nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒06‒04
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Personal Emotions and Political Decision Making: Implications for Voter Competence By Healy, Andrew J.; Malhotra, Neil; Mo, Cecilia H.
  2. The disadvantage of winning an election By Enriqueta Aragones; Santiago Sanchez-Pages
  3. Revealed Political Power By Jinhui Bai and Roger Lagunoff
  4. The Illusory Leader: Natural Resources, Taxation and Accountability By Eoin F. McGuirk; Eoin F. McGuirk
  5. Power indices expressed in terms of minimal winning coalitions By Fabien Lange; László Á. Kóczy
  6. Voting games with endogenously infeasible coalitions By László Á. Kóczy
  7. Democracy as a Middle Ground: A Uni…ed Theory of Development and Political Regimes By Larsson, Anna; Parente, Stephen
  8. Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection By Stefano Gagliarducci; Tommaso Nannicini
  9. Comparative Trade Policy By Wiberg, Magnus
  10. Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries By Andrés Rodríguez-Pose; Roberto Ezcurra
  11. Explaining nineteenth-century bilateralism: economic and political determinants of the Cobden-Chevalier network By Markus Lampe
  12. Common Agency Lobbying over Coalitions and Policy By Baron, David P.; Hirsch, Alexander V.
  13. Public Opinion and Terrorist Acts By Jitka Maleekova; Dragana Stanisic
  14. Single-dipped preferences By Salvador Barberà; Dolors Berga; Bernardo Moreno
  15. Gender anomalies in Stated Preference surveys – Are biases really gender dependent? By Jacob Ladenburg; Søren Bøye Olsen
  16. Vote Shares in Spanish General Elections as a Fractional Response to the Economy and Conflict By Javier Gardeazabal

  1. By: Healy, Andrew J. (Loyola Marymount University); Malhotra, Neil (Stanford University); Mo, Cecilia H. (Stanford University)
    Abstract: According to what criteria do citizens make political decisions, and what do these criteria say about democratic competence? An impressive body of evidence suggests that voters competently evaluate diagnostic information such as macroeconomic trends and their personal financial circumstances to reward good performance while ridding themselves of leaders who are corrupt, incompetent, or ineffective. However, what if some voters' personal emotional reactions to events completely unrelated to public affairs influence their voting decisions? The conflation of personal emotions with political cognition challenges traditional conceptions of citizen competence and democratic accountability. We explore whether emotional reactions unrelated to incumbent performance affect voting behavior by assessing the electoral impact of local college football games, events that government has nothing to do with and for which no government response would be expected. On average, a win before Election Day causes the incumbent to receive about one percentage point more of the vote, with the effect being larger for teams with stronger fan support. We corroborate these aggregate-level results with a survey conducted during the 2009 NCAA Men's College Basketball Tournament, where we find that sports-induced emotional change affects approval of President Obama and assessments of the health of the country. Voters' decisions and attitudes are thus shown to depend considerably on events that affect their personal level of happiness even when those events are entirely disconnected from government activity. Our results provide new evidence on the significant limitations of the electorate's capacity to hold elected officials accountable for their actions.
    Date: 2009–07
  2. By: Enriqueta Aragones; Santiago Sanchez-Pages
    Abstract: This paper analyzes the problem that an incumbent faces during the legislature when deciding how to react to popular initiatives or policy proposals coming from different sources. We argue that this potential source of electoral disadvantage that the incumbent obtains after being elected can jeopardize the reelection possibilities of the incumbent. We analyze the decision of the incumbent when facing reelection and we characterize the conditions under which the advantages that the incumbent obtains can overcome the disadvantages. Finally, we use the results of this analysis to discuss some implications of the use of mechanisms of direct democracy like referenda and popular assemblies on electoral competition.
    Keywords: Incumbency advantage, Referenda, Popular initiatives, Elections.
