A General Empirical Law of Public Budgets: A Comparative Analysis

Abstract: Political dynamics are likely to proceed according to more general laws of human dynamics and information processing, but the specifics have yet to be outlined. Here we begin this task by examining public budgeting in comparative perspective. Budgets quantify collective political decisions made in response to incoming information, the preferences of decision-makers, and the institutions that structure how decisions are made. Most models to date stress preferences (organized by political parties) almost exclusively. We suggest a quite different approach.

We begin by noting that input distributions for complex information-processing systems are Gaussian, providing a standard for comparing outputs against inputs. Next we examine public budget change distributions from a variety of countries and levels of government, finding that they are invariably distributed as double Paretians—two-tailed power functions. We find systematic differences in exponents for budgetary increases versus decreases (the latter are more punctuated) in most systems, and for levels of government (local governments are less punctuated). Finally, we show that differences among countries in the coefficients of the
general budget law are probably explained by differences in the formal institutional structures of the countries. That is, while the general form of the law is dictated by the fundamental operations of human and organizational information processing, differences in the magnitudes of the law’s basic parameters are country and institutionspecific.