nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒08‒22
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Does deceptive advertising reduce political participation? Theory and evidence By Daniel Houser; Sandra Ludwig; Thomas Stratmann
  2. Internal and external political competition By David Hugh-Jones
  3. Democracy and voting survey: first results from Ethiopia By Marie-Anne Valfort
  4. Political Participation / National Election Study By Rüdiger Schmitt-Beck
  5. Das Governance-Dilemma der demokratischen Wirtschaftspolitik By Kruse, Joern
  6. Financial Liberalization and Democracy: The Role of Reform Reversals By Campos, Nauro F.; Coricelli, Fabrizio
  7. The Political Economy of Regulatory Risk By Roland Strausz
  8. In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution By Andreas Kuhn

  1. By: Daniel Houser (George Mason University); Sandra Ludwig (LMU Munich); Thomas Stratmann (George Mason University)
    Abstract: We examine the effect of deceptive advertising on voting decisions in elections. We model two-candidate elections in which 1) voters are uncertain about candidates' attributes; and 2) candidates can inform voters of their attributes by sending advertisements. We compare political campaigns with truthful advertising to campaigns in which there is a small chance of deceptive advertising. Our theoretical model predicts that informed voters should act on the information contained in the advertisement. Thus, even in deceptive campaigns, informed voters should either vote for the candidate from whom they received an advertisement or abstain from voting; they should never vote for the opposing candidate. We test our model in laboratory elections, and, as predicted, find higher participation among informed voters in elections that allow only for truthful advertisement than in elections that permit deceptive advertising. Contrary to our theoretical predictions, we find substantial differences in voting behavior between truthful and deceptive campaigns. When faced with a small probability of deception, informed voters in deceptive campaigns vote for the candidate who did not send an advertisement, thereby making sub-optimal voting choices. Even when there is only a small chance that an advertisement is deceptive, voters are more likely to elect the candidate who generates less welfare.
    Date: 2009–08
  2. By: David Hugh-Jones
    Abstract: All rulers face political competition, both from rivals within their state, and from other states to which their subjects may exit. In a simple model, both kinds of competition are substitutes. Internal competition (democracy) bene?ts citizens by allowing them to replace rent-seeking rulers. But it also weakens these rulers' incentives to invest. External competition forces rent-seeking rulers to invest so as to prevent migration. As a result, citizens are less willing to ?ght for democracy, and rulers are less eager to oppose it, when external competition is high. In a panel of countries, there are fewer changes towards democracy when states have low GDP relative to their neighbours.
    Keywords: political competition, dictatorship, democracy, transitions
    JEL: D72 H77
    Date: 2009–08–10
  3. By: Marie-Anne Valfort (LEEP - Laboratoire d'econometrie de l'école polytechnique - CNRS : UMR7657 - Polytechnique - X)
    Abstract: This working paper contains the first results of a questionnaire that was conducted in May 2004 (May, 8-9) among 331 students of the Addis Ababa University to know their opinion about democracy and the political preferences they express through voting. The paper takes the form of the questionnaire itself in which we included, for each question, the corresponding first statistical results that we get. We create a synthetic table of content as well as an index at the end of the document to facilitate for the reader an easy access to the information he may be looking for.
    Keywords: Africa, Altruism, Equity, Ethiopia, Institution design, Public goods, Voting behaviour
    Date: 2009–04–15
  4. By: Rüdiger Schmitt-Beck
    Abstract: The chapter gives an overview of recent developments within participation and electoral research, and discusses the current state of affairs with regard to data provision and access. It concludes with several recommendations: (a) to tag a small number of key political variables as constant elements of the future question programmes of both the ALLBUS and the GSOEP, thereby creating substantial amounts of synergy at little marginal cost; (b) to establish a National Election Study in Germany by providing the current GLES project (which is funded by the DFG to study the 2009, 2013 and 2017 national elections) with a constant logistic and methodological support infrastructure by GESIS, and on the long run by providing a regular follow-up study to this project with a stable basis of reliable public funding and a firm institutional embedding, preferably by including it into the remit of GESIS; (c) to adapt the data services of the statistical offices in several respects more closely to the data requirements of participation and electoral research; (d) to establish a formal obligation for public agencies to submit survey data collected under their auspices in due time to the public domain for purposes of secondary analysis.
