In recent years, both scholars and journalists have heralded the benefits that derive from large, diverse groups when it comes to making better informed, and hence, more accurate decisions. This logic is perhaps best exemplified by a pair of terrific books on this topic by James Surowiecki’s New York Times Business Bestseller The Wisdom of Crowds and Scott Page’s The Difference. To summarize, the basic logic presumes that larger, more diverse groups can yield superior sharing of both expertise and information sharing, while being insulated from capture by any single faction.
In our recent AJPS article “Organizational Structure and the Optimal Design of Policymaking Panels: Evidence from Consensus Group Commissions’ Revenue Forecasts in the American States”, Jim Douglas and I claim that collective decisions made by policymaking panels involve an inherent tradeoff between panel size and panel diversity. This is a critical issue to scholars and practitioners alike concerned with how to best devise this class of governance structures to improve how public policy decisions are made.
Numerous independently-designated government policymaking panels and commissions exist that range from legislative redistricting to environmental policymaking to drug review panels. These panels often serve to both advise and craft government policies. Although these collaborative governance structures are set outside the purview of existing political branches, they are not immune to politics.
These policymaking panels reflect a myriad of political interests. For instance, Consensus Group (CG) commissions that are used by 26 American states to formulate the official general fund revenue forecasts, are comprised of members who represent varying appointment mechanisms (partisan versus nonpartisan), partisan orientations (Republican, Democratic, and Independent), and institutional interests (legislature, governor, and independently elected executive agency heads). Moreover, these policymaking panels typically mirror the size of most government policymaking panels and commissions by being comprised of anywhere from 3 to 9 members.
On a policy level, the composition of these CG commissions plays a vital role in defining the parameters of subsequent budgetary outcomes based on the bargaining process between governors and legislatures in the American states. As a practical matter, the aim is for governments to determine how to best design these policymaking bodies in a manner that mitigates the hazards of politics on collective decision-making.
In our study, we argue that larger, more diverse policymaking panels make it more difficult to efficiently coordinate the varying expertise and information of its individual members to produce a collective decision. The basis for this claim lies in research in both social psychology and organizational economics which contends that collective judgments rely on social engagement of individuals within the group, and that coordination losses resulting from such social engagement will necessarily ensue from pooling such disparate content together in arriving at a collective decision.
This research problem is tackled by first identifying the analytical theoretical conditions by which a panel size−diversity tradeoff occurs. Next, the existence of this panel size−diversity tradeoff is tested with data on CG commission general fund revenue forecasts from 1987−2008. Not only does the statistical evidence bears empirical support for this tradeoff, but it also uncovers that increasing organizational diversity on large panels has a much greater adverse impact of reducing the accuracy of CG commission revenue forecasts than compared to decreasing diversity on small panels.
Using these statistical estimates, we assess the effectiveness of states’ organizational structures:
- States possessing the best overall organizational structures for enhancing revenue forecast accuracy consistent with an optimal panel size−diversity tradeoff path include Indiana, Maine, Alaska, Nevada, Kentucky, and Hawaii.
- States possessing the most suboptimal organizational structures (i.e., ones that deviate from this optimal panel size−diversity tradeoff path) are ones where their CG panels are either too small and homogeneous (Massachusetts, Michigan, Rhode Island, South Carolina, Florida, New Mexico, Tennessee, and Vermont), or too large and heterogeneous (Wyoming, Nebraska, Washington, Kansas, and New York).
On a more sanguine note, we conclude that although a clear tradeoff occurs between panel size and organizational diversity in policymaking panels and commissions, it is not immutably fixed. For instance, some combination of rules and incentives that more efficiently utilize common expertise and information may enable large, more diverse panels to arrive at better collective decisions than posited in our study. Two such policy prescriptions that emanate from our article are lengthier terms of appointment as a means to forge greater trust among panel members engaged in repeated interactions, as well as sole reliance on common information from a panel’s independent staff for purposes of deliberation and policymaking.
About the Authors: George A. Krause is a Professor in the Department of Political Science at the University of Pittsburgh and James W. Douglas is a Professor in the Department of Political Science and Public Administration at The University of North Carolina at Charlotte. Their article, “Organizational Structure and the Optimal Design of Policymaking Panels: Evidence from Consensus Group Commissions’ Revenue Forecasts in the American States” appeared in the January 2013 issue of the American Journal of Political Science.