nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒05‒24
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Sitting on the fence: Pork-barrels and democratization under threat of conflict. The case of Ghana, 1996 - 2004 By Pierre André; Sandrine Mesplé-Somps
  2. Political connections and depositor discipline By Disli, Mustafa; Schoors , Koen; Meir, Jos
  3. The Impact of Ideology in the Voting Decision Making Process By Jordana Costa; Ana Côrte-Real
  4. What Determines State Capture in Poland? By Alwasiak , Stanislaw; Lewandowska-Kalina, Monika; Kalina, Lech; Kowalewski, Oskar; Mozdzen, Michal; Rybinski, Krzysztof
  5. Freezeout, Compensation Rules and Voting Equilibria By Christian At; Sylvain Béal; Pierre-Henri Morand
  6. Municipal Consolidation and Local Government Behavior: Evidence from Japanese Voting Data on Merger Referenda By Miyazaki, Takeshi
  7. Does Having a Female Sarpanch Promote Service Delivery for Women and Democratic Participation of Women? Evidence from Maharashtra, India By Dhanmanjiri Sathe; Stephan Klasen; Jan Priebe; Mithila Biniwale
  8. Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning By Florian Hoffmann; Roman Inderst; Marco Ottaviani
  9. How Experts Decide: Preferences or Private Assessments on a Monetary Policy Committee?* By Stephen Hansen; Carlos Velasco Rivera; Michael McMahon
  10. Education, race and revealed attitudes towards homosexual couples By Leguizamon, Sebastian; Leguizamon, Susane; Christafore, David
  11. The Condorcet paradox revisited By Herings P.J.J.; Houba H
  12. On the Role of Democracy in the Ethnicity-Growth Relationship: Theory and Evidence By Sugata Ghosh; Andros Gregoriou; Anirban Mitra

  1. By: Pierre André; Sandrine Mesplé-Somps (THEMA, Universite de Cergy-Pontoise; Institut de Recherche pour le Développement (IRD))
    Abstract: This paper studies political competition in the case of a democratization process. We present an illustrative model describing political competition when the opposition threatens the stability of the country. In some cases, our model predicts the government should invest in opposition districts to avoid political agitation. This contrasts with existing literature on established democracies, where public funds usually target ruling party supporters or electorally tight districts. We empirically observe the first democratic changeover in Ghana in 2000. Implementing a diff-in-diff strategy, we find that districts with a leading political party member appear to receive slightly more public funds when their party is not in charge. This phenomenon is found in urban areas and in areas that vote the most for this leading member’s party. Hence it occurs in places with the potential for political agitation.
    Keywords: Public goods, Elections, Politics, Ghana.
    JEL: D72 O55 R53
    Date: 2013
  2. By: Disli, Mustafa (BOFIT); Schoors , Koen (BOFIT); Meir, Jos (BOFIT)
    Abstract: We examine the effects of political connections on depositor discipline in a sample of Turkish banks. Banks with former members of parliament at the helm enjoy reduced depositor discipline, especially if the former politician’s party is currently in power – less so if the former politician served as a minister. Banks with structural problems are more likely to appoint former politicians, but our results remain robust after controlling for selection effects. Ministers may reduce depositor discipline less because they signal severe problems and because the additional government deposits they bring to the bank during their term tend to leave with them.
    Keywords: depositor discipline; political connections; banks
    JEL: D70 G10 G21
    Date: 2013–04–23
  3. By: Jordana Costa (Universidade do Porto); Ana Côrte-Real (Faculdade de Economia e Gestão, Universidade Católica Portuguesa - Porto)
    Abstract: The purpose of this research is to better understand the importance of ideology for the Portuguese voter, in particular its impact on the voting decision making process. The importance of such a study is due to a common understanding, between Political Marketing and Communication scholars, that the ideology is being replaced by other more important features, such as political brand, among others. The objective was, therefore, to understand what is the voters point of view on the subject, most importantly, to pinpoint the actual relevance of ideology from the voters’ perspective when they cast a political vote. Being that it was necessary to inquiry the voters themselves, quantitative methodology was used, in the form of a questionnaire. The research has shown that, contrary to the widespread trend between academics, the voters consider, still, the ideology as a highly important feature for them to undertake a voting decision. This study can be of benefit to political Marketers, so that used techniques can be enhanced and methods devised, in order to not only gain political campaigns but, and more importantly, the voters’ loyalty.
