Coalition government formation and policy payoffs

Abstract What determines the outcomes of negotiations is a central question in political science, and such negotiations are crucial in coalition systems where political parties distribute policy payoffs during coalition negotiations. In this paper, we argue that due to the combination of the non-separability of most public policies and the shared responsibility for policy outcomes under coalition governments, which policies a party manages to get included in a coalition agreement will reflect these policies’ popularity among the other governing coalition parties, rather than policy payoffs being driven by proportionality or relative salience. Using a unique dataset containing novel data on the budgetary impact of every measure proposed in election manifestos and coalition agreements over five government formations, we can directly observe the policy payoffs extracted by each party for participating in government, using a measure that is directly comparable across parties, policy areas, and time. The results have substantial implications for our understanding of the formation process and functioning of coalition governments.