We identify as political transformists the Italian members of parliament (MPs) who cross the aisle and vote for legislation opposed by their own political group—i.e., MPs who transform from the political opposition to the ruling parties (or from government supporters) into a force supporting the government (or opposition)—thus representing sources of party and governmental instability. Transformism, which characterized 471 MPs over the period considered, does not coincide with the broader phenomena of party switching already studied in political science. Once we disentangle the distinct behaviors, we study whether transformism helps extend the tenures of all 7128 MPs observed from 1946 to 2013. To the best of our knowledge, ours is the first work to consider the role of transformism in the survival of politicians. Our results suggest that transforming MPs suffer marked reductions in their survival probabilities, especially when compared with their fellow parliamentarians. However, transformist MPs, immediately after coming out as such, are more likely to survive than MPs remaining reliably loyal to their parties. That is, over time, transformists are punished by the electorate, but newly transformed politicians enjoy short-term comparative electoral advantages, thus shedding light on the relevance of a long-standing Italian political phenomenon.
Over the last four decades, banking crises around the globe have become longer. Along with the unprecedented government responses to the Great Recession of 2007–2008, protracted financial crises have led scholars to ask whether political decisions were somehow to blame. Despite growing concerns, little attention has been paid to the political and institutional determinants of financial crisis duration. This paper considers the role of these factors in determining the duration of systemic banking, currency, sovereign debt, and twin or triple coinciding crises. Relying on an extensive database of 125 countries observed over the 1976–2017 period and estimating a discrete-time duration model, we find that the electoral cycle, political ideology, majority governments, institutional quality, and central bank independence matter. This study shows that the duration dynamics of financial crises are idiosyncratic and must be examined individually. Finally, allowing for more flexible duration dependence patterns, we observe that the durations of both banking and twin or triple coinciding crises follow a nonmonotonic cubic model, while the probability of debt crisis ending declines monotonically over time.
This study uses data from the European Social Survey to analyse the impact of same-sex relationship recognition policies on the political trust of sexual minorities. We exploit temporal and geographic variation in the passage of same-sex relationship recognition policies to test the effect of these policies on the political trust of sexual minorities. Findings suggest that same-sex relationship recognition policies increase the trust that sexual minorities have in the actors and institutions that were integral to the policy change. The findings suggest an incentive mechanism exists for politicians and political parties to follow public policies that reduce structural stigma of minority groups and improve their political trust.
Adopting an international historical perspective, this study aims to identify the main empirical regularities in the long-run growth pattern of government expenditure. The application of parametric and non-parametric analyses to a sample of developed countries observed over the period 1880–2018 allows us to detect two main findings. The first is that, beyond the long-term growth of government expenditures in absolute terms, there is evidence for three expansionary long waves corresponding to the booms before and during the twentieth century’s two world wars, along with the ‘golden age of public sector intervention’. The latter refers to the decline in cross-country heterogeneity in the trends and composition of absolute growth of government expenditure since the 1960s. The ‘ratchet phenomenon’ in the pre-WWII period and the shift in ideological focus from market to government failures in the last decades of the twentieth century provide explanations that complement Wagner’s law and are consistent with the observed long-term evolution of the growth of government expenditure.
Schools are one of the ways parents transmit their cultural values. US public education historically promoted Protestantism. We examine two conflicts over classroom religious exercises during the 1960s: school prayer and Bible reading. Supreme Court rulings on those matters created controversy by changing the cultural values transmitted in public schools. More conservative and evangelical religious traditions felt that their children were deprived of vital religious instruction; some moderate and liberal Protestants, as well as Jews, praised the removal of religious exercise from the public schools. We document changes in private school enrollments between 1960 and 1970 for US counties with differing religious adherence. In counties with more evangelicals and fewer Catholics, private school enrollment increased by 13–17%. States that previously had required Bible reading also saw larger increases in private school enrollments. The results are robust to a variety of checks, including controls for race-related enrollment decisions. Our results imply that evangelical families relied on public schools to transmit religious values; when the nature of public schools changed, some of them shifted to private schools. The analysis of that historical event can inform contemporary discussions about school curriculums and vouchers.