    JEL: D7 H1
    Date: 2010–03
  3. By: Jinhui Bai and Roger Lagunoff (Department of Economics, Georgetown University)
    Abstract: This paper adopts a \revealed preference" approach to the question of what can be inferred about bias in a political system. We model an innite horizon, dynamic economy and its political system from the point of view of an \outside observer." The observer sees a nite sequence of policy data, but does not observe the underlying distribution of political power that produced this data. Neither does he observe the preference prole of the citizenry.The observer makes inferences about distribution of political power as if political power were derived from a wealth-weighted voting system with weights that can vary across states. The weights determine the nature and magnitude of the wealth bias. Positive weights on relative income in any period indicate an \elitist" bias in the political system whereas negative weights indicate a \populist" one. We ask: what class of weighted systems can rationalize the policy data as weighted majority outcomes each period? We show that without further knowledge, all forms of bias are possible: any policy data can be shown to be rationalized by any system of wealth-weighted voting. An additional single crossing restriction on preferences can, however, rule out certain weighting systems. We then augment policy data with polling data and show that the set of rationalizing wealth-weights are bounded above and below, thus ruling out extreme biases. In some cases, polls can provide information about the change in political inequality across time. Classification-JEL Codes: C73, D63, D72, D74, H11
    Keywords: wealth-bias, elitist bias, populist bias, weighted majority winner, rationalizing weights, "Anything Goes Theorem"
    Date: 2010–05–10
  4. By: Eoin F. McGuirk (Institute for International Integration Studies, Trinity College Dublin); Eoin F. McGuirk
    Abstract: This paper proposes and tests a mechanism through which the natural resource curse can operate. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is tested using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents, taxation and election proximity. It is found that an increase in natural resource rents decreases perceived tax enforcement, which in turn reduces the demand for regular, open and honest elections. Results are robust to alternative specifications. A supplementary analysis reveals that, consistent with the two-period model proposed, the effects are more acute closer to national elections. The findings support political-economy explanations of how natural resources affect economies, in which resource rents are purported to influence the decisions of the political elite through increased returns to staying in power.
    Keywords: Democracy; Political Economy; Natural Resources; Curses; Africa
    JEL: D73 O13 O55
    Date: 2010–05
  5. By: Fabien Lange (Óbuda University); László Á. Kóczy (Óbuda University)
    Abstract: A voting situation is given by a set of voters and the rules of legislation that determine minimal requirements for a group of voters to pass a motion. A priori measures of voting power, such as the Shapley-Shubik index and the Banzhaf value, show the influence of the individual players. We used to calculate them by looking at marginal contributions in a simple game consisting of winning and losing coalitions derived from the rules of the legislation. We introduce a new way to calculate these measures directly from the set of minimal winning coalitions. This new approach logically appealing as it writes measures as functions of the rules of the legislation. For certain classes of games that arise naturally in applications the logical shortcut drastically simplifies calculations. The technique generalises directly to all semivalues. Keywords. Shapley-Shubik index, Banzhaf index, semivalue, minimal winning coalition, Möbius transform.
    Keywords: Shapley-Shubik index, Banzhaf index, semivalue, minimal winning coalition, Möbius transform.
    Date: 2010
  6. By: László Á. Kóczy (Óbuda University)
    Abstract: While they use the language of game theory the known measures of a priory voting power are hardly more than statistical expectations assuming the random behaviour of the players. Focusing on normalised indices we show that rational players would behave dierently from the indices' predictions and propose a model that captures such strategic behaviour. In our model players do not automatically participate in every winning coalition they are members of, but have the possibility to block the formation of such a coalition. The strategic use of such blocks can increase voting power, when the latter is dened over the game with the remaining winning coalitions. In our model players do not automatically participate in every winning coalition they are members of, but have the possibility to block the formation of such a coalition. The strategic use of such blocks can increase voting power, when the latter is defined over the game with the remaining winning coalitions.
    Keywords: Banzhaf index, Shapley-Shubik index, a priori voting power, rational players.
    Date: 2010
  7. By: Larsson, Anna (Dept. of Economics, Stockholm University); Parente, Stephen (University of Illinois)
    Abstract: A large literature documents that autocratic regimes have not, on average, outperformed democratic regimes, although they do display greater variance in economic performance. At the same time, no long-lived autocracy currently is rich whereas every long-lived democracy is. This paper puts forth a theory to account for these observations. The theory rests on the idea that autocratic leaders are heterogenous in their preferences and the idea that special interest groups can successfully lobby a democratic regime for policies that delay industrialization. We show that an elite landed class chooses to democratize society only after the economy has accumulated enough wealth.
