nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒07‒13
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. A non-monetary form of Clarke pivotal voting By Pivato, Marcus
  2. Why one would accept Voting Theory for Democracy and reject the Penrose Square Root Weights By Colignatus, Thomas
  3. Parochial Politics: Ethnic Preferences and Politician Corruption By Banerjee, Abhijit; Pande, Rohini
  4. Participation and voting behavior in a direct democracy: a structural model of migration policy in Switzerland By Jaya Krishnakumar; Tobias Muller
  5. Informatization, Voter Turnout and Income Inequality By Ryo Arawatari
  6. Voting on a sharing norm in a dictator game By Christoph Vanberg
  7. The Logic of Globalization and Substantive Democracy By Manuel Couret Branco
  8. The Political Economy of Environmental Regulations and Industry Compensation By Barbara Stoschek
  9. Pyramidal Democracy By Pivato, Marcus
  10. Does decentralization improve the efficiency in the allocation of public investment? Evidence from Spain By Alejandro Esteller; Albert Solé
  11. Is the World Flat? Or Do Countries Still Matter? By Alberto Chong; Mark Gradstein

  1. By: Pivato, Marcus
    Abstract: The Clarke Pivotal Voting Mechanism (CPVM) elicits truthful revelation of utility functions by requiring any `pivotal' voter to pay a monetary `Clarke tax'. This neglects wealth effects and gives disproportionate power to rich voters. We propose to replace the `Clarke tax' with a lottery, wherein the pivotal voter risks long-term exclusion from the CPVM (and any other formal political participation). The resulting voting mechanism is nonmanipulable, politically egalitarian, and implements something close to Relative Utilitarianism.
    Keywords: Pivotal Voting Mechanism; demand-revealing mechanism; Groves-Clarke; Clarke tax; Relative Utilitarianism
    JEL: D63 D71
    Date: 2007–07–10
  2. By: Colignatus, Thomas
    Abstract: Various scientists under the label of “Scientists for a democratic Europe” (SDE) sent a joint “Letter to the governments of the EU member states” (2007) advising the use of the Penrose Square Root Weights (PSRW) for the EU Council of Ministers. When we compare the SDE letter with Colignatus (2001, 2007b) “Voting theory for democracy” (VTFD) then we find that SDE does not fit voting theory for democracy. Inspection of the material upon which the SDE letter is based also shows a moral choice while the rigorous empirical analysis by Gelman, Katz and Bafumi (2007) is actually misrepresented. So the SDE letter can also be rejected on its own grounds. The PSRW approach seems not valid for (indivisible) individuals but may be applicable for divisible shares in shareholder meetings.
    Keywords: voting theory; voting systems; elections; public choice; political economy; Borda Fixed Point; democracy; European Union; Penrose square root weights;
    JEL: D71 A2 H0
    Date: 2007–07–06
  3. By: Banerjee, Abhijit; Pande, Rohini
    Abstract: This paper examines how increased voter ethnicization, defined as a greater preference for the party representing one's ethnic group, affects politician quality. If politics is characterized by incomplete policy commitment, then ethnicization reduces average winner quality for the pro-majority party with the opposite true for the minority party. The effect increases with greater numerical dominance of the majority (and so social homogeneity). Empirical evidence from a survey on politician corruption that we conducted in North India is remarkably consistent with our theoretical predictions.
    Keywords: Corruption; Ethnic Voting; India
    JEL: O12 P16
    Date: 2007–07
  4. By: Jaya Krishnakumar; Tobias Muller
    Abstract: In this paper, we analyze the political economy of immigration policy in a direct democracy setting. We formulate a structural model of voting and participation behavior integrating instrumental and expressive motivations. The model is estimated using data drawn from a survey carried out after a vote in Switzerland in 2000 on a popular initiative proposing to implement immigration restrictions. The model enables us to recover estimates of participation costs and preferences towards immigration and analyze how these preferences are translated into actual political outcomes. The results reveal a substantial gap ("participation bias") between attitudes towards immigration in the general population and the outcome of the vote.
    Date: 2007–05
  5. By: Ryo Arawatari (Graduate School of Economics, Osaka University)
    Abstract: In recent years, voter turnout has been decreasing in most industrial countries, and about 40% of all electors abstain from voting. This may affect income inequality and the GDP growth rate through a redistribution policy determined by majority voting. In this paper, we explore the reasons for this continuing decrease in voter turnout and assess its social costs. We conclude that informatization lowers voter turnout by generating an information overload, and that a decrease in voter turnout lowers GDP growth by limiting income redistribution.
