties.
6.6 WHY IRV IS BETTER THAN THE ALTERNATIVES 51
As discussed in section 4, the impact of electoral rules on other economic

variables is far less clear. As far as income distribution is concerned, pro-
portional democracies of Southern Europe tend to be less egalitarian than
proportional democracies of Northern Europe; it is likely that factors other
than the electoral rule here play a major role. The effect on corruption is also
unclear; however, it should be noted here that the argument put forward by
Myerson [58] does not apply to IRV. In fact, with IRV whenever there is a
recognizably dishonest of a certain ideology there is no coordination problem
if an honest politician with the same ideology enters the electoral contests.
Voters of that ideological persuasion can put the honest candidate first and
the dishonest candidate second. They don’t need to fear that a vote for the
honest candidate will split the ideological vote and help elect a candidate of
a different ideological persuasion.
6.6 Why IRV is Better than the Alternatives

There is no need to spend words on why IRV is better than proportionalism
or the current bizarre electoral system. While a proportional system may
have been adequate for the period in which the Italian Republic was being
established, it is clearly dysfunctional now.
IRV is clearly superior to FPTP in situations where there are more than
two parties. This is the current situation in Italy, and it is likely to stay
that way for a long time. Introducing FPTP may produce two outcomes,
both undesirable. On one hand, parties may be unable to forge electoral
alliances, so that in many districts more than two candidates will compete.
This is likely to generate results which depend in a random way on how the
votes are split between parties on the same side of the political spectrum.
On the other hand the parties may form tactical electoral alliances. This
would produce two—party contests in most district, but would very likely
give enormous bargaining power to small parties. Thus, all the problems of
proportionalism would reappear, with the added disadvantage that not even
a clear count of the real strength of each party will be available. IRV avoids
these problems.
The Runoff system has many of the advantages of IR, and it also has
the advantage of being a system Italian electors are already familiar with.
However, IRV is superior for three reasons. First, it allows voters to express
the entire vector of preferences, while Runoff constrains them to express only
the top one and then the top preference among the candidates reaching the
second round. As an example of what this may imply, consider the outcome of
the infamous French presidential election of 2002, when extremist candidate
Le Pen advanced to the second round because the center—left divided votes
among multiple parties. Had an IRV system been used the outcome would
have probably been different, since Le Pen was ranked last by a large majority
of voters. Second, it does not require voters to go to the polls twice in order
to express their preferences. Third, Runoff gives the party leadership of small
parties the opportunity to campaign between the first and second round in
favor or against the larger parties. In the current Italian situation this is
undesirable, as it provides the leaders of small parties with more bargaining
power. Although it is a purely theoretical proposal, the kind of ‘Condorcet
voting’ proposed by Dasgupta and Maskin [27] has many advantages but it
is impractical because it requires complete ranking of the candidates.
6.7 Why IRV is Possible

Is there any hope for a decent electoral reform in the current political envi-
ronment? Italy has a long history of frustrated expectations on this count
(see Floridia [43] for a discussion of the difficulties in implementing electoral
reforms in Italy), so why should we expect something different this time?
It is always foolish to be optimistic in Italian politics, but there are some
reasons why the situation this time the situation may be different.
In the last two decades the main obstacle to the adoption of a fully co-
herent majoritarian electoral law has been the influence exercised by small
and medium—sized parties located pretty much everywhere along the politi-
cal spectrum. It is quite obvious that for these forces avoiding the adoption
of a majoritarian law was essentially a matter of life and death. Medium
and small sized parties have been pivotal in forming both center—left and
center—right governments. The only possibility for changing the electoral law
through parliamentary action was to reach an agreement between the bigger
parties on the center—left and the center—right. No such alliance however
was possible without at the same time causing the government to fall, as the
smaller parties would have strenuously opposed any such agreement. The
predictable result has been stalemate.
On top of this, both the center-left and the center-right had two major
parties (beside the smaller ones), DS and Margherita on the left and Forza
6.7 WHY IRV IS POSSIBLE 53
Italia and Alleanza Nazionale on the right. While the support for a ma-
joritarian reform by DS and AN has always been quite consistent, the same
cannot be said of Margherita and, especially, Forza Italia. In such a scenario
the only hope for electoral reform was extra-parlamentarian action in the
form of referendum initiatives, but such attempt have been unsuccessful.
The last few months however have produced a completely different sce-
nario. DS and Margherita have merged and formed the Partito Democratico,
so that now there is now a single large party on the left. Quite unexpectedly
the same is happening on the right; while the merger between FI and AN
has not been fully completed yet, it is well on its course and for the moment
it is advancing without major obstacles. This newly formed parties have an
obvious interest into a majoritarian reform of the electoral system.
But the really important event is that, for a curious accident of history,
the last election has produced the first Parliament in a long time in which
no small—medium sized party with diffuse territorial support is crucial for
forming a majority. While Lega Nord is small in terms of the national popular
vote, its votes are concentrated in the North of the country, especially in
the regions of Lombardia and Veneto. This implies that the Lega is well
positioned to profit from a well—designed majoritarian law.
The center—right will not promote any serious electoral reform if this
jeopardizes the government, exactly as the center—left did. As of the time of
this writing the numbers for the center—right in the current Parliament are
the following:
Camera dei Deputati Current membership of parliamentary groups.
• Popolo delle Libertà: 273.

