We present a simple theory of the quality (competence and honesty) of elected officials. Our theory offers four main insights. Low-quality citizens have a 'comparative advantage' in pursuing elective office, because their market wages are lower than those of high-quality citizens (competence), and/or because they reap higher returns from holding office (honesty). Hence, voters may find themselves supply constrained of high-quality candidates. Second, bad politicians generate negative externalities for good ones, making their rewards from office increasing in the average quality of office holders. This leads to multiple equilibria in quality. Third, incumbent policymakers can influence the rewards of future policymakers, leading to path dependence in quality: bad governments saw the seeds for more bad governments. Fourth, quality-constrained voters look for the optimal mix of honesty and ability, and this may lead to a negative correlation between these two qualities across political entities.
Published: Caselli, Francesco and Massimo Morelli. "Bad Politicians," Journal of Public Economics, 2004, v88(3-4,Mar), 759-782.