nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒07‒24
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Social Capital and Political Accountability By Tommaso Nannicini; Andrea Stella; Guido Tabellini; Ugo Troiano
  2. Rational Choice and Voter Turnout: Evidence from Union Representation Elections By Farber, Henry
  3. Gender inequality in education: Political institutions or culture and religion? By Arusha Cooray; Niklas Potrafke
  4. The Role of Ethnic Identity and Economic Issues in the 2007 Kenyan Elections By Roxana Gutiérrez-Romero
  5. Did the extension of the franchise increase the Liberal vote in Victorian Britain? Evidence from the Second Reform Act By Samuel Berlinski; Torun Dewan
  6. A Conflict Theory of Voting By Jeremy Petranka
  7. Triggers and Characteristics of the 2007 Kenyan Electoral Violence By Stefan Dercon; Roxana Gutiérrez-Romero
  8. An experimental study on learning about voting powers By Gabriele Esposito; Eric Guerci; Nobuyuki Hanaki; Xiaoyan Lu; Naoki Watanabe
  9. A political economy model of road pricing By De Borger B.; Proost S.
  10. Rhetoric in Legislative Bargaining with Asymmetric Information By Ying Chen; Hülya Eraslan
  11. The inequality curse: constraints and political discretion By Pereira, Luiz Carlos Bresser
  12. Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt By Carlo Cambini; Laura Rondi
  13. The Causes of Corruption: Evidence from China By Bin Dong; Benno Torgler
  14. Quantification of Political Risk in Energy Foresight - A Method Overview By Christoph Weber

  1. By: Tommaso Nannicini (Bocconi University, IGIER & IZA); Andrea Stella (Harvard University); Guido Tabellini (Bocconi University, IGIER, CEPR & CIFAR); Ugo Troiano (Harvard University)
    Abstract: In this paper, we empirically investigate a channel through which social capital may improve economic wellbeing and the functioning of institutions: political accountability. The main idea is that voters who share norms of generalized morality demand higher standards of behavior on their elected representavtives, are more willing to bear the cost of acquiring information, and are more likely to base their vote on criteria of social welfare rather than (narrow) personal interest. We take this conjecture to the data using information on the Italian members of Parliament in the postwar period (1948–2001). The empirical evidence shows that the electoral punishment of political misbehavior is considerably larger in electoral districts with high social capital, where social capital is measured by blood donation, and political misbehavior refers to receiving a request of criminal prosecution or shirking in parliamentary activity. Accordingly, episodes of political misbehavior are less frequent in electoral districts with high social capital.
    Keywords: Social Capital, Culture, Political Agency
    JEL: D72 D73 Z10
    Date: 2010–05
  2. By: Farber, Henry (Princeton University)
    Abstract: The standard theoretical solution to the observation of substantial turnout in large elections is that individuals receive utility from the act of voting. However, this leaves open the question of whether or not there is a significant margin on which individuals consider the effect of their vote on the outcome in deciding whether or not to vote. In order to address this issue, I study turnout in union representation elections in the U.S. (government supervised secret ballot elections, generally held at the workplace, on the question of whether the workers would like to be represented by a union). These elections provide a particularly good laboratory to study voter behavior because many of the elections have sufficiently few eligible voters that individuals can have a substantial probability of being pivotal. I develop a rational choice model of turnout in these elections, and I implement this model empirically using data on over 75,000 of these elections held from 1972-2009. The results suggest that most individuals (over 80 percent) vote in these elections independent of consideration of the likelihood that they will be pivotal. Among the remainder, the probability of voting is related to variables that influence the probability of a vote being pivotal (election size and expected closeness of the election). These findings are consistent with the standard rational choice model.
    Keywords: labor unions, voting, voter turnout
    JEL: D72 J51
    Date: 2010–06
  3. By: Arusha Cooray (School of Ecnomoics, University of Wollongong); Niklas Potrafke (Department of Economics, University of Konstanz, Germany)
    Abstract: We investigate empirically whether political institutions or culture and religion underlie gender inequality in education. The dataset contains up to 157 countries over the 1991-2006 period. The results indicate that political institutions do not significantly influence education of girls: autocratic regimes do not discriminate against girls in denying educational opportunities and democracies do not discriminate by gender when providing educational opportunities. The primary influences on gender inequality in education are culture and religion. Discrimination against girls is especially pronounced in Muslim dominated countries.
    Keywords: Gender discrimination, education, democracy, religion
    JEL: O11 O15 O43 O57 P26 P36 Z12
    Date: 2010–07–13
  4. By: Roxana Gutiérrez-Romero
    Abstract: This paper investigates the factors that shaped Kenyan’s voting intentions in the 2007 presidential election. Using data from a public opinion survey conducted two weeks before the election we are able to evaluate the relative importance of what shaped voting behavior comprehensively, taking into account factors such as ethnicity, access to public services, incidence of poverty and wealth differences across ethnic groups and across generations. We find strong evidence that ethnic identity was the main factor determining voting intentions and to a lesser extent grievances, economic well-being, and access to public and private goods. However, the relative importance of these factors depends on whether Kenyan voters identify themselves first and foremost in terms of their ethnicity, occupation or nationality. Those who identify themselves in terms of their ethnicity were influenced the most by access to public services. This evidence supports theories that suggest ethnic identity is a proxy used by voters to assess which candidate will give them greater access to public goods.