Politics, like any social system, involves selection mechanisms. This paper presents a model of politics as an evolutionary process. Our model yields three main results. First, the political process selects for efficient policies in the long run. We call that attribute asymptotic efficiency. Second, bargaining amongst interest groups bounds the inefficiencies that can exist in the short run. Potential inefficiency declines when organizing interest groups becomes less costly. Finally, policies that appear to be inefficient in a static analysis can be efficient once economists consider the dynamic nature of political decisions. We argue that viewing the political process as a selection mechanism allows political economists to use efficiency as a criterion for positive economic analysis. In our approach, applied political economy involves looking for relevant costs that make the policy efficient. However, our approach does not rob political economists of the ability to make meaningful normative statements; it only constrains the type of statements made.
The interest group theory of government assumes that the state’s primary purpose is to facilitate wealth transfers between special interests. The values of the transfers depend on their durability, which can be increased by mechanisms that raise the cost of repealing them. Nonetheless, such mechanisms cannot function perfectly, and, thus, uncertainty surrounding their durability remains. We argue that the uncertainty could be mitigated by an insurance mechanism that compensates interest groups if other durability-enhancing mechanisms fail. To illustrate how such an insurance mechanism works, we rely on the 2014 settlements between the Department of Justice and Bank of America and Citigroup, respectively, which required both banks to donate to housing-counseling organizations whose funding Congress had reduced three years earlier.
Prior empirical research on rent seeking has focused on estimating its effects on overall macroeconomic performance, with few studies attentive to income distribution. This paper expands on existing research by evaluating rent seeking’s effects on Gini coefficients, and income shares at the US state and county levels. We explore county-level panel data from the Census of Employment & Wages, adopting the percentages of workers employed in legal services and local government as proxies for rent seeking. We find that the estimated effects of rent seeking on the income distribution are significant and positive at all levels of analysis. However, rent seeking’s impact on the distribution of income is much more prominent at the state than at the county level. The results also suggest that the effect of rent seeking on the income distribution works by different mechanisms at the county level than it does at the state level.
This paper examines state interest in the nine bases of congressional seat apportionment considered for the House of Representatives as part of the Fourteenth Amendment to the US Constitution. We ask, what if voters preferred apportionments that delivered larger vote shares to their state? We then show that among all states, one basis of apportionment was a weak Condorcet winner, while the others were in a vote cycle. In both chambers of Congress, however, pure majority voting created orderings of the nine bases and a different Condorcet winner. Ironically, Congress did not select either Condorcet winner. Instead, a population-based apportionment was reported out of committee and passed both chambers as a consequence of agenda control and lack of pairwise voting. Our analysis provides an example of how agenda setting with incomplete information unintentionally can produce undesirable outcomes for a legislature.
A voting rule that permits some voters to favor a candidate by revealing only the initial segment of their sincere rankings is said to be vulnerable to the truncation paradox. In this paper, we consider four models for counting truncated ballots, optimistic, pessimistic (the most common), averaged, and round-down. Under the impartial anonymous culture assumption, the choice of model generally has a real impact on truncation-paradox vulnerability, but exceptions exist. When the election is decided by a one-shot scoring rule, the optimistic model is invulnerable to the truncation paradox, but all other models are vulnerable. We identify new voting rules immune to the truncation paradox, such as the Modified Borda Count. To obtain a more complete picture of the impact of processing model, we assess the likelihood of the truncation paradox in three-candidate elections with large electorates, focusing not only on one-shot scoring rules but also scoring rules with one-by-one or below-average elimination. Our assessment confirms that the processing model for truncated ballots may really matter.
Economists have claimed that the invisible hand of competition is behind the historical episodes of outstanding artistic achievement, from Shakespearean theater to musical composition in Mozart’s Vienna. Competition, the argument goes, acts on producers of the arts just as it does on producers of mundane commodities. By pitting one artist against all others for the public’s purse and the critics’ praise, rivalry encourages them to supply more refined products. While often left unstated, the same argument implies that the absence of competition will be detrimental to the quality of artists’ output. We extend that insight to explain the decline of the Florentine school of painting in the Late Renaissance period. The rise of the Medici family as Florence’s ruling dynasty turned the previously competitive market for paintings into a monopsony. That development, we argue, strengthened the benefits to local painters of forming a cartel to reclaim the rents captured by the monopsonist. The result was the creation of a local painters’ guild that restricted competition, ultimately contributing to a decline in the quality and influence of Florentine painting.
