What are the Economic reasons and explanations to make a referendum?

Australia is now conducting a survey on same sex marriage, to decide if they take the vote to the parliament or not. Although it is called a survey, the population is treating it as a referendum. The government could decide on its own to legalize the same-sex marriage, the same way it decides on topics such as immigration laws.

Are there any economic arguments that help a government to decide which topics are polled from the population and which are not?

1 Answer

Polling is expensive so only issues that a lot of people feel strongly about will get polled.

You can imagine that every citizen $i$ would pay $r_i$ monetary units to have a certain policy changed. This number may also be negative to reflect that some people like the current policy better than the proposed change.
Ideally the government would like to know $\sum r_i$, if its positive or negative. But I am sure there are also a lot of practical political considerations. However polling itself has a significant cost. Let us denote this by $C$. The government probably has some vague idea about $\sum r_i$. E.g. most people don't care about the color of chewing gum wraps, so the $\sum r_i$ for banning silver coloring is likely negligable. In this case a poll to determine the exact value would be wasteful as $$\sum r_i - C < 0.$$ So when you pick something to poll it is probably a salient issue, something that a lot of people know about and have strong opinions about. As I said, I am sure that these considerations are usually secondary to political ones.

• +1. How costly is polling? I assume that online surveys have dramatically decreased $C$, at least the cost of collecting data. – emeryville Sep 19 '17 at 9:40
• Great answer! I would just change slightly the Ri from "would pay to have a policy changed" to "would pay to have a say on a certain policy". Because the parliament can and should decide on most topics, that's their job. Polling make sense, in my opinion, when a topic might not be fairly represented in the parliament. – JoaoBotelho Sep 19 '17 at 10:20
• @emeryville most countries still use the postal voting. This is the case in Australia. Besides the vote material costs (paper, post, etc.), you have the cost of advertising and explaining the voting issue through public media. And you need to pay to the polling commission for counting and controlling the results. – JoaoBotelho Sep 19 '17 at 10:23
• @JoaoBotelho I think you perhaps read my answer to hastily? It is a crucial part of it that the people who prefer the status quo are also accounted for via the negative $r_i$ values. – Giskard Sep 19 '17 at 13:05
• @denesp I couldn't agree more with you on the self-selection issue but I am afraid that this also applies to the postal voting. At least, I would not use it! – emeryville Sep 19 '17 at 16:13