    Keywords: Income inequality; Information; Informatization; Voter turnout; Voting
    JEL: D31 O15 P16
    Date: 2007–07
  6. By: Christoph Vanberg (Max Planck Institute of Economics, Jena, Germany.)
    Abstract: I conduct an experiment to assess whether majority voting on a non- binding sharing norm affects subsequent behavior in a dictator game. In a baseline treatment, subjects play a one shot dictator game. In a voting treatment, subjects are ï¬rst placed behind a 'veil of ignorance' and vote on the amount that those chosen to be dictators 'should' give. The outcome of the vote is referred to as a 'non-binding agreement.' The results show that a norm established in this fashion does not induce more 'fairness' on the part of those subsequently chosen to be dictators. In fact, dictators were signiï¬cantly more likely to offer nothing under the treatment. I outline a simple model to account for this 'crowding out' effect of a norm that may demand ‘too much’ of some subjects.
    Keywords: Dictator game, communication, voting, promises, agreements, behavioral economics, guilt aversion, reciprocity, fairness, obligations
    JEL: C91 C92 D63 D64 D70
    Date: 2007–07–06
  7. By: Manuel Couret Branco (Department of Economics, University of Évora)
    Abstract: Despite some notable achievements in many parts of the planet the gap between the rich and the poor has become wider rather than tighter. On the political sphere success seems much more unequivocal, though. Indeed, beyond a handful of anachronistic exceptions, the world seems to have surrendered to the delights of democracy. From there to the conclusion that globalization favours democracy there was a small step that many political scientists all over the world have not hesitated to make. Refusing to share this optimism, many other scientists have, on the contrary, severely questioned the democratic character of the global economy, almost since the term globalization itself has been invented. In this work I will show how the logic of globalisation, in other words the logic of internationalised market capitalism conflicts with a substantive definition of democracy in developed countries as much as in developing countries.
    Keywords: Globalisation, Democracy, Capitalism, Development, Underdevelopment
    JEL: A11 A13 F01 F02 O19 P10
    Date: 2007
  8. By: Barbara Stoschek
    Abstract: This paper uses a political-economy framework to analyze what consequences the exogenous introduction of a quantitative restriction on total emissions in a small open economy has on the stringency of domestic trade policy. The question is whether and to what extent the government, if it takes different lobby groups´ interests into consideration, has an incentive to compensate the polluting industry for stricter environmental regulations by granting higher protection to it. It turns out that the government will indeed tend to increase subsidization of the industry affected by environmental regulation. This compensation will even be more than complete as long as environmental interests are taken into account. Hence, contrary to what might be expected, a net benefit for the polluting sector arises from environmental restrictions.
    Keywords: Environmental Regulations; International Competitiveness; Political
    JEL: F18 Q52 Q58
    Date: 2007–06–26
  9. By: Pivato, Marcus
    Abstract: We consider a decentralized, multilayered representative democracy, where citizens participate in deliberative policy formation after self-organizing into a pyramidal hierarchy of small groups. Each group elects a delegate, who expresses the deliberative consensus of that group at the next tier of the pyramid. The pyramid thus acts as a communications network which efficiently aggregates useful information and policy ideas. It is also a powerful meritocratic device, which channels legislative responsibility towards the most committed and competent citizens. This yields a practical implementation of deliberative democracy in a large polity.
    Keywords: deliberative democracy
    JEL: D71 D72
    Date: 2007–07–10
  10. By: Alejandro Esteller (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)); Albert Solé (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))
    Abstract: The well-known "Decentralization Theorem" (Oates, 1972) establishes the superiority of decentralized public provision over the centralized case, which is not so sensitive to the diversity of expenditure needs among territories. We test this hypothesis using a unique Spanish database that provides information on road and educational infrastructure investment and capital stocks by region both before and after the decentralization of such responsibilities. We find that investment in both categories is much more sensitive to regional output and to infrastructure users and costs when sub-central governments have the responsibility over such services.
    Keywords: Decentralization, Growth, Human capital, Roads
    JEL: D72 H54 H72 H77 I20
  11. By: Alberto Chong (Inter-American Development Bank); Mark Gradstein (Ben Gurion University/CEPR/CESifo)
    Abstract: This paper revisits the effects of a country’s institutional framework on individual firms’ behavior, in particular focusing on their propensity to comply with legal rules. The theoretical model presented here suggests that these effects may be of paramount significance—contrary to the recently popularized paradigm arguing that differences across countries have ceased to matter much. This paper’s empirical strategy consists of explaining the variation in measures of noncompliance with legal rules and employs a rich dataset based on thousands of firms from dozens of countries. We find that most of the variation emanates from country-wide differences in institutional quality, although some firm characteristics play a role as well. Our conclusion is that countries still matter in providing institutional infrastructure, which determines to a large extent the context within which firms operate.
    Keywords: Firms; Institutions; Law compliance; Country differences; Globalization
    JEL: D21 K42 O17 O57
    Date: 2006–11

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