doi: 10.1111/j.1467-9299.2011.01951.x POLITICAL DISCOURSE AND PATH SHAPING IN PUBLIC POLICY: COMPARING PENSION REFORMS IN GREECE AND ITALY DIMITRIS TSAROUHAS Which factors account for successful policy reform and what role does discourse play in the process? This article examines this empirical puzzle with reference to the issue of Greek reform failure. A matched comparison with Italy in the area of pensions reveals the salience of path shaping and the use of political discourse in narrowing down reform options and facilitating change. The Greek case of limited public information, incoherent preparation of the problem, and inner-circle decision- making, is contrasted with the Italian government’s information-sharing and consensus-building campaign for the establishment of a pro-reformist discourse. Findings confirm the salience of institutional conditions but suggest that pure institutionalist accounts premised on rational choice thinking and the power of veto players should be complemented with more agency-driven accounts of public policy. INTRODUCTION The 2008 economic crisis forced many European Union (EU) states to embark on com- prehensive public policy reforms so as to achieve fiscal consolidation. Nowhere has this been more pronounced than in Greece, whose financial troubles have only temporarily been assuaged through a joint EU-International Monetary Fund (IMF) rescue package released in the spring of 2010. The country’s bad record on reform had made conditions for the release of funds particularly stringent. For instance, reforming the Greek pension system was part of the latter’s conditionality approach and, as will be discussed below, new pension legislation was introduced in the summer of 2010 (IMF country report 2010, pp. 69–70; Salourou 2010). Why is the public policy reform record of industrialized states so varied despite agreement on the broad parameters of reform (OECD 2009)? More to the point, why does this variation in outcomes persist even in cases where policy preferences are almost identical and institutional traditions very similar? In this article, I suggest that while valuable institutional analyses based on path dependency are well documented, less attention has been paid to the agency-driven failure by political leaders to establish conditions conducive to long-term change. This suggests that path dependency ought to be complemented by a focus on path shaping (Torfing 1999) to understand the variety of reform success between states with similar institutional traditions. Political elites need to frame the public debate by making use of what has been termed a ‘vice into virtue’ approach (Levy 1999) narrowing down possible options and forming a pro-reformist coalition that has a direct stake in supporting change. To illustrate the theoretical argument, I compare pension reform in Greece and Italy. Pensions is a highly technical subject made especially difficult due to the dispersed nature of the ‘winners’ and the specificity of the ‘losers’, the lack of information on policy content and the related difficulty in shaping a reformist coalition. Empirical findings suggest that policy entrepreneurs in Italy have put a ‘vice into virtue’ approach into practice by Dimitris Tsarouhas is in the Department of International Relations, Bilkent University, Ankara, Turkey. Public Administration Vol. 90, No. 1, 2012 (160–174)  2011 The Author. Public Administration  2011 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.