Rewarding Merit or Luck? The Competency Signal in Comparative Perspective

This paper revisits models of economic voting to argue that when alternative sources of information about incumbent competence (merit) are not available, it may be rational for citizens to cast an economic vote even if the economy is mostly determined by exogenous factors (luck). This vote, however, is unlikely to promote democratic accountability. We subsequently show that this is precisely what happens in most developing countries, where exogenous factors such as commodity prices and inflows of capital driven by international liquidity are far more relevant to explain economic outcomes than in the developed world. As a result, by sanctioning and selecting incumbents based on the economy citizens are more likely to reward merit in the OECD and luck elsewhere. Our findings suggest that the economic vote is a poor instrument of democratic accountability in developing nations.