This paper explores the relation between campaign spending and votes, in France, relying on political financing reforms as a quasi-natural experiment to assess if and how spending affects votes, for both incumbent and challenger candidates in multiparty legislative elections. The French reforms were adopted in the mid-1990s, modifying the fundraising rules in three important ways: (1) spending limits were reduced, (2) legal entities no longer were allowed to fund candidates, and (3) the maximal amount of candidates’ personal campaign spending reimbursed by the State was raised. We study observations on two consecutive legislative elections, one before and one after the reforms. The difference in campaign expenses across elections turns out to be strongly affected by the reforms: candidates from the extreme parties (far left and far right) increased their expenditures substantially, while the candidates fielded by moderate parties reduced them considerably. Focusing on politicians running in both elections, we estimate the impact of spending using first-difference panel data methods and TSLS. Our instrumental variables for the difference in spending are constructed from the regulatory reforms. We find that spending by incumbents did not have statistically significant effects on their vote shares. Spending by challengers is statistically significant but the impact nevertheless is economically small.
What explains variation in the extent of regulation across US states and industries? We examine cross-sectional variation in state government regulations facing 81 three-digit North American Industry Classification System industries by matching novel data on regulatory restrictions at the state-industry level with data on state-industry characteristics. For most states, an increase in industry size is positively correlated with the extent of regulation. Additionally, for most industries, a positive correlation is found between industry size and the degree to which state governments regulate that industry. When we control for unobserved heterogeneity at the state and industry levels, we find that the extent of regulation is correlated robustly with the size of the industry. However, other industry-level factors, like average wages, average establishment sizes, the distribution of establishment sizes, the number of workplace accidents, and toxic emissions, are uncorrelated with the extent of regulation. Taken as a whole, our findings are consistent with hypotheses for regulation that emphasize the fixed costs of establishing regulation, the political salience of large industries, and the possibility that larger industries are more attractive targets for regulatory rent-extraction.
In 594 BCE, the Athenian lawgiver Solon, called upon to resolve a deepening social crisis, introduced a new constitution and mandated that in civil conflicts, no citizen is to remain apathetic and must take sides. Because the law seemed to support strife, it presents a puzzle. The paper offers a political economy rationale for Solon’s law against neutrality, modeling social conflict as a rent-seeking competition. We divide society into three groups, a hereditary aristocracy, which monopolized power before the Solonian constitution, a rival wealth-based commercial elite, called the new Solonian elite, and the poor, who are enfranchised only partly. We then identify the conditions under which the third group is better off by allying with one of the other groups, protecting the Solonian constitution. In our framework, Solon’s ban on neutrality is an attempt to change the payoffs from violent redistributions of rents, so that conflict is avoided. Accordingly, the ban should not only impede excessive rent seeking, but also prevent the exclusion of any social group.
Does the desirability of social institutions for public goods provision depend on the extent to which they include mechanisms for endogenous enforcement of cooperative behavior? We consider alternative institutions that vary the use of direct punishments to promote social cooperation. In one institution, subjects participate in a public goods experiment in which an initial stage of voluntary contribution is followed by a second stage of voluntary, costly sanctioning. Another institution consists of the voluntary contribution stage only, with no subsequent opportunity to sanction. In a third stage subjects vote for which institution they prefer for future interactions: do they prefer one that does allow sanctions or one that does not allow sanctions? Our results show that even though sanctions are frequently used when available, the clear majority of individuals vote for the institution that does not allow sanctions. Thus, a distinction is required between the principles that guide the choice of institutions and the principles that apply to actions guided by institutions. Our results indicate that it is the wealth generated by the institution that determines its desirability.