    Keywords: Autocracy; Democracy; Landed Elites; Growth Miracles; Vested Interests
    JEL: O10 P16
    Date: 2010–05–27
  8. By: Stefano Gagliarducci (Faculty of Economics, University of Rome "Tor Vergata"); Tommaso Nannicini (Bocconi University)
    Abstract: The wage paid to politicians affects both the choice of citizens to run for an elective office and the performance of those who are appointed. First, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians’ pay may change their mind. Second, if the reelection prospects of incumbents depend on their in-office deeds, a higher wage may foster performance. We use data on all Italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi-experimental framework. In Italy, the wage of a mayor depends on population size and sharply rises at different thresholds. We apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase—5,000 inhabitants—to control for unobservable town characteristics. Exploiting the existence of a two-term limit, we further disentangle the composition from the incentive component of the effect of the wage on performance. Our results show that a higher wage attracts more educated candidates, and that better paid politicians size down the government machinery by improving internal efficiency. Importantly, most of this performance effect is driven by the selection of competent politicians, rather than by the incentive to be reelected.
    Keywords: political selection, efficiency wage, term limit, regression discontinuity.
    JEL: M52 D72 J45 H70
    Date: 2010–05–28
  9. By: Wiberg, Magnus (Ministry of finance)
    Abstract: Current research has found ambiguous results with respect to the effects of the type of electoral regime on trade policy. The present paper proposes a solution to this indeterminacy. It is shown that the equilibrium level of trade protection can be relatively higher, as well as lower, under a majoritarian electoral rule compared to proportional representation. The equilibrium outcome is shown to depend on the number of voters in swing districts who own a factor specific to the exporting industry in relation to those who possess claims to the specific input employed by the import-competing sector. It is further argued that political rents are lower (higher) under majoritarian elections if there are more factor owners in the swing districts with stakes in the exporting (import-competing) industry.
    Keywords: Endogenous Tariff Formation; Trade Policy; Electoral Rules
    JEL: D72 F13
    Date: 2010–05–27
  10. By: Andrés Rodríguez-Pose (IMDEA Ciencias Sociales); Roberto Ezcurra (Universidad Pública de Navarra)
    Abstract: The global drive towards decentralization has been increasingly justified on the basis that greater transfers of resources to subnational governments are expected to deliver greater efficiency in the provision of public goods and services and greater economic growth. This paper examines whether this is the case, by analysing the relationship between decentralization and economic growth in 21 OECD countries during the period between 1990 and 2005 and controlling not only for fiscal decentralization, but also for political and administrative decentralization. The results point towards a negative and significant association between fiscal decentralization and economic growth in the sample countries, a relationship which is robust to the inclusion of a series of control variables and to differences in expenditure preferences by subnational governments. The impact of political and administrative decentralization on economic growth is weaker and sensitive to the definition and measurement of political decentralization.
    Keywords: fiscal decentralization;political decentralization;administrative decentralization;economic growth;OECD
    JEL: H71 H72 H77
    Date: 2010–05–24
  11. By: Markus Lampe
    Abstract: This study investigates the empirical determinants of the treaty network of the 1860s and 1870s. It makes use of three central theories about the determinants of PTA formation, considering economic fundamentals from neoclassical and ‘new’ trade theory, political-economy variables, and international interaction due to trade diversion fears (dependence of later PTAs on former). These possible determinants are operationalized using a newly constructed dataset for bilateral cooperation and non-cooperation among 13 European Countries and the US. The results of logistic regression analysis show that the treaty network can be explained by a combination of ‘pure’ welfare-oriented economic theory with political economy and international interaction models.
    Keywords: Preferential trade agreements, Anglo-French treaty of Commerce, Bilateralism, Political economy, Qualitative choice models
    JEL: N73 F13 F5
    Date: 2010–05
  12. By: Baron, David P. (Stanford University); Hirsch, Alexander V. (Stanford University)
    Abstract: This paper presents a theory of common agency lobbying in which policy-interested lobbies can first influence the choice of a governing coalition and then influence the legislative bargaining over policies. Equilibria can involve active lobbying at both stages of the governing process. Contributions can also be made to defeat a policy proposal, and although those contributions are never successful they can influence coalition choice. The equilibrium policy in the legislative bargaining stage is efficient given the coalition selected, but the equilibrium coalition need not be efficient. Lobbying can also lead to the preservation of the status quo and lobby-induced gridlock. An example is presented to identify the multiplicity of equilibria and provide a full characterization of an equilibrium.
