nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒07‒27
ten papers chosen by
Stan C. Weeber, McNeese State University

  1. Decision-making Institutions and Voters’ Preferences for Fiscal Policies By Sergio Galletta
  2. Negative Voters? Electoral Competition with Loss-Aversion By Lockwood, Ben; Rockey, James
  3. Housing insecurity, homelessness and populism: Evidence from the UK By Fetzer, Thiemo; Sen, Srinjoy; Souza, Pedro CL
  4. The Institutional Foundations of Religious Politics: Evidence from Indonesia By Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
  5. Legitimizing Policy By Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
  6. Institutions, Opportunism and Prosocial Behavior: Some Experimental Evidence By Antonio Cabrales; Irma Clots-Figueras; Roberto Hernán-González; Praveen Kujal
  7. On-the-job training and intra-family dynamics By Aquilante, Tommaso; Livio, Luca; Potoms, Tom
  8. The Employment Effects of Ethnic Politics By Amodio, Francesco; Chiovelli, Giorgio; Hohmann, Sebastian
  9. The Determinants and Effects of Social Connectedness in Europe By Michael Bailey; Theresa Kuchler; Dominic Russel; Bogdan State; Johannes Stroebel
  10. Electoral Turnout and Social Capital By Jeremy Clark; Abel François; Olivier Gergaud

  1. By: Sergio Galletta (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper examines the effect of local political decision-making institutions (i.e., direct democracy vs. representative democracy) on citizens’ preferences toward public spending. Exogenous variation in institutions comes from a regression discontinuity design, which exploits a discrete change in the probability that a municipality has representative democracy based on a legally stipulated population threshold in the Swiss canton (state) of Vaud. Fiscal policy preferences by municipality are measured by vote shares on Swiss national referendums and initiatives that, if approved, would have increased public spending. Relative to direct democracy, representative democracy reduces vote shares in favor of spending by around 5 percentage points. The effect is not due to sorting on other observables or to feedback from changes in local policies. These findings demonstrate the importance of preferences as a channel through which political decision-making institutions can affect public policies.
    Keywords: voter preferences, decision-making institutions, Switzerland, direct democracy
    JEL: D7 H7
    Date: 2018–12
  2. By: Lockwood, Ben; Rockey, James
    Abstract: This paper studies the effect of voter loss-aversion in preferences over both candidate policy platforms and candidate valence on electoral competition. Loss-aversion over platforms leads to both platform rigidity and reduced platform polarisation, whereas loss-aversion over valence results in increased polarization and also the possibility of asymmetric equilibria with a self-fulfilling (dis)-advantage for the incumbent. The results are robust to a stochastic link between platforms and outcomes; they hold approximately for a small amount of noise. A testable implication of loss-aversion over platforms is that incumbents adjust less than challengers to shifts in voter preferences. We find some empirical support for this using data for elections to the US House of Representatives.
    Keywords: Electoral Competition; Loss-aversion
    JEL: D72 D81
    Date: 2020–01
  3. By: Fetzer, Thiemo; Sen, Srinjoy; Souza, Pedro CL
    Abstract: Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits exogenous variation in the affordability of rents due to a cut that substantially lowered housing benefit -- a welfare benefit aimed at helping low income households pay rent. Before April 2011, local housing allowance covered up to the median level of market rents; from April 2011 onwards, only rents lower than the 30th percentile were covered. We exploit that the extent of cuts significantly depend on statistical noise due to estimation of percentiles. We document that the affordability shock caused a significant increase in: evictions; individual bankruptcies; property crimes; share of households living in insecure temporary accommodation; statutory homelessness and actual rough sleeping. The fiscal savings of the cut are much smaller than anticipated. We estimate that for every pound saved by the central government, council spending to meet statutory obligations for homelessness prevention increases by 53 pence. We further document political effects: the housing benefit cut causes lower electoral registration rates and is associated with lower turnout and higher support for Leave in the 2016 EU referendum, most likely driven by its unequal impact on the composition of those that engage with democratic processes.
