nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2021‒05‒10
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. A political economy of loose means-testing in targeted social programs By Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
  2. The Electoral Impact of Wealth Redistribution: Evidence from the Italian Land Reform By Caprettini, Bruno; Casaburi, Lorenzo; Venturini, Miriam
  3. Humanistic Digital Governance By Snower, Dennis J.; Twomey, Paul
  4. Power ranking of the members of the Agricultural Committee of the European Parliament By Imre Fertõ; László Á. Kóczy; Kovács Attila; Balázs R. Sziklai
  5. Public debt and the political economy of reforms By Boyer, Pierre; Esslinger, Christoph; Roberson, Brian
  6. Self-Signaling in Moral Voting By Mechtenberg, Lydia; Perino, Grischa; Treich, Nicolas; Tyran, Jean-Robert; Wang, Stephanie
  7. Establishment and Outsiders : Can Political Incorrectness and Social Extremism work as a Signal of Commitment to Populist Policies? By Gonnot, Jerome; Seabright, Paul
  8. Racial Diversity, Electoral Preferences, and the Supply of Policy: The Great Migration and Civil Rights By Calderon, Alvaro; Fouka, Vasiliki; Tabellini, Marco
  9. Class Altruism and Redistribution By Ghiglino, Christian; Juárez-Luna, David; Müller, Andreas
  10. Freedom of Speech, Deterrence, and Compellence in the Parliament By Altindag, Duha T.; Mocan, Naci; Zhang, Jie
  11. The Best at the Top? Candidate Ranking Strategies Under Closed List Proportional Representation By Benoit S Y Crutzen; Hideo Konishi; Nicolas Sahuguet
  12. Dynamic Team Contests with Complementary Efforts By Maria Arbatskaya; Hideo Konishi
  13. Simple-majority rule and the size of the Bundestag By Salvatore Barbaro; Anna Specht
  14. Using Social Media to Identify the Effects of Congressional Partisanship on Asset Prices By Francesco Bianchi; Howard Kung; Roberto Gomez Cram
  15. Changing Ingroup Boundaries: The Effect of Immigration on Race Relations in the US By Fouka, Vasiliki; Tabellini, Marco
  16. Effectiveness of collective action against the pandemic: Is there a difference between democratic and authoritarian regimes? By Cukierman, Alex
  17. Public opinion and special interests in American environmental politics By Elise Grieg
  18. The Effect of Constitutional Provisions on Education Policy and Outcomes By Scott Dallman; Anusha Nath; Filip Premik

  1. By: Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
    Abstract: This paper studies the political sustainability of programs that are targeted towards the poor. Given that the poor to whom these programs cater do not constitute a majority, we show that for their own good it pays to let the middle class benefit from them in a random way. This approach mimics the actual institutional arrangements whereby middle-class individuals feel that they can successfully apply to the programs. We consider a two stage decision process: first a Rawlsian government chooses the probability at which the middle class is allowed to benefit from a given program; then, majority voting determines the level of benefit and the rate of contribution. At the first, constitutional stage, the government cannot commit to a specific level of taxes and benefit but anticipates that these are set by majority voting in the second stage.
    Keywords: Political Support; Redistribution paradox; Targeted transfers
    JEL: D72 H23 H50
    Date: 2021–01
  2. By: Caprettini, Bruno; Casaburi, Lorenzo; Venturini, Miriam
    Abstract: Governments often implement large-scale redistribution policies to gain enduring political support. However, little is known on whether such policies generate sizable gains, whether these gains are persistent, and why. We study the political consequences of a major land reform in Italy. A panel spatial regression discontinuity design shows that the reform generated large electoral gains for the incumbent Christian Democratic party, and similarly large losses for the Communist party. The electoral effects persist over four decades. Farmers' grassroots organizations and continued political investment in reform areas (i.e. fiscal transfers and public sector employment) are plausible mechanisms for this persistence. We find less support for other potential explanations, including migration, voters' beliefs, and patterns of economic development.
