This week, I was most intrigued by Lake and Baum’s piece “The Invisible Hand of Democracy,” probably because I would really like to believe what they conclude in their paper. Prior to the publication of their work in 2001, there was generally no robust empirical support for the normative idea that citizens living in a democracy are better off than those in a dictatorship. These authors’ goal was to fill this identifiable gap in empirical evidence to somehow provide proof that democracy has real and substantively important effects on the daily lives and well-beings of individuals. Beyond this, they believe that this positive effect of democracy can be achieved fairly quickly; within a few years of a transition to democracy, one should expect the health and wellbeing of the people to improve.

The author’s theory builds on a class of public choice models, wherein the state is conceived of as having a monopoly on the legitimate use of force, which gives them a natural monopoly within their core areas of production. However, states are still contestable, and can be displaced more or less easily depending on the barriers that exist prohibiting potential competitors, as well as the cost of political participation. Accordingly, in democracies, where these barriers are low, “the state will produce as a regulated monopoly, provide relatively larger quantities of goods at relatively lower prices and thereby earn fewer supernormal profits or monopoly rents.” Conversely. in autocracies, where these barriers are high, “the state will exercise its monopoly power, provide fewer public searches, and earn greater rents. In sum, their hypothesis is as follows: in democracies, states will earn fewer monopoly rents and produce a higher level of services than autocracies.”

This hypothesis is tested both cross-sectionally and over time for a variety of ‘quality of life’ indicators, i.e. public health and education. The results of their statistical analysis confirm their hypotheses, allowing Lake and Baum to substantively conclude that democracy does indeed have real, important, positive effects on the well-beings of individuals regardless of the region in the world.