nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒02‒26
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Right Look: Conservative Politicians Look Better and Their Voters Reward It By Berggren, Niclas; Jordahl, Henrik; Poutvaara, Panu
  2. Diversity and the Power of the Elites inDemocraticSocieties: A Model and a Test. By Oriana Bandiera; Gilat Levy
  3. Information and Strategic Voting By Marcelo Tyszler; Arthur Schram
  4. How Does Political Instability Affect Economic Growth? By Ari Aisen; Francisco José Veiga
  5. Preferences, actions and voting rules. By Alaitz Artabe; Annick Laruelle; Federico Valenciano
  6. Population Aging, the Composition of Government Spending,and Endogenous Economic Growth in Politico-Economic Equilibrium By Kuehnel, Johanna
  7. Institutions, organizations and space: forms of proximity (In French) By Damien TALBOT (GREThA, CNRS, UMR 5113)
  8. Mayors’ Reelection Choice and the Economy: Evidence from Portugal By Vítor Castro; Rodrigo Martins
  9. Punching above One's Weight: The Case against Election Campaigns By Marco A. Haan; Bart Los; Sander Onderstal; Yohanes E. Riyanto
  10. The Politicians' Wage Gap: Insights from German Members of Parliament By Peichl, Andreas; Pestel, Nico; Siegloch, Sebastian
  11. Giving Money Away? The Politics of Direct Distribution in Resource Rich States - Working Paper 231 By Alexandra Gillies
  12. Fragile States and Development Policy By Timothy Besley; Torsten Persson
  13. The importance of electoral rule: Evidence from Italy By Massimo Bordignon; Andrea Monticini

  1. By: Berggren, Niclas (Ratio Institute); Jordahl, Henrik (Research Institute of Industrial Economics); Poutvaara, Panu (University of Munich)
    Abstract: Previous research has established that good-looking political candidates win more votes. We extend this line of research by examining differences between parties on the left and on the right of the political spectrum. Our study combines data on personal votes in real elections with a web survey in which 2,513 non-Finnish respondents evaluated the facial appearance of 1,357 Finnish political candidates. We find that political candidates on the right are better looking in both municipal and parliamentary elections and that they have a larger beauty premium in municipal, but not in parliamentary, elections. As municipal candidates are relatively unknown, the beauty-premium gap indicates that voters – especially those to the right – use beauty as a cue for candidate ideology or quality in the municipal elections.
    Keywords: beauty, elections, political candidates, appearance, ideology, parties
    JEL: D72 J45 J70
    Date: 2011–02
  2. By: Oriana Bandiera; Gilat Levy
    Abstract: This paper analyzes whether political outcomes in local democracies are determinedby the preferences of the median - typically poor - agents or whether they reflect thewishes of the wealthy elites. A model shows that when politicians belonging todifferent groups can form coalitions, the wealthy elites' influence on policy choices isendogenously higher when there is diversity in preferences among the poor. In linewith the theoretical predictions, the pattern of public good provision by localgovernments in Indonesia reveals that when individuals have different preferences— here due to different ethnicities — democratic policy outcomes are closer to thepreferences of the elites, rather than the preferences of the poor majority.
    Date: 2010–08
  3. By: Marcelo Tyszler (University of Amsterdam); Arthur Schram (University of Amsterdam)
    Abstract: We theoretically and experimentally study voter behavior in a setting characterized by plurality rule and mandatory voting, where voters choose from three options. We are interested in the occurrence of strategic voting in an environment where Condorcet cycles may occur. In particular, we focus on how information about the distribution of preferences affects strategic behavior. We also vary the relative importance of the second preferred option to investigate how this affects the strategic vote. Quantal response equilibrium analysis is used to analyze the game and proves to be a good predictor for the experimental data. Our results indeed show that strategic voting arises, the extent of which depends on (i) the availability of information; (ii) the relative importance of the intermediate candidate; (iii) the electorate's relative support for one's preferred candidate; and (iv) the relative position of the plurality-supported candidate in a voter's preference ordering. Our results show that information serves as a coordination device where strategic voting does not harm the plurality-preferred candidate's chances of winning.