    Keywords: Italy; Land reform; redistribution; voting
    JEL: D72 N54 P16 Q15
    Date: 2021–01
  3. By: Snower, Dennis J.; Twomey, Paul
    Abstract: We identify an important feature of current digital governance systems: "third-party funded digital barter": consumers of digital services get many digital services for free (or under- priced) and in return have personal information about themselves collected for free. In addition, the digital consumers receive advertising and other forms of influence from the third parties that fund the digital services. The interests of the third-party funders are not well-aligned with the interests of the digital consumers. This fundamental flaw of current digital governance systems is responsible for an array of serious problems, including inequities, inefficiencies, manipulation of digital consumers, as well as dangers to social cohesion and democracy. We present four policy guidelines that aim to correct this flaw by shifting control of personal data from the data aggregators and their third-party funders to the digital consumers. The proposals cover "official data" that require official authentication, "privy data" that is either generated by the data subjects about themselves or by a second parties, and "collective data." The proposals put each of these data types under the individual or collective control of the data subjects. There are also proposals to mitigate asymmetries of information and market power.
    Keywords: advertising; Digital governance; digital service providers; digital services; market power; Personal Data; preference manipulation
    JEL: H41 L41 L44 L51 O33 O35 O38 P34
    Date: 2021–01
  4. By: Imre Fertõ (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary and Kaposvár University, Kaposvár, Hungary); László Á. Kóczy (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungaryand Department of Finance, Budapest University of Technology and Economics, Hungary); Kovács Attila (Károli Gáspár University of the Reformed Church, Budapest, HungaryBudapest, Hungary); Balázs R. Sziklai (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary and Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest, Hungary)
    Abstract: We aim to identify the most influential members of the Agricultural Committee of the European Parliament (COMAGRI). Unlike previous studies that were based on case studies or interviews with stakeholders, we analyse the voting power of MEPs using a spatial Banzhaf power index. We identify critical members: members whose votes are necessary to form winning coalitions. We found that rapporteurs, EP group coordinators and MEPs from countries with high relative Committee representations, such as Ireland, Poland or Romania are powerful actors. Italy emerges as the most influential member state, while France seems surprisingly weak.
    Keywords: European Parliament, Common Agricultural Policy, voting games, Banzhaf index, voting game over a convex geometry
    JEL: D71 D72 Q18
    Date: 2021–03
  5. By: Boyer, Pierre; Esslinger, Christoph; Roberson, Brian
    Abstract: We develop a two-period model of redistributive politics in which two politicians compete in an election in each period. In the first period, the politicians propose both whether to experiment with an efficient reform with uncertain benefits and choose the amount of public debt. Politicians also allocate pork-barrel spending to voters in each period. We show that allowing politicians to raise debt ensures that the reform is always implemented when the reform's ratio of private good to public good gains exceeds a threshold, i.e. the reform generates enough private good benefits. This is not the case when the reform's ratio of private good to public good gains is below this threshold. We also examine hard and a soft debt limits, and find that both limits reduce the political success of the reform. However, at moderate debt levels soft limits dominate hard limits with respect to equilibrium efficiency of reform provision.
    Keywords: Debt and Spending Limits; Political Competition; public debt; Redistributive politics; reforms
    JEL: C72 D72 D78 H60
    Date: 2021–03
  6. By: Mechtenberg, Lydia; Perino, Grischa; Treich, Nicolas; Tyran, Jean-Robert; Wang, Stephanie
    Abstract: This paper presents a two-wave survey experiment on self-image concerns in moral voting. We elicit votes on the so-called Horncow Initiative. This initiative required subsidization of farmers who refrain from dehorning. We investigate how non-consequentialist and non-deontological messages changing the moral self-signaling value of a Yes vote affect selection and processing of consequentialist information, and reported voting behavior. We find that a message enhancing the self-signaling value of a Yes vote is effective: voters agree more with arguments in favor of the initiative, anticipate more frequently voting in favor, and report more frequently having voted in favor of the initiative.
    Keywords: information avoidance; moral bias; multi-wave field experiment; voting
    JEL: C93 D72 D91
    Date: 2021–01
  7. By: Gonnot, Jerome; Seabright, Paul
    Abstract: This paper explores why voters might vote for candidates who espouse extreme policies that voters do not support or behave in ways that they do not approve. We develop a model in which these policies and behaviors serve as signals that the candidates are outsiders to the political establishment, and therefore more likely than Establishment candidates to implement economic policies that are congruent with voters' interests. Establishment candidates seeking election may therefore choose an extreme social platform or indulge in offensive behavior for \textit{populist} reasons - that is, as a way of signaling independence from the interests of the Establishment. This populist strategy is more likely when the value of social policies as signals of future economic policy outweighs their value as signals of future social policies, when voters' trust in economic and social policy announcements is low, when the cost for candidates of breaking campaign promises once elected is low, and when there exist few alternative ways for the voters to predict future policies. We present empirical support from the US and Europe for the main prediction of the model that liberal voters are more likely to vote for social outsiders when they have lower levels of trust in politicians.