We investigate whether and how analytical thinking affects Muslims’ prosocial voting towards in-group (fellow Muslims) and out-group (Han Chinese) members. We conduct an incentivized laboratory-style voting experiment in western China, where tension and competition exist between the two ethnic groups. We find a significant negative effect of analytical thinking on prosocial voting in general. We also find that the effect of analytical thinking is related to group identity: A strong and significant negative effect is found on behavior towards out-group members, but a small and generally insignificant effect towards in-group members. Our results are consistent with group competition affecting the benefits and costs of prosocial voting, and those benefits and costs become more salient when engaging in analytical thinking.
A variety of complementarities and overlaps exist between the psychological strand of behavioral economics and the subjectivist strand of Virginia Political Economy. This paper provides an overview of those commonalities and places them in a common information processing framework. The framework can account for systematic mistakes, framing effects, subjectivity, individual variety, and several issues in constitutional political economy. It also reveals many commonalities between these two quite different approaches to human behavior.
With the number of people fleeing Syria since 2011 exceeding 5 million, and unclear prospects regarding the country’s future, Syrians currently residing outside their homeland are not expected to return any time soon. The question of their integration into their respective hosting countries is, therefore, directly policy relevant. We focus on Syrians who fled to Egypt. Cultural, religious and linguistic differences between those two countries are minor, which is expected to facilitate integration. We ran three incentivized lab-in-the-field experiments pairing 114 Syrian refugees residing in Egypt with 194 Egyptian nationals to measure various behavioral dimensions such as altruism, cooperation and reciprocity, while varying the partner in each game to be either a refugee or an Egyptian. Our findings indicate that Egyptians treat Syrians more favorably than they treat each other across all games, whereas the behavior of Syrians does not depend on the identity of their interaction partner.
Recent work has suggested that the US Supreme Court’s ruling in Citizens United (2010), eliminating restrictions on independent campaign expenditures, increased the election probabilities of Republican state legislative candidates (Klumpp et al. in J Law Econ 59(1):1–43, 2016). Left unexplored has been whether the Court’s ruling in Citizens United increased not only the number of Republican state legislators, but also the conservatism of their estimated policy preferences, net of any effects on election probabilities. We attempt to distinguish between the possible electoral and preference effects of Citizens United. Our estimates consistently suggest that Citizens United led not only to greater likelihoods of election for Republican state legislative candidates, but also to larger within-district increases in their conservatism. The estimates, which are robust to a series of matching and placebo exercises, may provide support for the claim that more money in elections has contributed to greater conservatism among state-level Republican officeholders.
In a series of laboratory experiments, two types of players were created randomly. Participants of one type were selected for a group based on performance on a task, whereas participants of the other type were selected automatically without prerequisite. In the main experiment, such favoritism induced a decline in cooperation, measured as contributions in pairwise public goods games, compared to when all participants were treated equally. The reduction in cooperation was observed both for those participants who did not benefit from the favoritism and for those who did, and regardless of whether a player was matched with someone who was favored or not. In extensions of the original experiment, the main results were replicated. Furthermore, the negative effect on cooperation was shown to exist also continue when a rationale was given for the use of favoritism, but to be turned off when selection was random instead of performance-based.
In spatial theory a central concept is salience, or the relative importance of issues in a voter’s mind in evaluating candidates’ platforms. Traditional, self-reported measures of salience have either been national in breadth (“which issues are most important to the nation as a whole?”) or personal (“which issues do you care most about personally?”). In the former case, the subjects are being asked to guess what issues other voters think are important; in the latter case, subjects are likely to report issues that are “socially” important to avoid seeming selfish or superficial. Unsurprisingly, such self-reported measures have not been found to explain actual candidate choices by individual voters very well. We introduce a simple process-tracing measure of salience, using mouse-tracking. Experimental participants were asked to rate three hypothetical candidates, using information accessed in a setting where the distribution of attention represents salience in the decision process. Four models were tested: standard city block distance and then the addition of each of the two measures of traditional salience—national and personal—and, finally, the attention distribution measure. Attention distribution improves model fit over the standard distance model and improves classification compared to the traditional salience measures.
