Regulatory Complexity Is Not Always a Bad Thing

In recent decades, legislative systems around the world have produced increasingly lengthy laws, full of clauses, exceptions, and references. Is this a symptom of modernity or democratic dysfunction?

Massimo Morelli (Bocconi Department of Social and Political Sciences and affiliated with IGIER) and Dana Foarta (Centre for Economic Policy Research) attempt to answer this question in their study “The Common Determinants of Legislative and Regulatory Complexity,” published in the Journal of Law, Economics, and Organization (Oxford University Press, 2025).

In some cases, complexity of laws and regulations can be bad, for example, because they are more difficult to understand and navigate, but in other cases greater details and contingencies can be good—making the social contract more “complete.”

The authors start from an observation that is as intuitive as it is crucial: “In some cases, the complexity of laws and regulations can be bad, (…) but in other cases greater details and contingencies can be good—making the social contract more ‘complete’.” Understanding when complexity is “good” or “bad” is therefore essential to understanding the quality of democratic governance.

Inside the model: the expert and the decision-maker

At the heart of the study is a theoretical model representing a strategic game between two actors:

• a proposing expert, who drafts a reform or law with knowledge of the technical details and its potential effects;
• a political decision-maker, who must approve it but has more limited information and their own incentives (such as re-election or popularity).

The expert can choose how much detail or simplification to include in the legislative proposal. If their information is accurate and their objectives are aligned with those of the decision-maker, complexity is a virtuous tool: it serves to cover all possible situations and make the law more comprehensive. But if interests diverge or uncertainty is high, complexity can become a strategy of “obfuscation”: a way to conceal controversial parts and increase the likelihood that the decision-maker will approve the proposal without fully understanding its implications.

As the authors write, “the proponent can 'muddy the waters' for the policy maker by drafting a complex reform even when it is not necessary, for the sole purpose of increasing the likelihood of its approval.” The model thus shows that regulatory complexity arises not only from technical needs or the economic context, but also from strategic interactions and distorted political incentives.

When complexity is useful (and when it is not)

“Efficient” complexity emerges when precision is useful for reducing uncertainty and improving policy implementation. “Inefficient” complexity, on the other hand, arises when it serves only to mask information or to please those in power. In this sense, Foarta and Morelli's model helps to distinguish between functional complexity (which improves the quality of the law) and opportunistic complexity (which reduces transparency).

Italy vs. the United States: two natural experiments

The theory also helps reconcile seemingly contradictory empirical results. In Italy, where political instability is chronic, more laws often mean more bureaucracy and less effectiveness. In the United States, however, a study by Ash, Morelli, and Vannoni (2025) shows that greater legislative complexity can go hand in hand with economic growth, thanks to competition between states and the ability to learn from the experiences of others. The model explains both dynamics: when uncertainty and implementation costs are high, complexity becomes a brake; when information is more extensive and costs are lower, it becomes an accelerator of efficiency.

A delicate balance

While this integration eliminates the pandering incentives, it also reduces the likelihood of complex policies when such policies are in fact efficient.

Eliminating delegation to experts, however, does not solve the problem. If all power remains in the hands of politicians, there is a risk of the opposite effect: “too much simplicity,” which can lead to ineffective or superficial laws. “The integration of drafting and decision-making functions eliminates incentives for pandering, but it also reduces the likelihood of complex policies when such policies are in fact efficient.”

Beyond the regulatory maze

Higher complexity makes laws and regulations harder to understand and costlier to implement. These factors are likely to contribute to voter disengagement from the political process, costlier implementation of public policies, and a more negative- -perception of public institutions. Greater complexity of rules and laws can also generate distrust and populist attitudes and platforms.

The authors' conclusions look at the democratic implications. “Higher complexity makes laws harder to understand and costlier to implement, [generating] mistrust and populist attitudes.” For this reason, according to Morelli and Foarta, it is urgent to understand the dynamics that generate unnecessary complexity and identify institutional rules that promote transparency without sacrificing precision.