    Keywords: median voter model; populism
    JEL: D72 D78 D81
    Date: 2021–03
  8. By: Calderon, Alvaro (Stanford University); Fouka, Vasiliki (Stanford University); Tabellini, Marco (Harvard Business School)
    Abstract: Between 1940 and 1970 more than 4 million African Americans moved from the South to the North of the United States, during the Second Great Migration. This same period witnessed the struggle and eventual success of the civil rights movement in ending institutionalized racial discrimination. This paper shows that the Great Migration and support for civil rights are causally linked. Predicting Black inflows with a version of the shift-share instrument, we find that the Great Migration increased support for the Democratic Party and encouraged pro-civil rights activism in northern and western counties. These effects were driven by both Black and white voters, and were stronger in counties with a lower history of discrimination and with a larger working class and unionized white population. Mirroring the changes in the electorate, non-southern Congress members became more likely to promote civil rights legislation. Yet, these average effects mask heterogeneity in the behavior of legislators, who grew increasingly polarized along party lines on racial issues. Overall, our findings indicate that the Great Migration promoted Black political empowerment outside the South. They also suggest that, under certain conditions, cross-race coalitions can be major drivers of social and political change.
    Keywords: diversity, civil rights, great migration, race
    JEL: D72 J15 N92
    Date: 2021–04
  9. By: Ghiglino, Christian; Juárez-Luna, David; Müller, Andreas
    Abstract: Why do tax rates vary so much across countries? We study the role of other-regarding preferences and ethnic fragmentation in redistribution. The government of a two-party democracy is elected by altruistic voters and decides on a redistributive income tax. Social identification directs voters' altruism toward specific social groups. We identify three main factors that lead to low levels of redistribution in the political equilibrium: (i) strong in-group altruism of the rich voters---which we refer to as class altruism; (ii) weak universal altruism among all voters---in particular the rich; and (iii) ethnic fragmentation among poor voters. Using survey data, we document evidence on the pattern of altruism in the United States and the European Union and find that our model predictions are consistent with the observed differences in tax rates.
    Keywords: altruism; Ethnic fragmentation; inequality; Probabilistic voting; redistribution; Social classes; social identity; Tax rate
    JEL: D64 D71 D72 H20
    Date: 2021–02
  10. By: Altindag, Duha T. (Auburn University); Mocan, Naci (Louisiana State University); Zhang, Jie (Hunan University)
    Abstract: In most countries Parliamentary immunity protects lawmakers from civil or criminal charges while in office, and it shields them from prosecution for their political speech or political actions. This paper presents the first empirical analysis in the literature of the impact of Parliamentary immunity on the behavior and performance of politicians. Leveraging a Constitutional Amendment, the adoption of which lifted the immunity of 132 of the 550 members of the Turkish Parliament, we find that immunity from prosecution impacts how the Members of the Parliament (MPs) act and perform their duties in the Parliament. Losing immunity (and the resultant presumed fear of prosecution) pacifies the MPs of the opposition parties. They become less diligent in the Parliament (drafting fewer pieces of legislation, initiating fewer investigation inquiries, delivering fewer and shorter speeches) and become less aggressive (interrupting other MPs less frequently). They also reduce their tendency to cast dissenting votes against the government. MPs of the opposition parties who lose their immunity are less likely to get re-nominated by their parties in the next election, and they are less likely to get re-elected. We find no evidence that more outspoken and active opposition MPs or those who are more valuable for their parties have been targeted for immunity revocation. There is no evidence that the MPs, who retained immunity, have increased their Parliamentary efforts in reaction to their same-party colleagues losing immunity. We find that laws are passed faster after the Constitutional Amendment was adopted, possibly as a consequence of reduced opposition and deliberation. Using Eurobarometer surveys, we find that citizens' reactions to the revocation of MP immunity are polarized. An individual's trust in the Parliament is decreased or increased based on whether an MP from the individual's province lost immunity and if that MP subscribes to the same or opposing ideology as the individual.