    Keywords: homelessness and populism: Evidence from the UK; Housing insecurity
    JEL: D72 H2 H3 H5 P16
    Date: 2019–12
  4. By: Samuel Bazzi (Boston University); Gabriel Koehler-Derrick (Harvard University); Benjamin Marx (Département d'économie)
    Abstract: Why do religious politics thrive in some societies but not others? This paper explores the institutional foundations of this process in Indonesia, the world’s largest Muslim democracy. We show that a major Islamic institution, the waqf, fostered the entrenchment of political Islam at a critical historical juncture. In the early 1960s, rural elites transferred large amounts of land into waqf —a type of inalienable charitable trust—to avoid expropriation by the government as part of a major land reform effort. Although the land reform was later undone, the waqf properties remained. We show that greater intensity of the planned reform led to more prevalent waqf land and Islamic institutions endowed as such, including religious schools, which are strongholds of the Islamist movement. We identify lasting effects of the reform on electoral support for Islamist parties, preferences for religious candidates, and the adoption of Islamic legal regulations (sharia). Overall, the land reform contributed to the resilience and eventual rise of political Islam by helping to spread religious institutions, thereby solidifying the alliance between local elites and Islamist groups. These findings shed new light on how religious institutions may shape politics in modern democracies.
    Keywords: Religion; Institutions; Land reform; Islam; Sharia Law
    JEL: D72 D74 P16 P26 Z12
    Date: 2020–05
  5. By: Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
    Abstract: In many settings of political bargaining over policy, agents care not only about getting their will but also about having others approve the chosen policy thus giving it more weight. What is the effect on the bargaining outcome when agents care about such legitimacy of the policy? We study this question theoretically and empirically. We show that the median-voter theorem holds in groups that are ideologically very cohesive and in groups with extreme ideological disagreement. However, in groups with intermediate ideological disagreement, the median-voter theorem does not hold. This is since, on the individual level, ideological disagreement with the median has a non-monotonic effect on the policy. We test our model in a natural experimental setting—U.S. appeals courts—where causal identification is based on random assignment of judges into judicial panels, each consisting of three judges who rule on a case. Here judges care about legitimacy of the policy they write because a norm of consensus prevails and because increased legitimacy reduces the likelihood of the judicial case to be heard by the Supreme Court. The predicted pattern of how policies depend on the participants’ ideologies are corroborated by our empirical tests.
    JEL: D7 K0 Z1
    Date: 2020–07
  6. By: Antonio Cabrales; Irma Clots-Figueras; Roberto Hernán-González; Praveen Kujal
    Abstract: Formal or informal institutions have long been adopted by societies to protect against opportunistic behavior. However, we know very little about how these institutions are chosen and their impact on behavior. We experimentally investigate the demand for different levels of institutions that provide low to high levels of insurance and its subsequent impact on prosocial behavior. We conduct a large-scale online experiment where we add the possibility of purchasing insurance to safeguard against low reciprocity to the standard trust game. We compare two different mechanisms, the private (purchase) and the social (voting) choice of institutions. Whether voted or purchased, we find that there is demand for institutions in low trustworthiness groups, while high trustworthiness groups always demand lower levels of institutions. Lower levels of institutions are demanded when those who can benefit from opportunistic behavior, i.e. low trustworthiness individuals, can also vote for them. Importantly, the presence of insurance crowds out civic spirit even when subjects can choose the no insurance option: trustworthiness when formal institutions are available is lower than in their absence.
    Keywords: institutions, trust, trustworthiness, voting, insurance
    JEL: C92 D02 D64
    Date: 2020
  7. By: Aquilante, Tommaso (Bank of England); Livio, Luca (ECARES-ULB); Potoms, Tom (University of Sussex)
    Abstract: This paper shows that marital status and gender crucially impact whether individuals receive certain types of on-the-job training. Using data from the British Household Panel Survey, we show robust evidence that when training is self-financed, married workers have significantly lower participation rates, whereas women have higher rates. The correlation between demographic characteristics and the likelihood of receiving employer-sponsored training is instead much weaker. We rationalize the relationship between training incidence and marital status with a simple two-period collective model of the household with limited commitment, where contemporaneous training decisions affect future bargaining power within the household. The core prediction of the model is confirmed empirically: the likelihood to participate in self-financed on-the-job training is negatively affected by higher levels of (a proxy for) intra-household bargaining power of the spouse of the individual. The results suggest there is scope for policy to increase workers’ training participation rates by targeting individuals with weaker bargaining power within the household.
