An argument for longer term lengths: job security improves performance

A new study determines longer term lengths make politicians more productive. Beyond politics, the findings may be applied to business organizations and projects that may take years to complete.

“It’s ok to give people incentives and monitor their accountability but we cannot make life a continual accountability situation, says Dal Bó, “This is not to say we should give jobs for life, but over some range of time, there are gains to be made by extending term lengths.”

Associate Professor Ernesto Dal Bó, UC Berkeley’s Haas School of Business, whose research focuses on the methods of political economy, found that lawmakers who serve longer terms are more effective, not because they don’t have to worry about early campaigning, but because they are better able to realize the rewards of hard work over a long period of time as compared to their colleagues serving shorter terms. He calls this the “time horizon/ investment” theory.

The findings are based on performance data from members of the Argentine House of Representatives and Senate. The study explains, “If all legislative activity were instantaneous in the sense that every effort leads to an immediate reward, time horizons should not matter. But in reality, legislators may need to sink certain costs if they want to reap benefits in terms of future political payoffs.”

According to Dal Bó, traditional economic organization models typically indicate that employee effort declines over the passage of guaranteed time on the job. They show there is a correlation between the duration of time and attentiveness to work. As a position’s longevity increases, so do the incentives to shirk one’s responsibilities.

Dal Bó’s research found opposite results. In “Term Lengths and Political Performance,” co-author Dal Bó and Martín Rossi, assistant professor, Universidád de San Andrés, Argentina, considered two possible explanations for why longer terms could make sense: with very short terms politicians may spend most of their time distracted with campaigning, and longer time horizons may offer a better investment scenario for the politician. “When you have a longer time horizon ahead of you, you will invest more, put in more effort. Why? Because you expect to reap the rewards from more effort.”

The study revealed legislators in the four-year track appear to work harder than those on a two-year track, “Postponing accountability for a bit is not necessarily counterproductive,” says Dal Bó, “But why? “If campaigning obligations were the reason, then the performance differential should widen as we get close to reelection time, but this does not appear to be true.”
The researchers took advantage of the end of the Argentine dictatorship in 1983 to observe an entirely new legislature: 254 representatives elected at the same time to serve four year terms without term limits. The other intriguing aspect was the Argentine constitutional requirement that every two years, the House must renew half of its members. A lottery determined who would face re-election after two years and who would have a four-year initial term. The researchers say this randomization created an exogenous – or independently external – variation in term lengths that only strengthens the credibility of the paper’s results.

“What makes this research credible is that it relies on natural experiments. The performance differentials we observe follow a well documented randomization,” says Dal Bó. The Argentine legislators were randomly selected to serve short or long terms.

Dal Bó and Rossi started collecting data in February 1984, four months after the election, comparing legislative performance metrics over the first two years. The question, “Were the four-year term officials working more than the two-year officials?”

Six measures of performance were used: floor attendance; committee attendance; number of committee bills in which the legislator participated; number of times the legislator spoke on the floor; number of bills introduced by the legislator; and the number of those bills that was approved. “There isn’t a single metric in which the two-year legislators outperformed the four-year ones. Furthermore, the internal hierarchy of the House was defined before the lottery; committee appointment changes, which could have altered the study’s findings, were non-existent and, therefore, inconsequential.

Dal Bó and Rossi also interviewed Argentine legislators seeking their personal accounts of productivity and job security. “This was not only fun but also incredibly helpful,” says Dal Bó. “We came out of those talks convinced that the duration of the office matters to legislators trying to figure out how involved they want to be.”
Furthermore, the study found legislators on the four-year track work harder than those on the two-year track only if their reelection is not a foregone conclusion. “The effects are driven by those on shakier electoral grounds. Perhaps shrinking term lengths could be a good idea from the accountability perspective,” says Dal Bó, “but one must give people time to invest effort and learn.”

A new study determines longer term lengths make politicians more productive. The findings of business and public policy Associate Professor Ernesto Dal Bó at the University of California, Berkeley’s Haas School of Business, are based on performance data from actual members of the Argentine House of Representatives and Senate.