    Keywords: parliamentary immunity, constitution, effort, prosecution, member of parliament, opposition party
    JEL: P16 K40 D72 H0
    Date: 2021–05
  11. By: Benoit S Y Crutzen (Erasmus School of Economics); Hideo Konishi (Boston College); Nicolas Sahuguet (HEC Montreal)
    Abstract: Under closed-list proportional representation, a partyís electoral list determines the order in which legislative seats are allocated to candidates. When candidates differ in their ability, parties face a trade-off between competence and incentives. Ranking candidates in decreasing order of competence ensures that elected politicians are most competent. Yet, party list create incentives for candidates that may push parties not to rank candidates in decreasing competence order. We examine this trade-off in a game-theoretical model in which parties rank their candidate on a list, candidates choose their campaign effort, and the election is a team contest for multiple prizes. We show that the trade-off between competence and incentives depends on candidatesíobjective and the electoral environment. In particular, parties rank candidates in decreasing order of competence if candidates value enough post-electoral high offices or media coverage focuses on candidates at the top of the list.
    Keywords: voting, proportional representation, tradeoffs, ranking
    JEL: C72 D72 D82
    Date: 2021–05–01
  12. By: Maria Arbatskaya (Emory University); Hideo Konishi (Boston College)
    Abstract: In this paper, we study dynamic team contests. In the framework of a Tullock contest between two teams generating impacts according to the Cobb-Douglas effort aggregation function, we examine how equilibrium efforts and winning probabilities depend on the timing of the actions. We show that in contrast to synchronous contests, asynchronous contests with publicly observable actions do not result in the same equilibrium outcome as the one-stage contest; they are strategically unbalancing, leading to more lopsided contests. The results have implications about the design of team contests with complementary efforts.
    Keywords: team contest, group contest, complementarity in efforts, order of moves, commitment
    JEL: C72 D23 D74
    Date: 2021–05–01
  13. By: Salvatore Barbaro (Johannes Gutenberg University Mainz); Anna Specht (Johannes Gutenberg-University Mainz)
    Abstract: How should an excessively large parliament be effectively reduced in size without violating constitutional principles? This is a question that the German Bundestag discussed since introducing the 2013 electoral reform until today. Facing a Bundestag consisting of 709 members and facing some public dissatisfaction, are reform to decrease the parliament’s size was adopted in 2020. With the 2017 elections taking place under the new electoral rule, the size would have been 686 instead of 709. However, the opposition filed a lawsuit against the new electoral law with the German Federal Constitutional Court. Aside from legal considerations, the adherence to plurality rule has to be criticised from a social-choice perspective. This paper aims to determine if the size and composition of the Bundestag change. Inparticular, whether the size is reduced when the German parliament’s directly-elected members are elected using the simple-majority rule. Thus, a statistical simulation is carried out. We show that the targeted size of the Bundestag of 686 MP can be achieved by using the simple-majority rule to select the directly-elected members of parliament. Though, as we find indications that even Condorcet losers were elected into parliament, applying the simple-majority rule would ensure that only Condorcet winner would be elected directly into the Bundestag.
    JEL: D71
    Date: 2021–03–05
  14. By: Francesco Bianchi; Howard Kung; Roberto Gomez Cram
    Abstract: We measure the individual and collective viewpoints of US Congress members on various economic policies by scraping their Twitter accounts. Tweets that criticize (support) a particular company are associated with a significant negative (positive) stock price reaction in a narrow time window around the tweet. A sharp partisan divide emerges, with Republicans and Democrats coordinated in both their support and opposition for different industries emanating from disparate legislative agendas. Members of congress coordinate within parties to push legislation through their social media accounts. As an illustrative and relevant example, we analyze the Tax Cuts and Jobs Act of 2017 and document significant aggregate stock market responses to the real-time evolution of partisan viewpoints about the bill.
    JEL: D72 G14
    Date: 2021–04
  15. By: Fouka, Vasiliki (Stanford University); Tabellini, Marco (Harvard Business School)
    Abstract: How do social group boundaries evolve? Does the appearance of a new outgroup change the ingroup's perceptions of other outgroups? We introduce a conceptual framework of context-dependent categorization, in which exposure to one minority leads to recategorization of other minorities as in- or outgroups depending on perceived distances across groups. We test this framework by studying how Mexican immigration to the US affected White Americans' attitudes and behaviors towards Black Americans. We combine survey and crime data with a difference-in-differences design and an instrumental variables strategy. Consistent with the theory, Mexican immigration improves Whites' racial attitudes, increases support for pro-Black government policies and lowers anti-Black hate crimes, while simultaneously increasing prejudice against Hispanics. Results generalize beyond Hispanics and Blacks and a survey experiment provides direct evidence for recategorization. Our findings imply that changes in the size of one group can affect the entire web of inter-group relations in diverse societies.
