Agency costs play an important role when societies delegate decision making power to elected politicians. These transaction costs imply that the demands of the electorate to regulate market failures may not be acted upon and, thus, never materialize and that the policies that do materialize will often reflect the interests of the elected politicians rather than those of their voters.

This project will study the hypothesis that the social identity of the elected politicians plays an important role for public policy. The agency costs associated with political delegation are ignored by a large literature on the relationship between democracy and public policy where it is assumed that a change in who can participate in elections leads directly to a change in policy choices. This ignores entirely the “supply side” of the political market and treats the elected politicians as passive agents that mechanically supply what is demanded.

The objective is to investigate how the socio-economic background of the councillors, aldermen and mayors (henceforth councillors) of the Municipal Boroughs (MBs) in late Victorian England influenced the boroughs’ reaction to the flora of negative externality problems associated with urban growth. We zoom in on the occupations of the councillors as the key indicator of social identity and investigate how the occupational structure evolved between 1866 and 1900. This setting is ideal because it allows us to relate (exogenous) changes in the suffrage rules to the occupational structure of the borough councils and in that way to evaluate the (causal) effect of occupational composition on policy choices (spending and taxation).

The project requires a major data collection effort. While data on policy outcomes and voting rights have already been digitalized, data on who served on the borough councils and on their occupations need to be collected from primary sources. A piolet study has established that it is possible from newspaper archives to reconstruct an almost complete list of who served on the councils and that it is possible from the individual-level census documents to match a large fraction of these to obtain their occupations. The project seeks funds to collect these data for about 100 large and medium-sized boroughs.