• Lega Nord: 60.
• Movimento per le Autonomie: 8.
Senato Current membership of parliamentary groups.
• Popolo delle Libertà: 146.

• Lega Nord: 26.
• Movimento per le Autonomie: 2.
The opposition to a majoritarian reform are more likely to come from the
Movimento per le Autonomie (MpA). This is a small Sicilian—based regional
party. While most of its votes are concentrated in Sicily it is not strong
enough to compete seriously in a majoritarian system (it collected 7.9% of
the votes in Sicily at the last senatorial election). Some additional opposition
is likely to come from a few congressmen formally belonging to Popolo delle
Libertà (PdL) but coming from smaller parties (e.g. Gianfranco Rotondi and
Alessandra Mussolini), as the option of re-activating their small parties gives
to these politician more bargaining power. Clearly, a switch to a majoritarian
system would dramatically decrease their leverage. It’s hard to make an exact
estimate of how many of such congressmen are in the Lower House, but their
number is not large and in all likelihood below ten6 . The situation in the
Senate is even better, since the center—right concentrated the candidacies of
politician coming from small parties to the Camera dei Deputati, where it
was sure to get a comfortable majority.
The bottom line is that PdL and Lega alone have a total of 333 seats in
the Camera (where 315 are needed for majority) and 172 in the Senate (where
161 are needed for majority). Therefore the two parties do not depend on the
MpA to guarantee the survival of government and can in fact easily afford
the dissent of the few politicians coming from smaller parties. Moreover,
the leader of the MpA has just become Governor of Sicily with the support
of a center—right coalition. It is therefore unlikely that MpA will retaliate
creating mischief at the local level. In short, PdL and Lega can expect very
little trouble if they decide to push for a majoritarian electoral system.
Another important observation is that the adoption of Instant Runoff
Voting is politically more convenient for PdL and Lega than a FPTP sys-
tem. The two parties split the center—right votes in Lombardia and Veneto,
the two regions in which Lega is stronger. Both parties prefer to retain their
brand and would be uncomfortable if a FPTP system were to force them to
field a single candidate for each electoral district; this was a clear factor in
the 2001 election, in which the center—right obtained 4% less in the majori-
tarian part than in the proportional part. The situation, in these regions,
is therefore similar to the one that led the conservative Australian govern-
ment to introduce the IRV in 1918 substituting the previously used FPTP.7
6
A couple of congressmen, coming from a small centrist party (the one controlled by L.
Dini) have already left Pdl to go into the Gruppo Misto. The numbers given in the main
text already take into account these defections.
7
At the time the newly formed Country Party was causing a split of the right—wing
6.7 WHY IRV IS POSSIBLE 55
An additional important advantage for the center—right coalition is that IRV

would probably let the PdL to absorb (as second preference) the votes of
the Unione Democratica di Centro (UDC), whose voters can be expected to
be ideologically quite conservative. It would also undermine the bargaining
position of MpA and other smaller right—wing parties, thus strengthening
especially the PdL.
On the center—left, the Partito Democratico (PD), the main opposition
party on the center—left, would be clearly favored by a majoritarian system
and can be expected to support it. The last center—left government has
been undermined by the large number of parties composing the government
coalition. The leadership of the PD seems now convinced that only a more
politically homogeneous coalition can hope to achieve majority and form an
effective government in the future. A change to a majoritarian electoral law
would clearly help the PD to achieve its goals.
The PD is also better off with IRV than with FPTP. The reason is the
that small parties on the left (such as the various Communist parties and the
Socialist party) are likely to present candidates even if they have no chance to
gain any seat. With an FPTP system this would force PD either to bargain
with these parties or to accept splitting the center—left vote, thus reducing
its chances of victory. IRV would avoid this problem.
The obvious losers would be the small parties of the center, such as UDC
and MpA, as well the radical left and the remnants of the Socialist party.
UDC is currently at the opposition and surely unable to block an electoral re-
form supported by the major parties. As previously observed MpA, although
part of government coalition, is not pivotal and not in a position create seri-
ous problems should PdL and Lega decide to push for a majoritarian system.
The radical left is not currently represented in Parliament; the only bargain-
ing power that it can exercise is at the local level, threatening the PD with
breaking center—left coalitions controlling many local governments. This is
unlikely to be a serious threat for two reasons. First, PdL and Lega can pass
a majoritarian law even without the PD, so that pressing the PD is only of
limited utility. Second, such a strategy would risk pushing the radical left
out of many local governments, something very costly for parties currently
vote, especially in rural areas where the party had most of its support. With an FPTP
system this was likely to give victory to the Australian Labor Party, even if such party
controlled only a minority of the vote. The IRV system allowed Country Party supporters
to give the first preference to their preferred party and their second to other center-right
candidates, thus avoiding minority victories by Labor.
lacking representation in Parliament.