    Keywords: ingroup–outgroup relations, race, immigration
    JEL: J11 J15
    Date: 2021–04
  16. By: Cukierman, Alex
    Abstract: Due to its high contagiousness, and the lags in development and administration of vaccines, containment of the COVID-19 pandemic is highly dependent on public behavior and on the focus and transparency of instructions issued by governing bodies. Democratic governments can mobilize support for painful measures if their decisions inspire broad-based confidence and legitimacy. Mobilizing public support for well-focused sanitary actions can also be achieved by coercion. Although coercive measures, can be used temporarily by democratic governments authoritarian governments have a comparative advantage in enforcing them. Results from a cross section of over 150 countries show that, in the absence of controls cumulative death per million people (CD) are lower in less democratic countries. When controlling for the fraction of old population and other variables the impact of democracy on CD in the entire sample vanishes. But splitting the sample into high democracy countries and low democracy countries reveals that mobilization of collective action is more (less) effective in the first (second) group the higher the level of democracy. An overtime average of the stringency of government responses to the pandemic (S) has a highly significant positive impact on CD suggesting reverse causality from CD to stringency. The paper formulates this dual relation as a 2x2 simultaneous model with a CD schedule and an S schedule and shows theoretically that the observed intersection points (CD, S) nearly trace a relatively immobile governmental, positively sloped, stringency response schedule. An overtime -- cross country estimate of the S schedule confirms this result yielding a highly significant but small coefficient.
    Keywords: collective action; democracy; lockdowns; pandemic deaths; stringency
    JEL: C30 D7 I1 J1 P16
    Date: 2021–02
  17. By: Elise Grieg (CER–ETH – Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: To shed light on the political inertia around environmental legislation, I study the response of US senators to public opinion while controlling for special interest pressure. I combine data on public opinion (PO) on climate change---estimated by multilevel regression with poststratification---with campaign contributions from the extractive industries to indicate special interest (SI) influence, and use senator fixed effects, instrumental variables and the timing of senate elections for identification. PO has a strong impact on environmental legislation. The effects are different for the two parties: Republicans react to PO in election cycles, whereas Democrats are responsive through their whole term. The responsiveness of elected officials to environmental opinion is surprising: while Americans often favour envi- ronmental regulation in general, they tend to consider it as of low importance. I discuss possible explanations.
    Keywords: Public opinion, campaign finance, political economy, climate change
    JEL: D72 Q54 Q58
    Date: 2021–04
  18. By: Scott Dallman; Anusha Nath; Filip Premik
    Abstract: Education services in the United States are determined predominantly by non-market institutions, the rules of which are defined by state constitutions. This paper empirically examines the effect of changes in constitutional provisions on education outcomes in the United States. To show causal effects, we exploit discontinuities in the procedure for adopting constitutional amendments to compare outcomes when an amendment passed with those when an amendment failed. Our results show that adoption of an amendment results in higher per-pupil expenditure, higher teacher salaries, smaller class size, and improvements in reading and math test scores. We examine the underlying mechanism driving these results by studying the actions of the legislature and the courts after an amendment is passed. We find that, on average, the legislature responds with a one-year lag in enacting education policies satisfying the minimum standards imposed by the amendment, and there is no increase in the number of education cases reaching appellate courts. Using school finance reforms, we also show that in situations where the legislature fails to enact education policies, courts intervene to enforce constitutional standards to improve outcomes. This enforcement mechanism is more impactful in states that have higher constitutional minimum standards. Taken together, the causal effects on education outcomes and the patterns in legislative bill enactments and court cases provide a novel test of the hypothesis that a strong constitutional provision improves the bargaining position of citizens vis-à-vis that of elected leaders. If citizens do not receive education services as mandated in the constitution, they can seek remedy in court.
    Keywords: Educational outcomes; Litigation; Legislative bills; Effects of constitutions; Education; Amendments
    JEL: I24 D02 P48 H75
    Date: 2021–04–26

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