Volume 3, Issue 1 - Economic Analysis of Constitutional Law

Depending on how people respond to it, a constitution can cause suffering on a vast scale or lay the foundation for a nation’s liberty, prosperity, and equality. As currently practiced, constitutional theory and interpretation especially concern the meaning, history, and philosophy of constitutional texts. These approaches cannot predict the responses of people to constitutions. Constitutional consequentialism, which I advocate, is a research program that aims to predict the effect of alternative forms and interpretations of constitutions on policy values, especially liberty, prosperity, and equality. This paper discusses two constitutional processes. “Median democracy,” which empowers the median voter, is implemented by referenda and ballot initiatives, special districts (water district, school board, etc.), and winner-take-all elections. “Bargain democracy,” which lubricates bargaining among factions and regions, is implemented by legislatures, comprehensive governments, and proportional representation. I show that median democracy causes stability, whereas bargain democracy ideally causes efficiency and often causes corruption or instability.

Constitutional political economy addresses four questions: (1) the causal question: What explains the constitutional institutions we observe? (2) the consequential question: What consequences do constitutional institutional have? (3) the ideal question: What constitutional institutions does justice require? and (4) the design question: What constitutional institutions are best for a polity given the constraints imposed by its current situation? Answers to the ideal and design questions require a theory of behavior that predicts how individuals will behave within constitutional institutions. Analysts usually assume that this theory of behavior corresponds to the explanatory theory developed to answer the second, consequential question. This essay argues that the assumption of rational self-interested behavior as the basis for a behavioral theory is not justified.

Though nominally exercised on behalf of private citizens, constitutional judicial review does perform an insurance function for politicians who expect to lose power in future elections. This paper discusses the various dimensions of institutional design of constitutional courts and argues that the extent and power of judicial review can be expected to increase relative to the degree of political uncertainty at the time of constitutional design. The paper then develops a simple empirical test of this hypothesis using data from Eastern Europe, regressing measures for various aspects of court design on the strength of the largest party in the legislature. The paper shows that the design of constitutional courts reflects the interests of the dominant political parties and that independent and powerful courts are associated with situations of divided or deadlocked politics.

This article takes on the puzzle of why many appellate courts insist on an outright (but simple) majority decision as to the immediate outcome or disposition of a case, while tolerating a plurality decision as to the precedential message, or reasoning, attached to a case. Somewhat similarly, pluralities are respected in many political settings but then not, for example, in legislative assemblies. The argument builds both on the Condorcet Jury Theorem and on the problem of dealing with voting paradoxes, or cycles. It links decision rules with the likelihood of cycling and the danger of misconstruing majority decisions.

In Ruling Majorities and Reasoning Pluralities, Professor Saul Levmore explores the “division of labor” between the various thresholds of agreement required for collective action—supermajority, simple majority, or plurality rule. His particular emphasis is on the choice between the last two options. To improve our understanding of this choice in various settings, Professor Levmore considers the relationship between two well-known contributions to the study of group decisionmaking, namely, the Condorcet Jury Theorem and the Condorcet Criterion, which have not generally been treated together. This essay explores the relationship between these two insights in the context of judicial decisionmaking. Counterintuitively, the essay demonstrates that while the Condorcet Criterion continues to hold great promise as a tool of decision in en banc appellate courts, the Condorcet Jury Theorem is most appealing in judicial contexts that appear less collegial and thus less like a jury. In contexts in which jurists engage in deliberation and in which they anticipate that their outputs will have precedential effect, the Jury Theorem has little if any role to play. In contrast, the Theorem might prove more useful in evaluating low-level judicial outputs or decisions that otherwise are not expected to be treated as precedent. Thus, common law trial court decisions and civil law court decisions are more likely to be useful benchmarks in a Condorcet Jury Theorem analysis. It is because such courts do not anticipate that their decisions will have the force of precedent that they are more likely to be derived from governing legal texts, and thus more prone to characterizations of accuracy, than are judicial outputs that are driven by policy concerns and are generated with the understanding that they will be treated as precedent.

This article employs the methodology of public choice, or constitutional political economy, to the question of how citizenship should be defined in a constitution. All members of a community or an assembly representative of all members writes a constitution. Each participant in the constitution-drafting process is uncertain of his or her future identity under the constitution and thus chooses a constitution that maximizes the expected utility of all future citizens. The article describes the optimal conditions within this framework for: (1) granting citizenship to those born and raised in the country; (2) granting citizenship to those immigrating into the country; and (3) withdrawing citizenship from those who emigrate from the country. The article also discusses why it might be desirable to require that people pass certain tests and take a loyalty oath to the constitution before being awarded the privilege of voting.

In 1992, Israel underwent a major constitutional reform, which provided Israel, for the first time in its history, with an effective system of separation of powers between the political branches of government. This reform was not intentional but, rather, a byproduct of the voluntary adoption by the two major political parties of open primaries as the method for choosing candidates on their lists for election to parliament (the Knesset). The adoption of the primaries system produced two major changes in the Israeli constitutional and political order. First, it transformed the Knesset into an independent body and, hence, for the first time in Israel’s history, provided for a functioning system of checks and balances between the legislature and the executive. Second, it shifted power from the Jewish religious minority to the secular majority and even contributed to the increase in the relative power of the Arab parties. On a more general level, the Article demonstrates the impact different modalities of pre-selection of party candidates can have not only on the outcome of the elections and on the relative power relations among the parties, but, more importantly, on the structure and the functioning of the political system. Once proven, this impact requires public attention: legislative regulation of the pre-selection process may be required, indeed even constitutionally mandated, to ensure political checks and balances.

Elected politicians—legislators and, in some systems, members of the executive—can choose to exercise authority themselves or to delegate that authority to any number of agencies. Such delegation of power can occur at the constitutional stage, but is most common at the post-constitutional stage. Two categories of delegation can be distinguished: domestic delegation to agencies within the legislators’ jurisdiction, and international delegation to supranational or international bodies. While some research has been done on domestic delegation, especially in the context of delegation to administrative agencies in the U.S., as well as on delegation to supranational bodies, especially with regard to the E.U., these activities have not been analyzed within a unified framework. This paper attempts to inquire into these issues and provide a general picture of the decision-making process regarding whether to delegate authority and to which body to transfer the authority. The past decade has been a period of rapid change in Central and Eastern Europe. Almost all of these countries have either passed entirely new constitutions or substantially modified the old ones. This is a unique situation in which constitutional delegation of powers can be performed almost simultaneously with post-constitutional delegation. The constitutional process in Israel is very different. It has been underway for fifty years. However, it can also be characterized by simultaneous constitutional and post-constitutional choices. In this paper, we examine such delegation choices in nine countries. We describe the main differences among these countries with regard to delegation of power, try to trace their origins and analyze their effects on delegation of powers. One question raised is what are the ramifications of a quasi-simultaneous constitutional and post-constitutional choice? Have constitutional rules been chosen in anticipation of the necessary compatibility with the rules of international organizations that one wants to join? Has membership in international organizations led to a boost in credibility of those governments concerned?