    Keywords: Voting Behavior; Experimental Economics; Quantal Response Equilibrium
    JEL: C92 D72 D83
    Date: 2011–02–10
  4. By: Ari Aisen; Francisco José Veiga
    Abstract: The purpose of this paper is to empirically determine the effects of political instability on economic growth. Using the system-GMM estimator for linear dynamic panel data models on a sample covering up to 169 countries, and 5-year periods from 1960 to 2004, we find that higher degrees of political instability are associated with lower growth rates of GDP per capita. Regarding the channels of transmission, we find that political instability adversely affects growth by lowering the rates of productivity growth and, to a smaller degree, physical and human capital accumulation. Finally, economic freedom and ethnic homogeneity are beneficial to growth, while democracy may have a small negative effect.
    Keywords: Economic growth , Economic models , Education , Human capital , Political economy , Productivity ,
    Date: 2011–01–13
  5. By: Alaitz Artabe (UPV/EHU); Annick Laruelle (UPV/EHU and Ikerbasque); Federico Valenciano (UPV/EHU)
    Abstract: In this paper we address several issues related to collective dichotomous decision-making by means of quaternary voting rules, i.e., when voters may choose between four actions: voting yes, voting no, abstaining and not turning up-which are aggregated by a voting rule into a dichotomous decision: accep- tance or rejection of a proposal. In particular we study the links between the actions and preferences of the actors. We show that quaternary rules (unlike binary rules, where only two actions -yes or no- are possible) leave room for “manipulability” (i.e., strategic behaviour). Thus a preference pro…le does not in general determine an action pro…le. We also deal with the notions of success and decisiveness and their ex ante assessment for quaternary voting rules, and discuss the role of information and coordination in this context.
    Date: 2011–02–17
  6. By: Kuehnel, Johanna
    Abstract: This paper introduces a democratic voting process into an OLG economy in order to analyze the effects of a rising old-age dependency ratio on the composition of government spending and endogenous economic growth. Forward-looking agents vote each period on the public policy mix between productive government expenditure and public consumption spending that benefits the elderly. Population aging shifts political power from the young to the old. While this does not affect public productive expenditure, it leads to an increase in public spending on the elderly and a slowdown in economic growth. However, the overall effect on long-term economic growth is positive. This is due to reduced capital dilution or increased saving.
    Keywords: Demographics; Endogenous Economic Growth; Government Spending; Markov Perfect Equilibrium; Probabilistic Voting
    JEL: D72 E62 O41
    Date: 2011–02–17
  7. By: Damien TALBOT (GREThA, CNRS, UMR 5113)
    Abstract: Opposing heterogeneous agents, imposing choices, and making divergent interests compatible, are all political prerequisites for agent coordination. Although these political prerequisites are not entirely ignored in proximity literature, such literature does tend to insist, for the most part, on cognitive perspective: the biggest beneficial effect of proximity is that of facilitating knowledge-sharing between agents. The principal objective of this paper is to propose both political and cognitive conceptions of proximity. In order to do so, we use the concept of institution, to examine the relations between these concepts - proximity and institution. We obtain one principal result: proximity is an institutional fact, which itself divides up two sub-categories, organizational and geographical proximity. Organizational proximity refers to the cognitive and political coordination of agents. Geographical proximity between actors is a latent resource. This resource would only be activated if the agents share organizational proximity. This form of proximity means that actors integrate cognitive community, i.e. reach memory of organization made up of rules and routines, and integrate political community, i.e. take place in power structure.
    Keywords: proximities, institutions, cognitive dimension, political dimension
    JEL: B52 R39
    Date: 2011
  8. By: Vítor Castro (Universidade de Coimbra and NIPE); Rodrigo Martins (Universidade de Coimbra and GEMF)
    Abstract: Using a data set that covers all Portuguese mainland municipalities for the period 1979-2005, this study performs an empirical analysis of the economic determinants of Mayors' choice to run for another term. The literature on the subject is mainly centered on the United States and, as far as we know, no papers are found addressing the economic factors of this choice. Probit panel estimations show that local economic conditions matter more than the national or regional economic environment. The results also confirm that political variables are important and that they influence the likelihood of seeking reelection in the same way as they affect vote and popularity functions.
