Institutional Change as a Response to Unrealized Threats: An Empirical Analysis

Leaders shift political institutions to ameliorate threats to their tenure. The masses might rebel to replace the leader and change institutions. Disloyalty by political insiders might result in a coup. Leaders liberalize when the masses present a greater threat and ‘autocratize’ to dissipate threats from elites. A two-step procedure tests these arguments: (1) The risks of revolution and coup are estimated as a function of leader health, experience, economic conditions and extant institutions. (2) These risks are used to predict institutional change in a heteroskedastic regression model. The magnitude and direction of institutional change depends upon whether the masses or elites pose the greater threat. When both risks are high, leaders must gamble as to which risk they believe is greatest. In such circumstances, institutions are highly volatile even as the aggregate direction of change becomes unclear.