This article outlines benefit-cost criteria for nudges and behavioral norms for a wide range of policy situations. The principal benefits from well-designed policies usually derive from promoting efficient behaviors, but counterpart costs may also be generated by discouraging efficient behaviors. The distinguishing economic characteristic of nudges is not only that they are less intrusive interventions that nudge rather than mandate behavior, but that they exploit additional policy dimensions other than financial incentives. Policies utilizing financial incentives have a cost advantage over nudges to the extent that they involve transfers, which are not net social costs. Failure to understand this cost distinction has led to overestimation of the cost-effectiveness of nudges compared to financial incentives. Financial incentives are flexible and can be varied continuously on a single dimension. Nudges usually involve indivisible components, but their stringency sometimes can be varied by utilizing nudges on multiple policy dimensions.
Nudges are popular types of interventions. Recent years have seen the rise of ‘norm-nudges’—nudges whose mechanism of action relies on social norms, eliciting or changing social expectations. Norm-nudges can be powerful interventions, but they can easily fail to be effective and can even backfire unless they are designed with care. We highlight important considerations when designing norm-nudges and discuss a general model of social behavior based on social expectations and conditional preferences. We present the results of several experiments wherein norm-nudging can backfire, and ways to avoid those negative outcomes.
The growing preoccupation with identity within public discourse raises important questions concerning its effects on democratic governance. Building on the work of James M. Buchanan, we hope to show that (1) the logic of identity politics raises costs to political cooperation, (2) the phenomenon of identity politics flows from the larger rents associated with the identity group formation and (3) that the rent race has deleterious consequences, i.e., the subversion of democratic governance. The incentives of coalitions to define themselves along identity-related lines threatens democratic governance by enabling the formation of permanent winning coalitions. Without the ability to move between groups and take part in democratic governance, individuals who compose the permanent losing coalitions may choose to defect entirely, immersing the system in tribal violence.
To what extent are the outcomes of economic regulation intended and desired by its proponents? To address that question, we combine Stigler’s theory of regulatory capture with the Austrian theory of the dynamics of interventionism. We reframe Stigler’s theory of regulatory capture as an analytical starting point for a dynamic theory of interventionism, one accounting for the unintended consequences that emerge from regulation, even if the origins of such regulation were designed to benefit a particular industry or special interest group. Therefore, we argue that regulatory capture is not necessarily inconsistent with a dynamic theory of intervention. We illustrate our theoretical point by applying it to an econometric case study of electric utility regulation and its eventual nationalization in both Ontario and Quebec in the early twentieth century, resulting in unintended and undesirable consequences that deviated from the interests of the regulation’s intended beneficiaries.
Competition policy (antitrust policy in the United States) engages the subfields of microeconomics (price theory), industrial organization, law and economics, and public choice. The last was a latecomer to the list because of the persistence of naïve “public interest” explanations for competition policy’s origins, purposes, and effects. Even after a half-century of policy analyses in general and of public regulation of prices and conditions of entry into myriad industries around the world—showing that such interventions almost always benefit politically powerful special interests rather than society at large—most scholars still carelessly and mistakenly assume that private plaintiffs, attorneys called to the antitrust bar, the public law enforcement agencies, prosecutors, judges and other parties involved in antitrust proceedings have no motivations beyond preserving competitive marketplaces. My aim here is to bring antitrust policy more firmly within the ambit of public choice reasoning, which helps explain why antitrust intervention often either is ineffective or perverse. Competition law enforcement is a first cousin of economic regulation and, hence, should be evaluated as such.
We ask whether voters rewarded conservative politicians who voted in favor of same-sex marriage. The evidence is based on a rollcall vote in the German national parliament (Bundestag) in June 2017. That vote had a profound influence on public discourse concerning the social-political platforms of the conservative parties in Germany, the Christian Democratic Union (CDU) and its Bavarian sister party Christian Social Union (CSU). National elections took place in September 2017. We find that, when comparing the outcomes of the 2017 and 2013 national elections, the vote share of conservative politicians who voted in favor of same-sex marriage was around 1.29% points higher (about 0.33 standard deviations of the change in the candidate’s vote share) than the vote share of conservative politicians who did not vote in favor of same-sex marriage. Voters apparently were seeking policy outcomes other than economic ones when evaluating politicians’ performances in office.
