Testing Democracy

Developing countries that free themselves from authoritarian governments are often called “experiments in democracy.” Now MIT economist Benjamin Olken has gleaned some surprising insights from an actual field experiment in democracy, which he conducted in 49 Indonesian villages.

Indonesia, which threw off the authoritarian Suharto regime in 1998 after 31 years of rule, is still evaluating local and regional forms of democracy. So in three distinct rural subdistricts–in East Java, North Sumatra, and Southeast Sulawesi–Olken arranged to have major public decisions in some locales decided by plebiscite, in which all citizens get a vote. Other villages left similar decisions in the hands of traditional small councils of village leaders.

Unexpectedly, the civic decisions–often involving road, sanitation, and water projects–were nearly identical whether made by majority vote or village elites. Giving power to the people, it seems, does not automatically lead to tangible material changes. Yet when people were allowed to vote, they expressed greater contentment with the results.

“I expected more of a change in the outcomes,” says Olken, an associate professor of economics. “But there is more satisfaction and potentially more legitimacy through these direct democratic institutions.” In turn, the study challenges a popular view in development economics: that “elite capture” of politics–the control of government decision-­making by a small group–enriches a select few. Perhaps, Olken notes, some elites “are leaders doing a good job of making sure things are allocated the right way.”

Olken’s study, which will appear in the American Political Science Review, “represents the first effort to study real-world democracy in a natural setting where the stakes mean something to the participants,” says Yale political-science professor Donald Green.

Olken offers a few caveats about the experiment. Direct democracies must find democratic ways of deciding what to vote on; in this case, that occurred through open village meetings, but elites made up a large portion of those in attendance. Plebiscites, for all the satisfaction they bring on matters of the common good, may be no better suited than indirect democracy for deciding matters that may hurt some citizens, such as whether to route a road through existing property. “Direct democracy can be very important in the right context,” he says. “But the question is: What exactly is the right context?”

Finally, Olken notes, “elite capture” may indeed hinder good government in other places. “I don’t think we’ve disproven that elite capture is still a problem,” he says. “But maybe in some cases elites are doing good things as well.”