    Keywords: Local elections, Reelection, Mayor, Economic conditions, Probit model.
    JEL: D72 H79 C35
    Date: 2011
  9. By: Marco A. Haan (University of Groningen); Bart Los (University of Groningen); Sander Onderstal (University of Amsterdam); Yohanes E. Riyanto (Nanyang Technological University Singapore)
    Abstract: Politicians differ in their ability to implement some policy. In an election, candidates make commitments regarding the plans they will try to implement if elected. These serve as a signal of true ability. In equilibrium, candidates make overambitious promises. The candidate with the highest ability wins. Yet, the electorate may be better off having a random candidate implement her best plan, rather than seeing the winner implementing an overambitious plan. This is more likely if the ability distribution is skewed toward high values, the number of candidates is high, with private benefits from being elected, or if parties select candidates.
    Keywords: election promises; signalling
    JEL: D72
    Date: 2010–06–10
  10. By: Peichl, Andreas (IZA); Pestel, Nico (IZA); Siegloch, Sebastian (IZA)
    Abstract: Using a unique dataset of German members of parliament with information on total earnings including outside income, this paper analyzes the politicians’ wage gap (PWG). After controlling for observable characteristics as well as accounting for selection into politics, we find a positive PWG which is statistically and economically significant. It amounts to 40-60% compared to citizens with an executive position. Hence, we show that the widely held claim that politicians would earn more in the private sector is not confirmed by our data. Our findings are robust with respect to potential unobserved confounders. We further show that the PWG exceeds campaigning costs and cannot be justified by extraordinary workload. Hence, our results suggest that part of the PWG can be interpreted as rent extraction. This calls for a reform of the regulation of outside earnings, which account for a sizeable share of the wage premium.
    Keywords: politicians' wage gap, descriptive representation, citizen-candidate model, political rents, outside earnings
    JEL: D72 H11 H83 J31 J45
    Date: 2011–02
  11. By: Alexandra Gillies
    Abstract: The governments of resource rich states have several options for how to allocate oil and mineral revenues, including the direct distribution of revenues to their citizens. This paper discusses the political feasibility and political implications of such cash transfers in the specific context of resource-rich states. Identifying the contexts in which this policy is mostly likely to emerge, and understanding the potential governance risks and benefits, will help policymakers to consider the desirability of cash transfers as an allocation choice. Cash transfers could have positive political and governance effects, but they should not be taken for granted. Possible benefits include the creation of a constituency in favor of sound natural resource management, a more level playing field between the state and the citizens, the emergence of broad-based taxation and its positive accountability effects, and less of the principal-agent problems that currently keep resources from serving the public interest. These effects may not play out in all resource-rich states, as transfers coudl end up reflecting rather than reducing the extortion and rentierism that frequent these contexts. Careful country selection, strong understanding of the context, and politically aware program design could increase th elikelihood that cash transfers contribute to more favorable governance outcomes.
    Keywords: Direct Distribution
    Date: 2010–11
  12. By: Timothy Besley; Torsten Persson
    Abstract: It is widely recognized that fragile states are key symptoms of under-development inmany parts of the world. Such states are incapable of delivering basic services totheir citizens and political violence is commonplace. As of yet, mainstreamdevelopment economics has not dealt in any systematic way with such concerns andthe implications for development assistance. This paper puts forward a frame-workfor analyzing fragile states and applies it to a variety of development policies indifferent types of states.9076:
    Keywords: state fragility, development
    JEL: P45
    Date: 2011–01
  13. By: Massimo Bordignon (DISCE, Università Cattolica); Andrea Monticini (DISCE, Università Cattolica)
    Abstract: We employ bootstrap methods (Efron (1979)) to test the eect of an important electoral reform implemented in Italy from 1993 to 2001, that moved the system for electing the Par- liament from purely proportional to plurality rule (for 75% of the seats). We do not nd any eect on either the number of parties or the stability of governments (the two main objectives of the reform) that remained unchanged at their pre-reform level.
    Keywords: Electoral system; Plurality rule; Duverger's law; Bootstrap.
    JEL: H7
    Date: 2011–01

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