Much of the lobbying process is inherently competitive: when lobbyists with opposing goals attempt to move outcomes in their preferred direction, successful lobbying by one actor will disadvantage opposing actors. This article theorizes and quantifies the indirect form of influence that competing lobbying actors exert on each other. While existing theories of competitive lobbying have focused on legislation, we argue that all stages of the lobbying process involve competition. Our findings make two contributions to the study of lobbying influence. First, using spatial econometrics, we present the first estimates of how the success of one lobbying actor is shaped by the lobbying activities of opposing actors. Second, we study competition in three diverse empirical settings that capture three different stages of the lobbying process: (1) lobbying camps favoring opposite legislative outcomes in five European countries, (2) US lobbying firms competing over client resources, and (3) corporations competing for administrative trade barriers in 19 World Trade Organization member countries. The results reveal important insights about how interdependence among lobbyists conditions their effectiveness. Our application of spatial techniques to model interdependence between actors is useful for all scholars who want to take competitive or collaborative diffusion mechanisms into account in studies of lobbying and public policy.
The “protection-for-sale” motive introduced by Grossman and Helpman (Am Econ Rev 84: 833–850, 1994) has been adopted widely in the literature, but only a few papers test the theory empirically. To provide empirical evidence for the protection-for-sale theory, we proceed in three steps. First, we argue that among all existing theories, only the mechanism in the protection-for-sale theory depends on the government’s political strength. Second, we develop a theoretical model to rationalize the connection between political strength and import tariffs. Our extended protection-for-sale model predicts that a government with greater political power generally imposes higher tariffs. Third, we propose that political strength can be proxied by the share of legislative seats held by the governing party or coalition. We test the model prediction using panel data covering 95 product categories and 105 countries, from 1996 to 2014. Our estimates provide support the protection-for-sale theory. The estimated effects of political strength on tariffs are larger in small and democratic countries.
We use the predatory theory of the state to explain China’s violent assimilationist campaign targeting the Uyghurs, a predominantly Muslim minority group in China that constitutes a population majority in the Xinjiang Uyghur Autonomous Region. Our analysis suggests that growing political centralization under the leadership of President Xi Jinping, combined with technological changes that reduced the costs of implementing predatory policing in Xinjiang and elevated the perceived economic benefits from integration, contributed to the choice of destructive cultural assimilation rather than respect for the rights and autonomy of Uyghurs in Xinjiang. While the economics literature sometimes describes the political economy of China’s growth miracle as the byproduct of a constrained Leviathan, the present paper shows that a predatory theory of the state is more useful for understanding how a cultural genocide can occur alongside economic growth.
We use experimental data to explore the conditions under which males and females may differ in their tendency to act corruptly and their tolerance of corruption. We ask if males and females respond differently to the tradeoff between the benefits accrued by corrupt actors versus the negative externality imposed on other people by corruption. Our findings reveal that neither males nor females uniformly are more likely to engage in, or be more tolerant of corruption: it depends on the exact bribery conditions—which can reduce or enhance welfare overall—and the part played in the bribery act. Females are less likely to tolerate and engage in corruption when doing so reduces overall welfare. On the other hand, males are less tolerant of bribery when it enhances welfare but confers payoff disadvantages on them relative to corrupt actors. Females’ behavior is consistent across roles when bribery reduces welfare, but apart from that, gender behavior is strongly role-dependent.
I propose two alternative versions of a “Tullock Index” for assessing the effectiveness of income or wealth redistribution. In the spirit of Atkinson’s (J Econ Theory 2:244–263, 1970) inequality index, the Tullock Index is constructed with reference to either (A) the maximum inequality reduction attainable with current transfer spending or (B) the minimum transfer spending necessary to achieve current post-transfer inequality. Using Current Population Survey (CPS) microdata from 1988 to 2014, I construct annual estimates of the Tullock Index at the national level for the United States. The Tullock Index is increasing over that period, suggesting that redistribution has become less effective in reducing inequality. State-level panel fixed-effects estimates show that ineffective redistribution is related to higher state-level poverty rates, lower employment-to-population ratios, and lower levels of overall employment.
