nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒05‒14
four papers chosen by
Eugene Beaulieu
University of Calgary

  1. Memetics & Voting: How Nature May Make us Public Spirited By John P. Conley; Myrna Wooders
  2. INSTITUTIONS AS THE FUNDAMENTAL CAUSE OF LONG-RUN GROWTH By Daron Acemoglu; Simon Johnson; James Robinson
  3. The Political Economy of Equalization Transfers By Stuti Khemani
  4. Optimal Unemployment Insurance and Voting By Andreas Pollak

  1. By: John P. Conley (Department of Economics, Vanderbilt University); Myrna Wooders (Department of Economics, Vanderbilt University)
    Abstract: We consider the classic puzzle of why people turn out for elections in substantial numbers even though formal analysis strongly suggests that rational agents would not vote. If one assumes that voters do not make systematic mistakes, the most plausible explanation seems to be that agents receive a warm glow from the act of voting itself.   However, this begs the question of why agents feel a warm glow from participating in the electoral process in the first place. We approach this question from an memetic standpoint. More specifically, we consider a model in which social norms, ideas, values, or more generally, "memes" influence the behavior of groups of agents, and in turn, induce a kind of competition between value systems. We show for a range of situations that groups with a more public-spirited social norm have an advantage over groups  that are not as public-spirited. We also explore conditions under which the altruistic behavior resulting from public-spiritedness is disadvantageous. The details depend on the costs of voting, the extent to which different types of citizens agree or disagree over the benefits of various public policies, and the relative proportions of various preference types in the population. We conclude that memetic evolution over social norms may be a force that causes individuals to internalize the benefits that their actions confer on others.
    Keywords: Memetics, evolution, voting, warm glow, civic duty, free riding, public choice, public goods
    JEL: C7 D7
    Date: 2005–04
  2. By: Daron Acemoglu; Simon Johnson; James Robinson
    Abstract: This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally a conflict over these social choices, ultimately resolved in favor of groups with greater political power. The distribution of political power in society is in turn determined by political institutions and the distribution of resources. Political institutions allocate de jure political power, while groups with greater economic might typically possess greater de facto political power. We therefore view the appropriate theoretical framework as a dynamic one with political institutions and the distribution of resources as the state variables. These variables themselves change over time because prevailing economic institutions affect the distribution of resources, and because groups with de facto political power today strive to change political institutions in order to increase their de jure political power in the future. Economic institutions encouraging economic growth emerge when political institutions allocate power to groups with interests in broad-based property rights enforcement, when they create effective constraints on power-holders, and when there are relatively few rents to be captured by power holders. We illustrate the assumptions, the workings and the implications of this framework using a number of historical examples.
    Keywords: development
    JEL: N11
    Date: 2004–09–01
  3. By: Stuti Khemani
    Abstract: Normative theories of fiscal federalism postulate that intergovernmental transfers should be determined by equity and efficiency considerations, to support local governments in providing differentiated public goods to heterogeneous populations, while ensuring an even distribution of basic services across all regions (Musgrave, 1959, 1983; Oates, 1972; Gramlich, 1977). However, a recent surge of empirical evidence shows that variations in intergovernmental transfers to sub-national jurisdictions within countries cannot be explained by traditional concerns of equity and efficiency alone, and that political variables representing electoral incentives of public agents are additional and significant determinants.
    Keywords: Political Economy,Equalization Transfers, determinants
    Date: 2004–11–01
  4. By: Andreas Pollak (University of Freiburg)
    Abstract: The framework of a general equilibrium heterogeneous agent model is used to study the optimal design of an unemployment insurance (UI) scheme and the voting behaviour on unemployment policy reforms. In a first step, the optimal defined benefit and defined replacement ratio UI systems are obtained in simulations. Then, the question whether switching to such an optimal system from the status quo would be approved by a majority of the voters is explored. Finally, the transitional dynamics following a policy change are analysed. Accounting for this transition has an important influence on the voting outcome.
    Keywords: insurance, heterogeneous agents, job search, voting, human capital
    JEL: C61 D58 D78 E24 E61 J64 J65
    Date: 2005–05–12

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