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on Positive Political Economics |
| By: | Rogers, Todd T |
| Abstract: | How accurate are people when predicting whether they will vote? These self-predictions are used by political scientists to proxy for political motivation, and by public opinion researcher to predict election outcomes. Phone surveys from three elections, including one survey experiment, are analyzed to compare respondents’ pre-election vote intention with their actual voting behavior using administrative records (N=29,403). Unsurprisingly, many who predict that they will vote actually do not vote. More surprisingly, many who predict that they will not vote actually do vote (29% to 56%). Records of past voting behavior predicts turnout substantially better than self-prediction. Self-prediction inaccuracy is not caused by lack of cognitive salience of past voting, or by inability to recall past voting. Moreover, self-reported recall of turnout in one past election predicts future turnout just as well as self-prediction. We discuss implications for political science research, behavioral prediction, election administration policy, and public opinion. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:7779639&r=pol |
| By: | Russo, Antonio |
| Abstract: | We study the political economy of urban traffic policy. We consider a city and its suburbs. The city decides, by majority voting, on a parking charge in the Central Business District (CBD) and restrictions on road space dedicated to cars. City and suburbs vote on road pricing in the CBD. Results include the following. When the majority of city voters prefers cars to public transport sufficiently more than the average voter, car charges and space restrictions are smaller than optimal. If the suburbs' voters have stronger preferences for cars than the city's, road pricing has the lowest political support among the instruments we consider. Tax exporting and imperfect government coordination may inflate total charges. This is welfare enhancing if it compensates for voters' opposition to car restraining policies. Earmarking charge revenues for public transport is welfare enhancing only if they are topped up by extra funds from a national government. |
| Keywords: | Road pricing; parking charges; majority voting; multiple government |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25844&r=pol |
| By: | Tetsuo Ono (Graduate School of Economics, Osaka University) |
| Abstract: | This paper analyzes the political economy of public education and redistribution in an overlapping-generation model of a two-class society in which growth is driven by the accumulation of human capital. The levels of public education and lump- sum financial transfers are determined by voting, while private education which supplements public education is purchased individually. The model, which includes two-dimensional voting, demonstrates multiple steady-state political equilibria. One is an equilibrium with a high share of public education in government expenditure; the other is an equilibrium with a high share of lump-sum transfers. Numerical analysis shows empirically plausible result of growth, inequality and the composition of redistributive expenditures. |
| Keywords: | Education, political economy, inequality, growth |
| JEL: | D72 D91 I24 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1209&r=pol |
| By: | Martinez-Bravo, Monica; Padro, Gerard; Qian, Nancy; Yao, Yang |
| Abstract: | This study investigates the effects of introducing elections on public goods and redistribution in rural China. We collect a large and unique survey to document the history of political reforms and economic policies and exploit the staggered timing of the introduction of elections for causal identification. We find that elections significantly increase public goods expenditure, the increase corresponds to demand and is paralleled by an increase in public goods provision and local taxes. We also find that elections cause significant income redistribution within villages. The results support the basic assumptions of recent theories of democratization (Acemoglu and Robinson, 2000; Lizzeri and Persico, 2004). In addition, we show that the main mechanism underlying the effect of elections is increased leader incentives. |
| Keywords: | Democracy; Elections; Institutions |
| JEL: | P16 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8975&r=pol |
| By: | Saint-Paul, Gilles; Ticchi, Davide; Vindigni, Andrea |
| Abstract: | We develop a theory of endogenous political entrenchment in a simple two-party dynamic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchmen by the Left occurs only if incumbency rents are sufficiently high and that low-skill citizens may vote for this party even though they rationally expect the adoption of these policies. We also discuss the case where the left-wing party may have the incentive to ex-ante commit to not pursue entrenchment policies once in power. Finally, we show that, in a more general framework, the entrenchment policies can be implemented also by the right-wing party. The comparative statics analyzes the effects of state capacity, a positive bias of voters for one party and income inequality on the incentives of the incumbent party to pursue entrenchment policies. The importance of our theory for constitutionally legislated term limits is also discussed. The theory sheds light on why left-wing parties or politicians often support liberal immigration policies of unskilled workers, are sometime in favor of free trade with less developed economies and of globalization more generally, or fail to reform plainly |
