New Economics Papers
on Collective Decision-Making
Issue of 2008‒01‒12
eight papers chosen by

  1. The Paradox of New Members in the Council of Ministers: A Noncooperative Approach By Maria Montero
  2. The Paradox of New Members: Strategic Foundations and Experimental Evidence By Michalis Drouvelis; Maria Montero; Martin Sefton
  3. The Effect of Direct Democratic Institutions on Income Redistribution: Evidence for Switzerland By Feld, Lars P.; Fischer, Justina A.V.; Kirchgaessner, Gebhard
  4. The Impact of Direct Democracy on Public Education: Evidence for Swiss Students in Reading, Mathematics and Natural Science By Fischer, Justina A.V.
  5. Decentralization as a disincentive for transnational terror? An empirical test. By Dreher, Axel; Fischer, Justina AV
  6. Which Democracies Pay Higher Wages? By James C. Rockey
  7. A New Unified Theory of Sociobehavioral Forces By Guillermina Jasso
  8. Within and Between Gender Disparities in Income and Education Benefits from Democracy By Ruth Uwaifo Oyelere

  1. By: Maria Montero (University of Nottingham)
    Abstract: Power indices suggest that adding new members to a voting body may increase the power of an existing member, even if the number of votes of all existing members and the decision rule remain constant. This phenomenon is known as the paradox of new members. This paper shows that the paradox has theoretically occurred in the EU using the leading model of legislative bargaining. Furthermore, it is possible for a majority of members to be in favor of enlargement, even if voters are bargaining over a fixed budget.
    Keywords: legislative bargaining, weighted voting, power measures, EU enlargement, paradox of new members
    JEL: C71 C72 C78
    Date: 2007–12
  2. By: Michalis Drouvelis (School of Economics, University of Nottingham); Maria Montero (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham)
    Abstract: Power indices suggest that adding new members to a voting body may affect the balance of power between the original members even if their number of votes and the decision rule remain constant. Some of the original members may actually gain, a phenomenon known as the paradox of new members. We show that the paradox can occur as an equilibrium of a noncooperative bargaining game based on the Baron-Ferejohn (1989) model of legislative bargaining. We implement this game in the laboratory and find empirical support for the paradox.
    Keywords: voting, non-cooperative bargaining, power indices, experiments, paradox of new members
    JEL: C70 C92
    Date: 2007–12
  3. By: Feld, Lars P. (Alfred-Weber-Institute, Ruprecht-Karls-University of Heidelberg); Fischer, Justina A.V. (Dept. of Economics, Stockholm School of Economics); Kirchgaessner, Gebhard (SIAW-HSG, University of St. Gallen)
    Abstract: There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. In this paper, employing both a composite index and measures of single institutions, we find that direct democracy is particularly associated with lower welfare spending. Moreover, we estimate a model which explains the determinants of achieved redistribution measured by Gini coefficients using panel data provided by the Swiss Federal Tax Office from 1981 to 1997. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution.
    Keywords: Income Redistribution; Direct Democracy; Referendums; Initiatives
    JEL: D70 D78 H11 H75 I30
    Date: 2007–04–30
  4. By: Fischer, Justina A.V. (Dept. of Economics, Stockholm School of Economics)
    Abstract: Empirical analyses for the US suggest that stronger people’s control over the school budget is deleterious to student performance. Using Swiss data on ninth graders in mathematics, reading and natural science collected jointly with the PISA study 2000, this paper tests this hypothesis for Switzerland, exploiting inter-cantonal variation in political institutions. For both student performance in reading and mathematics, stronger popular rights appear to lower educational achievement through the school budget channel. In particular, the qualification of teachers is identified as most influential determinant of student achievement, which is shown to be linked to educational spending.
    Keywords: Direct democracy; public finance; economics of education; PISA
    JEL: H10 H41 I28
    Date: 2007–12–31
  5. By: Dreher, Axel (Swiss Economic Institute, ETH Zurich); Fischer, Justina AV (Dept. of Economics, Stockholm School of Economics)
    Abstract: Using panel data for a maximum of 109 countries over the years 1976-2000, we empirically analyze the impact of decentralization on the occurrence of transnational terror. Taking account of the potential simultaneity between terror and decentralization, our results show that expenditure decentralization robustly reduces the number of terror events in a country, while political decentralization has no impact.