Using data from 225 cantonal government elections over the 1980–2019 period in Switzerland, we estimate the effect of fiscal performance on the vote share of finance ministers seeking re-election. Our estimations show that finance ministers benefit statistically and electorally from balancing fiscal accounts and presenting budget surpluses. Improving the fiscal balance by 1000 Swiss francs per inhabitant in the pre-election year raises the electoral result of a finance minister by 1.4–5.4 percentage points from the vote share of her previous election. We present evidence for politician-specific monitoring: the finance minister—in contrast to the spending ministers—seems to be the sole member of government who benefits, electorally, from debt reduction. Correcting for possible selection phenomena, our results suggest that the electoral effect of fiscal performance may not be caused by a selection bias but rather by the office of the finance ministry itself.
In a weighted voting game, each voter has a given weight, and a coalition of voters is successful if the sum of their individual weights exceeds a given quota. Such voting systems translate the idea that voters are not all equal by assigning them different weights. In such a situation, two voters are symmetric in a game if interchanging the two voters leaves the outcome of the game unchanged. Two voters with the same weight are naturally symmetric in every weighted voting game, but the converse statement is not necessarily true. We call the latter scenario inconsistent weighting. We investigate herein the conditions that give rise to such a phenomenon within the class of weighted voting games, and we study how the choice of the quota, the total weight, and the number of voters can affect the probability of observing inconsistent weighting.
The ability to hold MPs accountable for their actions is one of the cornerstones of modern representative democracy. While it is important for MPs to send signals to both their constituents and to their party, a large number of MPs remain absent from votes. Those absences are an important part of the MP’s toolbox, but absences carry limitations, rooted in electoral and political constraints. We investigate how—conditional on the electoral cycle—some well-established political constraints along the government and opposition lines vary in strength. We examine the absence probabilities of MPs in the United Kingdom from 1997 to 2015, and find that as the next elections are approaching, political constraints somewhat weaken and electoral ones take over, but marked differences emerge between parliamentary sessions.
This paper presents evidence that greater representation encourages electoral participation. I exploit an electoral reform in 2015 Chile that changed the extent to which each district is represented in the national congress, differentially across districts. Using voter participation in the first round of 2017’s election, which included votes for president and both chambers of congress, I find that voter participation rose (or fell less) in districts where congressional representation increased. A placebo test using participation in the second round of the presidential election, which did not select the legislative branch, shows no effect of the change in parliamentary representation.
Economic projections by the Federal Open Market Committee (FOMC) were very inaccurate in the years during and after the Great Recession. Relying on a model of collective prediction that weighs the “wisdom of crowds” against shared biases, we examine GDP forecast errors in a panel dataset of FOMC projections from 1992 through 2016. Consistent with the model, we find that diversity of projections reduces collective error, while shared bias magnifies collective error. Collective error is associated strongly with errors by the Federal Reserve Board staff. The benefits of diversity often are statistically significant, especially for projections with terms longer than 1 year.
This paper investigates the impact of international state-building efforts on economic development in Somalia. Owing to non-existent or poor-quality national income accounts, we use satellite data capturing nightlight emissions to measure economic activity. Using the synthetic control method, we find that the establishment of the Transitional Federal Government in 2004 was associated with economic stagnation relative to the preceding years, when Somalia did not have a formal central government. The result remains whether we enter the total lights emitted from the country or the distribution of lights across the country. Our empirical findings are consistent with the idea that the exogenously imposed Transitional Federal Government destabilized the nation by creating inconsistencies with the informal institutions that had led to development during Somalia’s statelessness.
This study analyzes a model of collective choice in voting when information is verifiable and pre-voting deliberation is allowed. Each voter has, independently of the others, a positive probability of receiving a private signal about the true state; with complementary probability, the voter is uninformed. Verifiable information means that lying is disallowed during deliberation: informed voters can publicly reveal or hide their signals, while uninformed voters have to disclose their ignorance. We first provide sufficient and necessary conditions under which all voters reveal information fully. Moreover, we derive a counterintuitive result with verifiable information: Voting preceded by deliberation may lead to worse social decisions than a voting process without deliberation.
