NBER WORKING PAPER SERIES ELECTED VERSUS APPOINTED REGULATORS: THEORY AND EVIDENCE Timothy Besley Stephen Coate Working Paper 7579 http://www.nber.org/papers/w7579 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 March 2000 The authors are grateful to Yun Ho Chung, Tarcisio DaGraca and Imran Rasul for valuable research assistance, to Doug Jones and Dick Schuler for Guidance on the literature and institutions, and to Sharon Tennyson for many useful discussions. We also thank Richard Boylan, Roger Noll and a number of seminar participants for helpful feedback. STICERD provided financial support for the project. The views expressed herein are those of the authors and are not necessarily those of the National Bureau of Economic Research. © 2000 by Timothy Besley and Stephen Coate. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Elected versus Appointed Regulators: Theory and Evidence Timothy Besley and Stephen Coate NBER Working Paper No. 7579 March 2000 ABSTRACT This paper contrasts direct election with political appointment of regulators. When regulators are appointed, regulatory policy becomes bundled with other policy issues the appointing politicians are responsible for. Since regulatory issues are not salient for most voters, regulatory policy outcomes reflect the preferences of party elites and special interests. Direct election of regulators strengthens the power of voters by ensuring the salience of regulatory issues. Using panel data on regulatory outcomes from U.S. states, we find evidence in favor of the idea that elected states are more pro-consumer in their regulatory policies. 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