    Keywords: Terrorism; Decentralization; Democracy
    JEL: D74 H40 H70
    Date: 2007–12–20
  6. By: James C. Rockey
    Abstract: This paper asks if and how constitutions affect labour market outcomes. This question is motivated by Rodrik (1999), who suggests that 'democracies pay higher wages' and Persson and Tabellini (2003) who provide evidence that constitutions impact on economic outcomes. An empirical analysis using treatment effect estimators and Bayesian Model Averaging provides robust causal evidence that presidential democracies are associated with lower wages, after controlling for other potential determinants such as the level of income per capita.
    Keywords: Democracy, Constitutions, Wages, Factor Shares, Bayesian Model Averaging
    JEL: P16 J31 C11
    Date: 2007–12
  7. By: Guillermina Jasso (New York University and IZA)
    Abstract: This paper proposes a new unified theory of sociobehavioral forces. The goal of the new theory is to integrate theories describing five sociobehavioral processes - comparison (including justice and self-esteem), status, power, identity, and happiness - bringing under a single theoretical umbrella diverse mechanisms together with their effects across disparate domains and for both individuals and societies. The integration is made possible by the remarkable similarity of the internal core of the theories, a core comprised of three elements: personal quantitative characteristics, personal qualitative characteristics, and primordial sociobehavioral outcomes. The unified theory posits the operation of three sociobehavioral forces - comparison, status, and power - each associated with a distinctive mechanism, in particular, a distinctive rate of change of the outcome with respect to the quantitative characteristic. Each combination of elements - e.g., status-wealth-city - generates a distinctive identity and a distinctive magnitude of happiness. Thus, the theory enables systematic and parsimonious analysis of both individuals and societies via the distinctive configurations of elements. To illustrate the unified theory, we analyze the three-way contest between loyalty to self, subgroup, and group in a two-subgroup society, deriving many new testable predictions, for example, that the bottom subgroup will have difficulty mobilizing itself, that the ablest individuals in a society will not make good leaders as their first loyalty is to self, and that the proportions loyal to self, subgroup, and group differ sharply, depending on the sociobehavioral forces, valued goods, and subgroup size. Finally, the theory provides a foundation for making explicit connections among the most important themes and insights of contemporary social science, including inequality, oppositional culture, group boundary permeability, social inclusion and exclusion, segregation and integration, social distance and polarization, and bonding and bridging.
    Keywords: justice, comparison, status, power, identity, happiness, inequality, personal quantitative characteristics, personal qualitative characteristics, individualism and collectivism, lognormal distribution, Pareto distribution, power-function distribution, rectangular distribution, exponential distribution, normal distribution
    JEL: C02 C16 D1 D31 D6 I3
    Date: 2007–12
  8. By: Ruth Uwaifo Oyelere (Georgia Institute of Technology and IZA)
    Abstract: There is data evidence that welfare has improved post democracy in Nigeria. However, the distribution or concentration of the benefits in subgroups of the population is unknown. In this paper, the question of differential welfare impacts, across and within gender, post democracy in Nigeria is explored. I make use of simple econometric tools to test two null hypotheses. First, there is no disparity in the income and returns to education benefits of the shift to democracy across gender in Nigeria. Second, there are no within gender disparities of the shift to democracy on income and returns to education in Nigeria. From the results, both null hypotheses are rejected. Though men and women benefited from reforms post democracy, gender differences exist. Specifically, I find on average higher income benefits for men post democracy. Nigeria. However, disparities in income benefits are at lower levels of education. Men and women have similar income benefits at the tertiary level. Interestingly, I find the reverse when considering returns to education. On average, women experienced a greater change in returns to education post democracy in Nigeria but this disparity is primarily at the tertiary level. I also find inequality has increased post democracy in Nigeria, more so among women than men.
    Keywords: gender, democracy, income gap, disparities, returns to education, Nigeria, inequality
    JEL: O15 P00 J16 D63
    Date: 2007–12

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