Building from the interest-group theory of regulation, we posit that trust alters the payoff from regulatory rent-seeking relative to profit-seeking. Trust reduces the costs of productive economic exchange by lowering transaction costs, thus raising the cost of rent-seeking behavior. In addition, trust increases political accountability, discouraging politicians from creating regulatory rents. We therefore hypothesize that trust reduces the extent of business regulation while simultaneously facilitating market efficiency. To test that hypothesis, we construct an overall business regulation index measuring procedures, time, and cost along eight dimensions of doing business in a country. The empirical results reveal that trust negatively relates to business regulation but positively relates to market efficiency. Interaction and split-sample results further indicate that trust and business regulation are substitutes. Collectively, the findings reported herein suggest that business regulation itself is not the root cause of market inefficiency, but rather lack of trust is the dominant factor.
Legislative design was a critical question at the 1787 Constitutional Convention. The peculiar compromise that was struck—featuring proportional and republican elements—defies the logic of the Convention’s majority rule. We investigate how in establishing the new national legislature, small state delegates were able to prevail over the large state majority and secure the Connecticut Compromise. We argue that the small state coalition’s victory owes to their strategy at a critical juncture: the Gerry Committee. The Gerry Committee amplified the contours of the debate over legislative design and the careful curation of its participants precipitated a shift of structural and creative freedom allowing for the consideration of alternative solutions. The Committee produced an environment favorable to a compromise on legislative structure and power by manipulating the policy dimensions connecting representation, taxation, and slavery. Participant curation was essential in allowing political opponents—the small states—to overcome unfavorable conditions, maximize utility, and craft a proposal capable of approval by delegates and eventual constitutional ratification.
This paper explores whether rules-based allocation is an effective tool for restraining political favoritism. We exploit a policy shift in distributing state lottery revenues to Israeli municipalities from discretion-based to rules-based allocation to estimate the extent of political favoritism. By comparing the likelihood of receiving grants by two types of localities before and after a policy reform, our approach offers a complementary empirical strategy for studying political favoritism that can be used even in the absence of exogenous variation in political connections; it likewise may reveal the overall impact of multiple political interests and social affiliations on favoritism. We find that political favoritism toward Jewish (versus Arab) and affluent (versus less affluent) municipalities diminished significantly after the reform but has not yet disappeared along the ethnic dimension. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism.
We study the primacy effects that occur when voters cast their votes because a candidate or party is listed first on a ballot. In the elections that we analyzed, there are three potential types of such effects that might occur when voters vote for (1) the first candidate listed on the ballot in single-member district (SMD) elections ( candidate primacy ); (2) the first party listed on the ballot in open-list proportional representation (OLPR) elections ( party primacy ); or (3) the first candidate on a party list in OLPR elections ( list primacy ). We estimated the party primacy effect (2) and established that there was no interaction between (2) and (3). A party primacy effect is especially difficult to estimate because parties’ positions on ballots are typically fixed in all multi-member districts (MMDs) and it is impossible to separate the first-position “bonus” from a party’s normal electoral performance. A rare natural experiment allowed us to estimate the primacy party bonus between 6.02 and 8.52% of all votes cast for the 2014 Polish local elections. We attribute the large size of such bonus to the great complexity of voting in the OLPR elections, especially the much longer ballots, voting in many simultaneous elections, and ballot design as a booklet rather than a sheet.
We model a two-party electoral game with rationally inattentive voters. Parties are endowed with different administrative competencies and announce a fiscal platform to be credibly implemented in case of electoral success. The budgetary impact of each platform depends on the party’s competence and on a stochastic implementation shock. Voters rely on the announced platform to infer a party’s unobserved competence. In addition, voters receive noisy signals on the impact of each fiscal platform with noise depending ultimately on a voter’s cognitive skills. We predict that the interplay between the desire of parties to win the election (the incentive to manipulate voters’ beliefs) and voters’ (lack of) cognitive skills (the scope for manipulation) distorts fiscal policies towards excessive budget deficits. The mechanism is that parties attempt to manipulate inferences on their competencies by implementing a loose fiscal policy. The predictions are tested empirically on a sample of advanced economies over years 1999–2008. Our results remain stable after controlling for potentially confounding differences across countries and over time, along with unobserved heterogeneity. Finally, alternative mechanisms potentially driving our results are investigated and ruled out.