| Keywords: | checks and balances; constituencies; inefficient redistribution; inequality; political entrenchment; political rents; state fiscal capacity |
| JEL: | D72 P16 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8960&r=pol |
| By: | Matthias Dahm (Department d'Economia and CREIP, Universitat Rovira i Virgili); Amihai Glazer (Department of Economics, University of California-Irvine) |
| Abstract: | This paper addresses the puzzle of why redistributive legislation, which benefits a small minority, may pass with overwhelming majorities. It models a legislature in which the same agenda setter serves for two periods, showing how he can exploit a legislature (completely) in the first period by promising future benefits to legislators who support him. In equilibrium, a large majority of legislators vote for the first-period proposal because they thereby maintain the chance of belonging to the minimum winning coalition in the future. Legislators may therefore approve policies by large majorities, or even unanimously, that benefit few, or even none, of them. The results are robust: some institutional arrangements, such as super-majority rules or sequential voting, limit but do not eliminate the agenda setter's power to exploit the legislature; other institutions such as secret voting do not limit his power. |
| Keywords: | Agenda Setting; Legislation; Voting |
| JEL: | D72 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:111211&r=pol |
| By: | Renaud Coulomb (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Marc Sangnier (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper analyzes the impact of changes in the winning chances of candidates running for the 2007 French presidential election on abnormal stock returns of firms that could benefit from a candidate's victory. We use prices formed by transactions on a political prediction market to reveal the probabilities of victory of S. Royal and N. Sarkozy. We find that changes in S. Royal's probability of victory have no impact on firms that should benefit from her party platform. On the opposite, abnormal returns of firms that should benefit from reforms announced by N. Sarkozy or that are directed or owned by his friends are positively correlated with changes in his probability of victory. Both effects appear to be independent and the network effect is fifty percents larger than the other one. All these results persist when we take into account specific characteristics of firms. |
| Keywords: | Political Majority ; Prediction Markets ; Firms Value ; Abnormal Returns ; Social Network ; Political Connections |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00671405&r=pol |
| By: | Quoc-Anh Do (School of Economics, Singapore Management University); Yen-Teik Lee (Department of Finance, Lee Kong Chian School of Business, Singapore Management University); Bang Dang Nguyen (Finance and Accounting Group, Judge Business School, University of Cambridge); Kieu-Trang Nguyen (SPEA, Indiana University) |
| Abstract: | This paper investigates the impact of social-network based political connections on firm value. We focus on the networks of university classmates and alumni among directors of U.S. public firms and congressmen. Comparing firms connected to elected versus defeated politicians in the Regression Discontinuity Design of close elections from 2000 to 2008, we provide evidence that political connections enhance firm value. However, the value of political connections varies in a more complex way than expected. While connections to powerful members of the Senate generate strong positive impact on firm value, connections to newly elected congressmen are less valuable to firms than connections to state-level politicians defeated in those elections. As a result, a director’s connection to an elected congressman causes a Weighted Average Treatment Effect on Cumulative Abnormal Returns of -2.65% surrounding the election date. Our results are robust and consistent through various specifications, parametric and nonparametric, with different outcome measures and social network definitions, and across many subsamples. Overall, our study identifies the value of political connections through social networks, uncovers its variation across different politicians’ backgrounds, and stresses the importance of state-level political connections. |
| Keywords: | Corruption; Accountability; Population Concentration; Capital Cities; US State Politics; Media; Turnout; Campaign Contributions; Public Good Provision |
| JEL: | D72 D73 L82 R12 R50 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:22-2012&r=pol |
| By: | E Bracco |
| Abstract: | This paper proposes a theory of socially optimal districting in a legislative-election model with endogenous party platforms. We generalize the model of Coate and Knight (2007), allowing parties to strategically condition their platforms on the districting. The socially optimal districting re ects the ideological leaning of the population, so that parties internalize voters' preferences in their policy platforms. The optimal seat-vote curve is unbiased when voters are risk-neutral, and -contrary to previous findings-biased against the largest partisan group when voters are risk-averse. The model is then calibrated by an econometric analysis of the elections of U.S. State legislators during the 1990s. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:1794&r=pol |
| By: | Chor, Davin; Campante, Filipe Robin |
