Transaction Costs

July 4, 2008 by  
Filed under Blog

One concept to consider in evaluating what percentage of delegates should be apportioned by the primary and what by the caucus is whether the “information and transaction costs” of participating in both the primary and the caucus create barriers to participation for some voters and whether those barriers can be lowered.

The definition of information and transaction costs can be found on the site “Texas Politics”. Dr. James Henson of the University of Texas at Austin is executive producer of Texas Politics, an online textbook that according to a press release from UT serves “as a free resource for anyone interested in learning more about the subject. One of our goals for the site is to provide a public resource for citizens who need explanatory information about the political system, as well as information about how to participate in politics more effectively.”

Information costs are the costs of acquiring and processing information – in this case, political information necessary for or useful in voting and other forms of political participation. What constitutes political information or voting information? Political information can range from the simplest facts about voting procedures to arcane knowledge about politics, policy, and candidates.

Transaction costs are the costs of making a transaction in the marketplace. Even simple economic transactions involve additional costs that may not be obvious. A trip to the convenience store to buy a gallon of milk or a loaf of bread involves not just the cost of the item you need to buy, but time, possibly gasoline, and a share of the annual insurance cost for your car.

For a single trip to the grocery store, such costs are negligible. But they still exist, and we often factor them into our decision making for small transactions consciously or not. For other transactions the costs are both more numerous and higher. Buying a car, for example, involves substantial sales taxes, title and registration fees, insurance, and inspection fees (in addition to time and travel associated with looking at possible vehicles to purchase).

Voting also can impose numerous and substantial transaction costs. As with all transactions, voters must spend time that could be used for other productive or leisure activities. In the United States the time many Americans spend voting is longer than it could be, because we rely primarily on single-day, mid-week elections.

So, the question is whether the information and transaction costs for participating in the primary and caucus varies across income, race, gender, class and other categories and whether that variance creates an undue burden on participation and if so, how to eliminate the burden.

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