    Date: 2009–07
  13. By: Jitka Maleekova; Dragana Stanisic
    Abstract: The paper explores the dimensions of public opinion relevant for supporting terrorism and their relationship with terrorist attacks. We link the 2007 PEW survey data on justification of suicide terrorism and opinions in 16 countries of the Middle East, Africa and Asia on nine regional powers to the NCTC data on international terrorist incidents between 2004 and 2008. We find that justification of suicide terrorism and unfavorable opinion on regional powers are correlated with the occurrence of terrorism and the effect of each of these dimensions of public opinion varies with the level of the other. In addition, we find a robust positive relationship between the share of people in a country who at the same time justify suicide bombings and have an unfavorable opinion of a regional power and the occurrence of terrorism originating from that country.
    Keywords: support for terrorism, public opinion, international terrorism
    Date: 2010
  14. By: Salvador Barberà; Dolors Berga; Bernardo Moreno
    Abstract: We characterize the set of all individual and group strategy-proof rules on the domain of all single-dipped preferences on a line. For rules defined on this domain, and on several of its subdomains, we explore the implications of these strategy-proofness requirements on the maximum size of the rules' range. We show that when all single-dipped preferences are admissible, the range must contain two alternatives at most. But this bound changes as we consider different subclasses of single-dipped preferences: we provide examples of subdomains admitting strategy-proof rules with larger ranges. We establish exact bounds on the maximal size of strategy-proof functions on each of these domains, and prove that the relationship between the sizes of the subdomains and those of the ranges of strategy-proof functions on them need not be monotonic. Our results exhibit a sharp contrast between the structure of strategy-proof rules defined on subdomains of single-dipped preferences and those defined on subsets of single-peaked ones.
    Keywords: strategy-proof, group strategy-proof, binary range rules, single-dipped
    JEL: D71
    Date: 2009–12–31
  15. By: Jacob Ladenburg (Danish Institute of Governmental Research); Søren Bøye Olsen (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: In this paper, we develop a North-South endogenous growth model to examine thrThe potential for a number of common but severe biases in stated preference method surveys being gender dependent has been largely overlooked in the literature. In this paper we summarize results from three Choice Experiment studies that find evidence in favor of gender differences in vulnerability to biases. Specifically, the results indicate that women are more susceptible to starting point bias than men, while men are more susceptible to hypothetical bias than women. This seems to be interrelated with women inherently being more uncertain than men when choosing from a choice set. Furthermore, we set up a novel theoretical model, which provides an explanation for gender specific susceptibility to biases. We conclude that biases can indeed be gender dependent. Hence, researchers should not simply disregard potential gender differences, but rather take them into account and examine the extent of them when performing surveys. Finally, we give suggestions for future research in this area.
    Keywords: Choice Experiment, Gender, Hypothetical bias, Preference Uncertainty, Starting point bias
    JEL: J16 D80 Q51
    Date: 2010–05
  16. By: Javier Gardeazabal
    Abstract: In this paper we study the response of vote shares to economic fluctuations and conflict. Spain seems to be the ideal niche for a case study like this since it has experienced both phenomena during the last decades. Recent Spanish democratic history has witnessed four complete economic cycles, with deep recessions and pronounced booms. During this period, there has been a nationalistic conflict with terrorist manifestation. We use Spanish provincial data from the ten congressional elections since the end of Franco's dictatorship. Vote shares at provincial level are modeled as fractional responses to unemployment, inflation, terrorism assassinations, turnout and other factors. The statistical model used, a fractional probit, specifies conditional means of district and election unobserved effects as linear functions of the covariates. Estimates of National Partial Effects (NPE), i.e. the effect on national vote shares of changes in unemployment, inflation and terrorism are statistically significant and quantitatively important. In addition, vote shares respond to participation rates and these also depend on economic factors and terrorism, thus creating an endogeneity problem. The expected margin of victory is then used as instrument for turnout.
    Keywords: vote shares, turnout, fractional probit, partial effects, unemployment, terrorism
    JEL: C23 P16
    Date: 2010

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