| Abstract: | We examine several hypotheses regarding the determinants and implications of political protest, motivated by the wave of popular uprisings in Arab countries starting in late 2010. While the popular narrative has emphasized the role of a youthful demography and political repression, we draw attention back to one of the most fundamental correlates of political activity identified in the literature, namely education. Using a combination of individual-level micro data and cross-country macro data, we highlight how rising levels of education coupled with economic under-performance jointly provide a strong explanation for participation in protest modes of political activity as well as incumbent turnover. Political protests are thus more likely when an increasingly educated populace does not have commensurate economic gains. We also find that the implied political instability is associated with heightened pressures towards democratization. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:4876868&r=pol |
| By: | Martin Halla; Alexander F. Wagner; Josef Zweimüller |
| Abstract: | This paper explores one potentially important channel through which immigration may drive support for extreme right-wing parties: the presence of immigrants in one’s neighborhood. We study the case of the Freedom Party of Austria (FPÖ). Under the leadership of Jörg Haider, this party increased its share of votes from less than 5 percent in the early 1980s to 27 percent by the year 1999. Using past regional settlement patterns as a source of exogenous variation, we find a significantly positive effect of the residential proximity of immigrants on FPÖ votes, explaining roughly a quarter of the cross-community variance in FPÖ votes. It is the presence of low- and medium-skilled immigrants that drives this result; high-skilled immigrants have no (or even a negative) effect on FPÖ votes. |
| Keywords: | Immigration, political economy, voting |
| JEL: | P16 J61 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2012_05&r=pol |
| By: | Santiago Sanchez-Pages (University of Edinburgh); Marco Faravelli (School of Economics, University of Queensland, Australia) |
| Abstract: | Proponents of proportional electoral rules often argue that majority rule depresses turnout and may lower welfare due to the ?tyranny of the majority? problem. The present paper studies the impact of electoral rules on turnout and social welfare. We analyze a model of instrumental voting where citizens have private information over their individual cost of voting and over the alternative they prefer. The electoral rule used to select the winning alternative is a combination of majority rule and proportional rule. Results show that these two arguments against majority rule do not hold in this set up. Social welfare and turnout increase with the weight that the electoral rule gives to majority rule when the electorate is expected to be split, and they are independent of the electoral rule employed when the expected size of the minority group tends to zero. However, more proportional rules can increase participation within the minority group. This effect is stronger the smaller the minority group. We then conclude that majority rule fosters overall turnout and increases social welfare, whereas proportional rule fosters the participation of minority groups. |
| Keywords: | Costly voting, Incomplete information, Majority rule, Proportional rule, Turnout. |
| Date: | 2012–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:213&r=pol |
| By: | Andrews, Kenneth T.; Ganz, Marshall Louis; Baggetta, Matthew; Han, Hahrie |
| Abstract: | Member-based civic associations, or citizen groups, have two crucial roles in American democracy. They advocate for members' interests in the public arena, but also operate as Tocquevillian “schools of democracy†linking citizens to politics and equipping them with the skills of democratic citizenship. Yet scant research has examined the interrelationships of these two roles. Does the work that civic associations do in developing democratic participants enhance the work they do advocating for members' interests in the public arena? We bring together two previously disparate strands of research on civic associations by arguing that a key factor affecting the political presence of civic associations is leadership quality. We focus on the relationship of leadership quality to political presence, using data from a unique 2003 study of 226 local entities of the Sierra Club. We show that organizations with more skilled and committed leaders have higher levels of political presence. This contrasts with previous research that has focused primarily on community context and resources as explanatory factors. This study shows that political presence is related to the extent to which leaders develop their skills and demonstrate commitment to the organization. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:8065967&r=pol |
| By: | Filipe R. Campante (Harvard Kennedy School, Harvard University); Quoc-Anh Do (School of Economics, Singapore Management University) |
| Abstract: | We show that isolated capital cities are robustly associated with greater levels of corruption across US states. In particular, this is the case when we use the variation induced by the exogenous location of a state’s centroid to instrument for the concentration of population around the capital city. We then show that different mechanisms for holding state politicians accountable are also affected by the spatial distribution of population: newspapers provide greater coverage of state politics when their audiences are more concentrated around the capital, and voter turnout in state elections is greater in places that are closer to the capital. Consistent with lower accountability, there is also evidence that there is more money in state-level political campaigns in those states with isolated capitals. We find that the role of media accountability helps explain the connection between isolated capitals and corruption. In addition, we provide some evidence that this pattern is also associated with lower levels of public good spending and outcomes. |