Does all this imply that the PdL and Lega will actively push for electoral
reform? Not necessarily, but something will have to be done. A referendum
on the electoral law is still pending and it will be held in the Spring of
2009 if no reform is passed. The referendum, if successful, would generate a
system similar to the current one except that the parties will be unable to
form coalitions. Given the current political scenario this will probably create
more problems on the right than on the left. In particular, it would put in an
awkward position the Lega Nord. The party would have to decide between
going alone in the regions in which it is strong, thus splitting the right—wing
vote, or joining the PdL and present unified lists. Both alternatives have
drawbacks, that would be avoided by adopting the alternative vote.
The center—right parties may boycott the referendum8 , asking their sup-
porters not to go to the polls. This tactic has been used in the past to defeat
electoral reform promoted through referendum. However, it is not clear that
this would be better for the center—right than adopting a majoritarian elec-
toral system. The current electoral system it’s not particularly favorable to
the center—right and it was adopted because UDC, at the time part of the
center—right coalition, pushed for more proportionalism. The political sit-
uation has changed and the main parties on the center—right have now no
special interest in promoting proportionalism.
To conclude, the situation seems to be as favorable as it can get to pass a
majoritarian electoral law. This situation will not last forever. The incentives
of the current electoral systems favors fragmentation and it is likely that,
unless a new electoral law is passed, the next Parliament will be as fractured
as the previous one. Seizing the opportunity is therefore crucial. Discussion
and legislative action on electoral reform should start immediately.
8
In Italy a referendum is valid only if at least 50% of eligible voters cast their ballot.
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Electoral Systems.

1 Manuscript prepared for the conference ‘Riformare l’Italia. Una cosprazione

2 Electoral Systems in Practice 7

5 The Italian Case 33

5.2.1 Lower House . . . . . . . . . . . . . . . . . . . . . . . . 36

6 A Proposal for Reform 41

This document presents an overview of the main theoretical and empirical

Electoral systems have the task of aggregating social preferences in order to

design an electoral system, have therefore to engage in the painful calculation

Electoral Systems in Practice

The main job of an electoral system is to map distributions of votes into

2.1 Proportional vs. Majoritarian

2.2 ‘Ordinal’ or ‘Preference’ Systems

2.2.1 Main Preference Systems

candidates on the ballot. A candidate is elected if it meets a certain

370 270 240 120

Thus, 370 voters rank the candidates as A Â B Â C Â D, 270 voters rank

370 270 240 120

370 270 240 120

370 270 240 120

is ranked last by a majority of voters is elected, while such an outcome is

2.3 Mixed Systems

3.1 The Number of Parties

3.1.1 Duverger’s Law and FPTP

Models based on strategic voting however assume a degree of sophisti-

The brutal finality of a majority vote on a single ballot forces

the political platform. The number of parties is determined by the entry

3.1.2 Other Electoral Systems

Summarizing, the general message of the theoretical literature is not as

3.2 Empirical Evidence

proportional side, on the eﬀect of introducing thresholds for representation.

3.3 Electoral Systems and the Left—Right Di-

ical policies of income redistribution. Notice however that the argument is

[O]ur model implies that the right chose PR [proportional-

4.1 Public Spending

are diﬀerent for coalition and single party governments.

4.1.1 Composition of Public Spending

4.1.2 Level of Public Spending

Government spending as % of GDP

Observations pooled across countries and legislatures

The diﬀerence between majoritarian and proportional democracies is quite

Persson, Roland and Tabellini [66] perform a careful econometric analysis to

The overall eﬀect is similar in magnitude to earlier empirical re-

of redistributive spending and the eﬃciency cost of distortionary taxation.

The Italian Case

5.2 The Current Situation

be an exception, due to the fact that the referendum of 1993 imposed an

5.2.1 Lower House

5.2.4 Towns and Provinces

rewards for the parties linked to the winning mayor.

A Proposal for Reform

When discussing proposals of electoral reform it is necessary to keep in mind

cuts in public spending or to push for new expenditures favoring interest

6.1 Instant Runoﬀ Voting

6.2 Details of the Proposal

• All candidates are initially ranked according to the first preferences

candidates accordingly changed4 . This means that on each ballot each

• Following the elimination of Lastguy a new count of valid votes follows.