    Keywords: Voting behavior, ethnic identity, Kenya
    JEL: D72 D01
    Date: 2010
  5. By: Samuel Berlinski (Institute for Fiscal Studies and University College, London); Torun Dewan
    Abstract: <p>We use evidence from the Second Reform Act, introduced in the United Kingdom in 1867, to analyze the impact on electoral outcomes of extending the vote to the unskilled urban population. By exploiting the sharp change in the electorate caused by franchise extension, we separate the effect of reform from that of underlying constituency level traits correlated with the voting population. Although we find that the franchise affected electoral competition and candidate selection, there is no evidence that relates Liberal electoral support to changes in the franchise rules. Our results are robust to various sources of endogeneity.</p>
    Date: 2010–05
  6. By: Jeremy Petranka (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Research in the behavioral psychology of voting has found that voters tend to be poorly informed, highly responsive to candidate personality, and follow a "fast and frugal" heuristic. This paper analyzes optimal candidate strategies in a two-party election in which voters are assumed to behave according to these traits. Under this assumption, candidates face a trade-off between appealing to a broader base and being overly ambiguous in their policy stances. A decrease in the cost of ambiguity within this model offers a parsimonious justification for the increase in voter independence, candidate ambiguity, and party politics that empirical studies have revealed over the last five decades. I additionally argue a decrease in the cost of ambiguity is a natural result of the primary system, campaign finance reform, and changing media environment.
    Date: 2008–09
  7. By: Stefan Dercon; Roxana Gutiérrez-Romero
    Abstract: Following the 2007 disputed Kenyan Presidential election unprecedented levels of violence erupted across the country adding to the history of troubled elections in Africa. This paper offers quantitative and qualitative evidence on the incidence, impacts and issues that triggered electoral violence. Using two surveys conducted before and after the election we find that one out of three Kenyans were affected by the violence regardless of their ethnicity and wealth. The chances of being a victim of violence were higher in areas with land conflicts and where politically-connected gangs operated. Violence, which was mainly triggered by the perception that the election had been rigged, reduced trust and social capital among communities making violence more likely to reoccur.
    Keywords: Voting, Electoral Violence, Rule of Law, Institutions, Africa, Kenya
    Date: 2010
  8. By: Gabriele Esposito (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Eric Guerci (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Nobuyuki Hanaki (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579, Economics Department - Université de Tsukuba); Xiaoyan Lu (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Naoki Watanabe (Economics Department - Université de Tsukuba)
    Abstract: We investigate experimentally whether subjects can learn, from their limited experiences, about relationships between the distribution of votes in a group and associated voting powers in weighted majority voting systems (WMV). Subjects are asked to play two-stage games repeatedly. In the second stage of the game, a group of four subjects bargains over how to divide fixed amount of resources among themselves through theWMV determined in the first stage. In the first stage, two out of four subjects in the group, independently and simultaneously, choose from two options that jointly determine the distribution of a given number of votes among four members. These two subjects face a 2 × 2 matrix that shows the distribution of votes, but not associated voting powers, among four members for each outcome. Therefore, to obtain higher rewards, subjects need to learn about the latter by actually playing the second stage. The matrix subjects face in the first stage changes during the experiment to test subjects' understanding of relationships between distribution of votes and voting power. The results of our experiments suggest that although (a) many subjects learn to choose, in the votes apportionment stage, the option associated with a higher voting power, (b) it is not easy for them to learn the underlying relationships between the two and correctly anticipate their voting powers when they face a new distribution of votes.
    Keywords: experiment, learning, voting power, bargaining
    Date: 2010–07–12
  9. By: De Borger B.; Proost S.
    Abstract: In this paper, we take a political economy approach to study the introduction of urban congestion tolls, using a simple majority voting model. Making users pay for external congestion costs is for an economist an obvious reform, but successful introductions of externality pricing in transport are rare. In the few cases where tolls were actually introduced, implementation was characterized by two salient facts. First, the toll revenues were tied to improvements of public transport. Second, opposition to the introduction of tolling decreased substantially after it was introduced. In most cases, a majority was against ex ante, but a majority favored the introduction of tolling after it was implemented. This paper develops a stylized model with car and public transport, allowing for idiosyncratic uncertainty about modal substitution costs. We show that uncertainty reduces the number of voters that favors road pricing ex ante. The model can explain the presence of a majority that is against road pricing ex ante and in favor ex post. Moreover, uncertainty also implies that, if a majority is against ex ante, there will be no majority for organizing an experiment that would take away the individual uncertainty. Finally, we show that it is easier to obtain a majority when the toll revenues are used to subsidize public transport than when they are used for a tax refund.
