The paper investigates the Pareto efficiency of direct democracy and searches for the frequency with which the losing minority in referendum voting could compensate the majority and still be better off. A model is defined that permits the measuring of the intensity of preferences in a population, based on voting and abstention behavior. Using the model, an analysis of over 100 Swiss referenda reveals only a few instances in which the outcome of direct voting is inefficient. It seems that the political system evolves methods of trade-off that permit efficient outcomes in most cases. Criticism of direct democracy should therefore not rely on the primarily hypothetical objection of inefficiency.

Such issues as the freedom of speech or the right to vote are usually discussed as matters of principle or public policy, without concern for the preferences of the potential users of these rights. Yet it is interesting to see how strongly valued they are. This paper develops a method to derive the demand for legal and constitutional rights and rules, the values attached to them, and their sensitivity to income and education. The model is based on referendum data and on the interpretation of nonvoting behavior.

The paper investigates the Pareto efficiency of direct democracy and searches for the frequency with which the losing minority in referendum voting could compensate the majority and still be better off. A model is defined that permits the measuring of the intensity of preferences in a population, based on voting and abstention behavior. Using the model, an analysis of over 100 Swiss referenda reveals only a few instances in which the outcome of direct voting is inefficient. It seems that the political system evolves methods of trade-off that permit efficient outcomes in most cases. Criticism of direct democracy should therefore not rely on the primarily hypothetical objection of inefficiency.