    Keywords: Ideology; Voting Decision Making Process; Political Marketing; Political Product.
    Date: 2013–05
  4. By: Alwasiak , Stanislaw; Lewandowska-Kalina, Monika; Kalina, Lech; Kowalewski, Oskar; Mozdzen, Michal; Rybinski, Krzysztof
    Abstract: In this paper we examine the determinants of ex-ante state capture analyzing all the legal acts that have been passed in the period 1990-2011 in Poland. We find that during this the majority of legal acts were passed with the aim to satisfy the interest of particular groups. Furthermore, the regression analysis shows that the likelihood of state capture increases during the period of economic growth and local elections. The likelihood of state capture, however, declines during presidential elections. The results we attribute to different interests of political parties in the period of local and presidential election. Finally, we find that the state capture increased over the years in Poland. Additionally, we show that the EU accession did not prevent state capture in Poland. In contrast, the financial crisis of 2007 resulted in a wake-up effect and the likelihood of state capture declined in Poland.
    Keywords: law, corruption, state capture, public interest, transition country, Poland
    JEL: H40 H41 H62 K42 P37
    Date: 2013–02–28
  5. By: Christian At (CRESE, Université de Franche-comté); Sylvain Béal (CRESE, Université de Franche-Comté); Pierre-Henri Morand (Université d'Avignon et des pays de Vaucluse)
    Abstract: A single proposer has the opportunity to generate a surplus by taking the assets of a group of individuals. These individuals are called upon to vote for accepting or rejecting the monetary offer made to them by the proposer, who needs the agreement of a qualified majority. The voters who rejected the offer while the qualified majority is met are frozen out but they can claim a compensation in exchange for their asset. This article analyses how compensation rules influence both the votes and the offer made by the proposer. We find that unanimity rule or compensation equals to the proposal or voters' initial wealth maximize the expected social surplus that entirely accrues to the proposer. We show that increasing the offer does not always increase the probability of acceptance, in sharp contrast to many close models. We identify the optimal offer when the compensation does not depend on the proposal. Increasing the compensation always reduces the expected social surplus and the expected profit of the proposer, but does not always benefit to the voters. Reinforcing the qualified majority always increases the expected profit of the proposer, and can decrease both the expected social surplus and the expected utility of the voters. When the compensation is based on the proposal we find that the success or the failure of the proposition depends crucially of the compensation's shape.
    Keywords: Voting games, Compensations, Fairness, Freezeout, Regulatory takings, Debt restructuring
    JEL: D72 K2
    Date: 2013–05
  6. By: Miyazaki, Takeshi
    Abstract: The empirical literature investigating the role of key features of local governments regarding decisions on consolidation tends to use a dummy that takes 1 if adjacent local governments decide to merge. Under the estimation method, it is difficult to identify which governments have no incentive to merge. The current study presents an empirical test of decision on consolidation using voting data from Japanese local referenda that distinctively identify the preferences of specific individual municipalities. I find evidence that municipalities that could enjoy large economies of scale from a merger prefer consolidation, and large and small municipalities are likely to merge.
    Keywords: Boundary reform, economics of scale, local referenda, median voter model, municipal consolidation
    JEL: H11 H76 H77
    Date: 2013–05
  7. By: Dhanmanjiri Sathe (University of Pune); Stephan Klasen (Georg-August-University Göttingen); Jan Priebe; Mithila Biniwale
    Abstract: In this paper we examine the impact of mandated reservations for female sarpanchs in the gram panchayats on perceptions of service delivery and women’s democratic participation. Using survey data from the Sangli district, Maharashtra, we find that the availability of basic, public services is significantly higher in female sarpanch villages as compared to the male sarpanch villages, when the elections have been held three to 3 1/2 years before the survey; while service delivery in villages with more recently elected female sarpanchs is worse. Further, the reservations have a significant, positive impact on the democratic participation of the women in the female sarpanch villages, again driven by the impact of female sarpanchs elected 3 ½ years before the survey. The democratic participation of women, in turn, affects the availability of services very robustly. The findings suggest that the positive effects in terms of service delivery and democratic participation will take some time to materialize.