    Keywords: Political participation, political behaviour, elections, electoral behaviour, voting
    Date: 2009
  5. By: Kruse, Joern (Helmut Schmidt University, Hamburg)
    Abstract: As a result of the prevailing governance structure, economic policy in democracies usually suffers from specific deficiencies. Among these are the predominance of distributive over efficiency objectives, the neglect of long-run effects, and the lack of or biased use of expert knowledge in the political decision making process. These deficiencies can be attributed to a 'monopoly of democratic legitimacy' of the politicians and parties, an overloaded democratic delegation, the influence of interest groups, and the short-run incentives in the political process. The focus of this paper is on the reform of the governance structure of economic policy. It is suggested that a 'dual democratic legitimacy' should be introduced. A 'senate' which is independent of the political parties will be directly elected by the people. The senate firstly works as a second chamber in bicameralistic legislation, closely cooperating with consultative expert institutions. Secondly, the senate acts as a principal for any public institution outside of the parliament and the government, appointing the top personnel.
    Keywords: Delegation; Politische Institutionen; Zwei-Kammer-Systeme; Senat
    JEL: D02 D72
    Date: 2009–08–10
  6. By: Campos, Nauro F. (Brunel University); Coricelli, Fabrizio (University of Siena)
    Abstract: The relationship between economic and political liberalization has received a great deal of attention lately, yet the possibility of a nonlinear relationship and the role of reversals remain largely neglected. Focusing on democratization and financial reform, this paper offers evidence for a U-shaped relationship across countries, over time as well as in a panel setting using a wide range of estimators for various reform measures. We link this non-linear relationship to the notion of partial or captured democracy. We provide as well econometric support showing that even when de facto is modelled as a function of de jure financial liberalization, this non-linearity obtains.
    Keywords: reform reversals, political liberalization, economic liberalization, financial reform
    JEL: C23 D72 O38 P16
    Date: 2009–08
  7. By: Roland Strausz
    Abstract: I investigate the argument that, in a two–party system with different regulatory objectives, political uncertainty generates regulatory risk. I show that this risk has a fluctuation effect that hurts both parties and an output–expansion effect that benefits one party. Consequently, at least one party dislikes regulatory risk. Moreover, both political parties gain from eliminating regulatory risk when political divergence is small or the winning probability of the regulatory–risk–averse party is not too large. Because of a commitment problem, direct political bargaining is insufficient to eliminate regulatory risk. Politically independent regulatory agencies solve this commitment problem.
    Keywords: regulation, regulatory risk, political economy, independent regulatory agency
    JEL: D82
    Date: 2009–08
  8. By: Andreas Kuhn (Institute for Empirical Research in Economics, University of Zurich, Switzerland)
    Abstract: This paper presents a simple conceptual framework intended for describing individuals’ subjective evaluations of occupational wage inequality and their demand for redistribution. Most importantly, the framework explicitly allows for the distinction between individuals’ perceptions and their normative beliefs. I illustrate the framework using Swiss survey data from the International Social Survey Program. While most individuals accept quite large wage differentials across occupations, they also prefer a lower level of overall wage inequality than what they perceive to exist. Consistent with previous evidence, the empirical analysis also shows that financial self-interest, social norms about distributive justice and perceptions of how wages are determined in reality all simultaneously influence the demand for redistribution. Finally, I show that subjective inequality measures and the demand for redistribution are substantially significant predictors of both individuals’ support for government intervention and their party identification. This result provides indirect evidence on the presumed link between perceptions and beliefs on the one hand and political outcomes on the other hand.
    Keywords: Subjective inequality measures, demand for redistribution, distributive justice, party identification, support for the welfare state
    JEL: D3 D63 H1
    Date: 2009–08

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