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Appointed treasurers are better than elected treasurers

Speaking of academic research, here's an interesting paper showing that appointed treasurers are much better at their jobs than elected treasurers.

This paper investigates whether methods of public official selection affect policymaking in cities. I draw on the unique characteristics of California’s city referendum process to identify the causal effect of city treasurers’ method of selection on their cities’ debt management policies. I utilize a regression discontinuity strategy based on the effect of narrowly-passing appointive city treasurer referendums on city borrowing costs. The results indicate that appointive treasurers reduce a city’s cost of borrowing by 13% to 23%. The results imply that if all cities in California with elected treasurers were to appoint them, total borrowing expenditures would be reduced by more than $20 million per year. Appointive city treasurers appear to reduce borrowing costs primarily through the refinancing of expensive debt at lower interest rates.

That's not a huge surprise: People who are appointed treasurer probably know something about the job, while people who run for treasurer are often using it as a stepping stone for their next job.

But still: A 13 percent to 23 percent reduction in borrowing costs is a pretty serious savings. Indeed, this is the sort of research that activists might want to follow up on. Matt Yglesias, luckily, offers an action plan: "Figure out if your city elects its treasurer, and if it does then you’d better … start complaining … to someone … not really sure who’d have the authority to change something like this." Go!

By Ezra Klein  |  January 12, 2010; 6:00 PM ET
 
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Next: Bad politics, good sociology

Comments

City of Chicago Treasurer: elected (although here, that's somewhat same as being appointed by Mayor Daley--though the political, rather than professional problem, still exists).

The only saving grace is that so few people actually vote below the line for Mayor.

While we're at it, can we stop electing judges, too? There were, like, 57 judges on my ballot last November. And I stupidly do all the research I can, bringing my various endorsement lists from legal groups to the poll with me. It's a fool's errand.

Posted by: JJenkins2 | January 12, 2010 7:46 PM | Report abuse

Around here even if someone is elected to an office like treasurer there are actually appointed professionals like deputies and such that do all the real work. I'm pretty sure this is the case in all but the tiniest towns. I wonder if this study would hold in different states?

Posted by: AuthorEditor | January 12, 2010 9:00 PM | Report abuse

There is a flaw in your reasoning. The alternative explanation may be due to the fact that appointed treasurers, almost by definition, have a good relationship with the governing body that also appointed him/her.

In contrast, the relationship between an elected treasurer and others in the local government is happenstance. They may even hate each other professionally and personally.

The quality of the professional relationship may be the determining factor, not the way the treasurer came to the job. So, not sure a blanket change to electing treasurers is a good idea, until you can rule out competing explanations.

Posted by: csy8 | January 12, 2010 9:32 PM | Report abuse

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