    Keywords: Mandated reservations; Service delivery; political participation
    Date: 2013–04–11
  8. By: Florian Hoffmann; Roman Inderst; Marco Ottaviani
    Abstract: Using personal data collected on the internet, fi?rms and political campaigners are able to tailor their communication to the preferences and orientations of individual consumers and voters, a practice known as hypertargeting. This paper models hypertargeting as selective disclosure of information to an audience with limited attention. We characterize the private incentives and the welfare impact of hypertargeting depending on the wariness of the audience, on the intensity of competition, and on the feasibility of price discrimination. We show that policy intervention that bans the collection of personally identi?able data (for example, through stricter privacy laws requiring user consent) is bene?ficial when consumers are naive, competition is limited, and fi?rms are able to price discriminate. Otherwise, privacy regulation often back?fires. Keywords: Hypertargeting, selective disclosure, limited attention, consumer privacy regulation, personalized pricing, competition. JEL Classi?fication: D83 (Search; Learning; Information and Knowledge; Communication; Belief), M31 (Marketing), M38 (Government Policy and Regulation).
    Date: 2013
  9. By: Stephen Hansen; Carlos Velasco Rivera; Michael McMahon
    Abstract: Using voting data from the Bank of England, we show that different individual assessments of the economy strongly influence votes after controlling for individual policy preferences. We estimate that internal members form more precise assessments than externals and are also more hawkish, though preference differences are very small if members vote strategically. Counterfactual analysis shows that committees add value through aggregating private assessments, but that gains to larger committees taper off quickly beyond five members. There is no evidence that externals add value through preference moderation. Since their assessments also have lower precision, mixed committees may not be optimal.
    Keywords: Committees, Monetary policy
    JEL: E52 E58 D78
    Date: 2013–04
  10. By: Leguizamon, Sebastian; Leguizamon, Susane; Christafore, David
    Abstract: We examine the varying influence of the presence of homosexual couples on average home prices with different compositions of educational attainment and race. We find that a higher number of homosexuals in relatively higher educated areas is associated with higher average prices and lower average prices in areas with less educated residents. The magnitude of positive influence and negative influence is lower when the number of black residents increases. This suggests that education is associated with a greater revealed tolerance for homosexuals, but the influence of education is less for areas with a higher percent black, perhaps due to homophily.
    Keywords: Sexual Orientation; Homophily; Race; Education; Prejudice
    JEL: J15 R21
    Date: 2013–05–17
  11. By: Herings P.J.J.; Houba H (GSBE)
    Abstract: We analyze the Condorcet paradox within a strategic bargaining model with majority voting, exogenous recognition probabilities, and no discounting. Stationary subgame perfect equilibria (SSPE) exist whenever the geometric mean of the players' risk coefficients, ratios of utility differences between alternatives, is at most one. SSPEs ensure agreement within finite expected time. For generic parameter values, SSPEs are unique and exclude Condorcet cycles. In an SSPE, at least two players propose their best alternative and at most one player proposes his middle alternative with positive probability. Players never reject best alternatives, may reject middle alternatives with positive probability, and reject worst alternatives. Recognition probabilities represent bargaining power and drive expected delay. Irrespective of utilities, no delay occurs for suitable distributions of bargaining power, whereas expected delay goes to infinity in the limit where one player holds all bargaining power. Contrary to the case with unanimous approval, a player benefits from an increase in his risk aversion.
    Keywords: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games;
    Date: 2013
  12. By: Sugata Ghosh; Andros Gregoriou; Anirban Mitra
    Abstract: We study the relationship between ethnic diversity and economic performance and, in particular, focus on economic growth under democracy and dictatorship. We build a theory which emphasizes the public spending channel, and show that the relationship between public spending and ethnic diversity is qualitatively different under the two regimes. Our model also delivers that if the dictator is sufficiently corrupt, then growth is bound to be higher under a democracy irrespective of the degree of ethnicity. We then consider a panel of the most and least ethnically diverse nations and address potential endogeneity problems. Our empirical results robustly show that democracy has a significantly positive effect on growth, irrespective of the degree of ethnicity. We also show that the marginal effect of ethnicity on growth in the presence of democracy is always positive, irrespective of the type of estimator used. Finally, we establish that the negative marginal impact of increases in ethnicity can always be overcome by democracy.
    Date: 2013–03

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