    Keywords: Self-financed on-the-job training; intra-household bargaining; human capital formation; Nash bargaining
    JEL: J12 J16 J24
    Date: 2020–06–12
  8. By: Amodio, Francesco; Chiovelli, Giorgio; Hohmann, Sebastian
    Abstract: This paper studies the labor market consequences of ethnic politics in African democracies. We combine geo-referenced data from 15 countries, 32 parliamentary elections, 62 political parties, 243 ethnic groups, 2,200 electoral constituencies, and 400,000 individuals. We implement a regression discontinuity design that compares individuals from ethnicities connected to parties at the margin of electing a local representative in the national parliament. We find that having a local ethnic politician in parliament increases the likelihood of being employed by 2-3 percentage points. We hypothesize that this effect originates from strategic interactions between ethnic politicians and traditional leaders, the latter retaining the power to allocate land and agricultural jobs in exchange for votes. The available evidence supports this hypothesis. First, the employment effect is concentrated in the historical homelands of ethnicities with strong pre-colonial institutions. Second, individuals from connected ethnicities are more likely to be employed in agriculture, and in those countries where customary land tenure is officially recognized by national legislation. Third, they are also more likely to identify traditional leaders as partisan, and as being mainly responsible for the allocation of land. Evidence shows that ethnic politics shapes the distribution of productive resources across sectors and ethnic groups.
    Keywords: Africa; democracy; employment; ethnic politics; traditional leaders
    JEL: J15 J70 O10 P26 Q15
    Date: 2019–12
  9. By: Michael Bailey; Theresa Kuchler; Dominic Russel; Bogdan State; Johannes Stroebel
    Abstract: We use aggregated data from Facebook to study the structure of social networks across European regions. Social connectedness declines strongly in geographic distance and at country borders. Historical borders and unions — such as the Austro-Hungarian Empire, Czechoslovakia, and East/West Germany — shape present-day social connectedness over and above today’s political boundaries. All else equal, social connectedness is stronger between regions with residents of similar ages and education levels, as well as between those that share a language and religion. In contrast, region-pairs with dissimilar incomes tend to be more connected, likely due to increased migration from poorer to richer regions. We find more socially connected region-pairs to have more passenger train trips between them, even after controlling for distance and travel time. We also find that regions with a higher share of connections to other countries have higher rates of trust in the E.U. and lower rates of voting for anti-E.U. political parties.
    Keywords: social connectedness, Europe, homophily, border effects, migration
    JEL: D72 J61 O52 R23 Z13
    Date: 2020
  10. By: Jeremy Clark (University of Canterbury); Abel François; Olivier Gergaud
    Abstract: Although social capital is a useful and often used concept in political science to explain political behavior and electoral turnout, its effects are rarely tested because of scarcity of available data. It is hard to find a good measure of social capital not produced by a political process. Moreover, the concept suffers from an unstable definition that makes it difficult to operationalize. In line with a part of the previous literature, we propose a restricted definition of social capital based on its main origin, a person’s accumulated social interactions. This enables us to integrate social capital into the rational calculus of voting and state a clear prediction that higher social capital will raise electoral turnout. We test this prediction using data on New Zealand participation in the 2017 national election based on 2013 census characteristics at the finest aggregated level of “meshblock.” We measure social capital using a census measure of volunteering rates. Our results are clear and stable: there is a strong positive association between social capital and subsequent electoral turnout.
    Keywords: Electoral turnout, social capital, volunteering work, calculus of voting
    JEL: D42
    Date: 2020–07–01

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