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The Mario-Monti-Probability-Calculator

About a month ago I discussed in Economonitor the likelihood that the “Monti agenda” of budgetary discipline (so far large tax increases and promises of spending cuts ) and growth-oriented liberalizations (yet to be implemented) would still be at the core of agenda of the next Italian government, after the 2013 elections. In Italy, the debate is framed around the likelihood that Monti will succeed himself as prime minister (“Monti-bis”), or retain some important role, either in government (economy minister) or in politics (next president of the republic).

The probabilistic model described in my previous post was based on the idea that the outcome depends on two factors: the electoral system that will result from the ongoing parliamentary reform, and the leaderships of the two opposite left/right coalitions, which will be determined by “primary” ballots.  A “proportional system” would likely result in a “hung parliament”, and this increases the chances of ”Monti-Bis” because it produces weak coalition governments. By contrast, a “majoritarian” reform would have the opposite effect. The Monti Agenda also stands a better chance if leaders chosen to lead the left and the right parties are “moderate” (Mr. Alfano on the right and Mr. Renzi on the left), rather than “extreme” (Mr. Berlusconi on the right and an alliance of Mr. Bersani and Mr. Vendola on the left).

Two important things have change since my article one month ago :

  1. The electoral reform actually being discussed in the Senate, a proportional system “corrected” with a premium for the winning coalition, may well turn out to be a “purely proportional system.”  This is because the premium may be given to the winning coalition only if it reaches at least 42.5% of the vote, which may actually not happen. In this case the electoral reform would likely produce a “hung” Parliament.
  2. The “extreme” leaders are today less likely to get the upper hand. Berlusconi has declared he doesn’t want to run for prime minister, and Mr. Renzi, the major of Florence, has strengthened in the polls.

Both factors tend to increase the likelihood of a Monti bis. In particular,

The initial estimate of the probability of a Monti-Bis, p (M2) = 43% was based on the following assumptions:

  • Probability that Berlusconi is the leader if the right =  60% , compared to 40% for  Alfano;
  • Probability that Bersani is the leader of the left = 60% , compared to 40% for Renzi
  • Probability  of a “proportional” system =  60% compared to 40% for  a “majoritarian” one.

In the light of recent developments, we can update the calculations with the following changes :

  • Probability that Berlusconi is the leader of the right =  10% , compared to 90% for  Alfano;
  • Probability that Bersani is the leader of the left = 50% , compared to 50% for Renzi
  • Probability  of a “proportional” system =  90% compared to 10% for  a “majoritarian” one

Plugging these new numbers into the Monti-Calculator gives that the probability of a Monti bis increases by 11 points, from 43% to 54%.

4 Responses to “The Mario-Monti-Probability-Calculator”

princess1960November 8th, 2012 at 1:37 pm

well the political situation in Italy look's like GR ..a true MONTI keep very good balace about the politce party in Italy he is technocrat and this help him I watch every day in TV about the political situation ther for my opinion BERSANI is more clear than others so if in IT wanted to change the GV form tchnocrat to political this doesn't say something ..Monti is srtong cart for the economy in IT ..
thank you

OrnellaNovember 8th, 2012 at 1:50 pm

I do hope professor Manasse is wrong for Mr. Monti's government's output has only been higher taxes, fake "liberalizations" and a more centralized state. We are still subjects, more than citizens.

Simple MindNovember 13th, 2012 at 9:36 am

Isn't Italy's electoral system the result of tweaks and schemes to keep the Communisti out of power during the 50s and 60s? High time for a change. Gee, Monti is even duller than Prodi, who now seems a clever wit and exciting fellow. I had no idea Italy could produce such snorers! Too bad Napolitano is so damn old. He could have done much good a couple of decades ago.

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Emre Deliveli The Kapali Carsi

Emre Deliveli is a freelance consultant, part-time lecturer in economics and columnist. Previously, Emre worked as economist for Citi Istanbul, covering Turkey and the Balkans. He was previously Director of Economic Studies at the Economic Policy Research Foundation of Turkey in Ankara and has has also worked at the World Bank, OECD, McKinsey and the Central Bank of Turkey. Emre holds a B.A., summa cum laude, from Yale University and undertook his PhD studies at Harvard University, in Economics.

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