| Keywords: | Corruption; Accountability; Population Concentration; Capital Cities; US State Politics; Media; Turnout; Campaign Contributions; Public Good Provision |
| JEL: | D72 D73 L82 R12 R50 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:21-2012&r=pol |
| By: | Kwiek, Maksymilian |
| Abstract: | A committee is choosing from two alternatives. If required supermajority is not reached, voting is repeated indefinitely, although there is a cost of delay. Under suitable assumptions the equilibrium analysis provides a sharp prediction. The result can be interpreted as a generalization of the seminal median voter theorem known from the simple majority case. If supermajority is required instead, then the power to select the outcome moves from the median voter to the more extreme voters. Normative analysis indicates that the simple majority is not constrained efficient because it does not reflect the strengths of voters' opinion. Even if unanimity is a bad voting rule, voting rules close to unanimity may be efficient. The more likely it is to have a very many almost indifferent voters and some very opinionated ones, the more stringent supermajority is required for efficiency |
| Date: | 2012–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:stn:sotoec:1110&r=pol |
| By: | Papaioannou, Jason; van Zanden, Jan Luiten |
| Abstract: | This paper contributes to the growing literature on the links between political regimes and economic development by studying the effects of years in office on economic development. The hypothesis is that dictators who stay in office for a long time period will become increasingly corrupt, and that their poor governance will impact on economic growth (which is reduced), inflation (which increases) and the quality of institutions (which deteriorates). This may be related to the fact that their time horizon is shrinking: they develop (in the terminology developed by Olson) from ‘stationary bandits’ into ‘roving bandits’. Or they may get caught into a ‘disinformation trap’, caused by the ‘dictator dilemma’. We test these hypotheses and indeed find strong evidence for the existence of a dictator effect: the length of the rule is negatively related to economic growth and the quality of democratic institutions, and positively related to inflation. This effect is particularly strong in young states and in ‘single-party’ regimes. The negative effect of years in office was almost constant in time and did not disappear after about 1992. |
| Keywords: | Africa; dictatorships; economic growth; political institutions |
| JEL: | H7 O2 O55 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8962&r=pol |
| By: | Baum, Matthew A. |
| Abstract: | This study assesses the relationship between political partisanship and attitudes and behavior with respect to the Swine Flu crisis of 2009 in general, and the U.S. mass vaccination program in particular. I argue that even seemingly non-partisan political issues like public health are increasingly characterized by partisan polarization in public attitudes, and that such polarization is in part attributable, at least in part, to the breakdown of the information commons that characterized the American mass media from roughly the 1950s until the early 1990s. In its place has arisen an increasingly fragmented and niche-oriented media marketplace in which individuals are better able to limit their information exposure to attitudes and opinions that reinforce, rather than challenge, their preexisting beliefs. I test my argument against a variety of data sources, including opinion surveys and state level Swine Flu vaccination rate data. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:4696292&r=pol |
| By: | Berggren , Niclas (The Research Institute of Industrial Economics (IFN)); Nilsson, Therese (Department of Economics, Lund University) |
| Abstract: | Tolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We add to the literature by investigating whether the degree to which economic institutions and policies are market-oriented is related to different measures of tolerance. Regression analysis of up to 65 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. We furthermore find indications of a causal relationship and of social trust playing a role as a mechanism in the relationship between economic freedom and tolerance and as an important catalyst: the more trust in society, the more positive the effect of economic freedom on tolerance. |
| Keywords: | Markets; Economic freedom; Tolerance; Government; Institutions; Regulation |
| JEL: | P10 P48 Z13 |
| Date: | 2012–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2012_010&r=pol |
| By: | Beja Jr., Edsel L. |
| Abstract: | How SWB affects individual states, outcomes, or decisions is well established in the literature, but how it affects macroeconomic states, outcomes, or decisions remains an open empirical question. This paper focuses on the public policy issue of economic progress defined as either rapid economic growth or stable economy. Results indicate a negative relationship between high SWB and choice for rapid economic growth or stable economy. This conclusion holds for people in the upper-income and middle-income countries, but not so for people in the low-income countries. In fact, results suggest that people in the low-income countries attend less to either rapid economic growth or stable economy regardless of their SWB. |
| Keywords: | Happiness; subjective well-being; economic policy |
| JEL: | D70 I31 B50 D00 E60 |
| Date: | 2012–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38851&r=pol |