    Date: 2010–06
  10. By: Ying Chen (Arizona State University); Hülya Eraslan (John Hopkins University)
    Abstract: In this paper we analyze a legislative bargaining game in which parties privately informed about their preferences bargain over an ideological and a distributive decision. Communication takes place before a proposal is offered and majority rule voting determines the outcome. When the private information pertains to the ideological intensities but the ideological positions are publicly known, it may not be possible to have informative communication from the legislator who is ideologically distant from the proposer, but the more moderate legislator can communicate whether he would "compromise" or fight" on ideology. If instead the private information pertains to the ideological positions, then all parties may convey whether they will "cooperate," "compromise," or fight" on ideology. When the uncertainty is about ideological intensity, the proposer is always better on making proposals for the two dimensions together despite separable preferences, but when the uncertainty is about ideological positions, bundling can result in informational loss which hurts the proposer.
    JEL: C78 D72 D82 D83
    Date: 2010–07
  11. By: Pereira, Luiz Carlos Bresser
    Abstract: We live in an unjust world characterized by economic inequality. No liberaltheory of justice is able to justify it. Inequality is not “solved” with equality ofopportunity or meritocracy. Nor by the socialist and republican critique. The poor willhave to count with them and with democracy to make social progress reality. In theirpolitical struggle, they will face one economic constraint: the expected profit rate mustremain attractive to business investors. Yet, giving that technological progress inincreasingly capital-saving, this economic constraint does not obstruct that wages growabove the productivity rate and inequality is reduced. What really is an obstacle to socialjustice in the rich countries is, on one hand, the power that capitalist rentiers retain andfinancists acquired, and, on the other, the competition originated in low wage countries.
    Date: 2010–07–14
  12. By: Carlo Cambini (Politecnico di Torino, IMT Lucca and FEEM); Laura Rondi (Politecnico di Torino and FEEM)
    Abstract: This paper examines the investment and financial decisions of a sample of 92 EU regulated utilities, taking into account key institutional features of EU public utilities, such as: a) regulation by agencies with various degrees of independence; b) partial ownership of the state in the regulated firm; and c) the government’s political orientation, which may ultimately influence the regulatory climate to be either more pro-firm or more pro-consumers. Our results show that regulatory independence matters for both investment and financial decisions. Investment increases under an Independent Regulatory Agency (IRA), while ownership has no effect. Leverage also increases when the IRA is in place, especially so if the regulated firm is privately controlled. Finally political orientation does matter, as firm investment increases under more conservative (pro-firm) governments, but this effect appears to revert when the IRA is in place.
    Keywords: Regulated Utilities, Investment, Capital Structure, Private and State Ownership, Regulatory Independence, overnment’s Political Orientation
    JEL: G31 G32 L33 L51 L90
    Date: 2010–06
  13. By: Bin Dong (The School of Economics and Finance, Queensland University of Technology); Benno Torgler (The School of Economics and Finance, Queensland University of Technology, CREMA – Center for Research in Economics, Management and the Arts and CESifo)
    Abstract: In this study we explore in detail the causes of corruption in China using two different sets of data at the regional level (provinces and cities). We observe that regions with more anti-corruption efforts, histories of British rule, higher openness, more access to media and relatively higher wages of government employees are markedly less corrupt; while social heterogeneity, regulation, abundance of resource and state-owned enterprises substantially breed regional corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly, while administrative decentralization fosters local corruption. We also find that there is currently a positive relationship between corruption and economic development in China that is mainly driven by the transition to a market economy.
    Keywords: Corruption, China, Government, Decentralization, Deterrence, Social Heterogeneity
    JEL: D73 H11 K42
    Date: 2010–06
  14. By: Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: Uncertainty is almost ubiquitous in energy related decision making. It has many sources, multiple facets and numerous implications. From the uncertainties surrounding Global Warming over the incertitude of future technological progress to the volatility of fuel and other energy prices, the uncertainties account for an important part of the current energy strategy puzzle. One key element of this puzzle is however political risk. Especially when it comes to the supply of oil and gas, where around 70 % of the worldwide resources are concentrated in what is sometimes labelled the �strategic ellipse� (cf. e.g. Rempel et al. 2006), encompassing the region from the Arabian peninsula over the surroundings of the Caspian Sea up to the most important Siberian hydrocarbon reservoirs. How should political risk be taken into account when aiming at solving the energy strategy puzzle? This is the key issue addressed in this paper, however with a clear focus on the first step of strategic decision making, namely the environment analysis. Thereby environment does not mean only the natural environment but the entire surrounding world which is relevant for the decision making. Consequently the first point to be discussed in the following is energy related decision making in general and the role of risk herein in particular (cf. Section 2). Then a typology of risks and especially political risks is sketched in Section 3 before approaches to the modelling and quantification of political risk are reviewed in Section 4.
    Date: 2010–02

This nep-pol issue is ©2010 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.