nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒06‒24
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Does Political Representation through Parties Decrease Voters' Acceptance of Decisions? By Emanuel Towfigh; Andreas Glöckner; Sebastian Goerg; Philip Leifeld; Carlos Kurschilgen; Aniol Llorente-Saguer; Sophie Bade
  2. Elections, Information, and State-Dependent Candidate Quality By Thomas Jensen
  3. Public Evaluation and Political Acceptance of Sustainable Land Use Polices: A populist democracy policy failure? By Henning, Christian H.C.A.; Zarnekow, Nana; Petri, Svetlana; Albrecht, Ernst; Hedtrich, Johannes
  4. Who’s Favored by Evaluative Voting ? An Experiment Conducted During the 2012 French Presidential Election. By Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
  5. Political Economy in a Changing World By Daron Acemoglu; Georgy Egorov; Konstantin Sonin
  6. A Quantile-based Test of Protection for Sale Model By Susumu Imai; Hajime Katayama; Kala Krishna
  7. What Is European Integration Really About? A Political Guide for Economists By Enrico Spolaore
  8. Why Do Members of Congress Support Agricultural Protection? By Bellemare, Marc F.; Carnes, Nicholas
  9. Moneycracy By Alessandro Fedele; Pierpaolo Giannoccolo
  10. Political Economy of Crop Insurance Risk Subsidies under Imperfect Information By Bulut, Harun; Collins, Keith J.
  11. Resource Rents, Institutions and Violent Civil Conflicts By Ibrahim Ahmed Elbadawi; Raimundo Soto
  12. Moonlighting Politicians: Motivation Matters! By Alessandro Fedele; Paolo Naticchioni
  13. Does globalization matter on fiscal decentralization of OECD? By Barbara ERMINI; Raffaella SANTOLINI
  14. Voting or Buying: Inconsistency in Preferences toward Food Safety in Restaurants By Alphonce, Roselyne; Alfnes, Frode; Sharma, Amit

  1. By: Emanuel Towfigh (Max Planck Institute for Research on Collective Goods, Bonn); Andreas Glöckner (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Philip Leifeld (University of Konstanz, Zukunftskolleg); Carlos Kurschilgen (Max Planck Institute for Research on Collective Goods, Bonn); Aniol Llorente-Saguer (Max Planck Institute for Research on Collective Goods, Bonn); Sophie Bade (Royal Holloway University of London, Department of Economics)
    Abstract: Are decisions by political parties more or less accepted than direct-democratic decisions? The literature on parties as brand names or labels suggests that the existence of political parties lowers information and transaction costs of voters by providing ideological packages. Building on this important argument, we posit that this informational rationale for parties is not universally applicable and is contingent on the context of the decision that is made. Intermediary political decision-making institutions may impose additional costs on voters in situations where the decision is perceived to be personally important to the individual voter. We conduct an experimental online vignette study to substantiate these claims. The results imply that a combination of representative democracy and direct democracy, conditional on the distribution of issue importance among the electorate, is optimal with regard to acceptance of a decision.
    Date: 2013–05
  2. By: Thomas Jensen (Department of Economics, University of Copenhagen)
    Abstract: The quality of political candidates often depends on the current state of the world, for example because their personal characteristics are more valuable in some situations than in others. We explore the implications of state-dependent candidate quality in a model of electoral competition where voters are uncertain about the state. Candidates are fully informed and completely office-motivated. With a reasonable restriction on voters' ?beliefs, an equilibrium where candidates' ?positions reveal the true state does not exist. Non-revealing equilibria always exist. Some main findings are that canddates' ?positions can diverge more in equilibrium when they differ more in state-dependent quality and when the electorate is less well informed.
    Keywords: Electoral competition; Candidate quality; Uncertainty; Information; Polarization
    JEL: D72
    Date: 2013–02–20
  3. By: Henning, Christian H.C.A.; Zarnekow, Nana; Petri, Svetlana; Albrecht, Ernst; Hedtrich, Johannes
    Abstract: This paper studies the ability of the political process to design public policies implying an eective and ecient provision of global and local environmental public goods. While it is commonly accepted that the market is unable to guarantee an ecient provision of public goods, such as environmental protection or food security, the question is if or under which condition political processes are ecient mechanisms of public good provision. Beyond policy failure due special interest politics policy failure also results from the fact that economic processes are often rather complex and hence laymen use simple mental models (political beliefs) to understand policy impacts. If political beliefs are biased political decisionmaking based on public opinion leads to rather inecient policies establishing the paradox of populist democracy policy failure. We use own choice experiment data on sustainable land use policy in Germany to estimate econometrically the WTP for relevant global and local environmental public goods as well as voters' political willingness-to-vote for specic land use policies. Based on these estimations we derive underlying political belief. Further, we assess to what extend a populist democracy policy failure results, i.e. to what extend policy choices driven by political beliefs imply inecient land use policies when compared to the counterfactual evidence-based policy choices driven by model-based technological relations.
    Keywords: Agricultural and Food Policy, Land Economics/Use, Political Economy,
    Date: 2013
  4. By: Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
    Abstract: Under evaluative voting, the voter freely grades each candidate on a numerical scale, with the winning candidate being determined by the sum of the grades they receive. This paper compares evaluative voting with the two-round system, reporting on an experiment which used various evaluation scales, conducted during the first round of the 2012 French presidential election. Invitations to participate in the study were extended to around 5,000 voters in three cities, and the experiment attracted 2,340 participants. Basing our argument on the ranks, relative scores, and grade profiles of candidates, we show that the two-round system favors “exclusive” candidates, that is candidates who elicit strong feelings, while evaluative rules favor “inclusive” candidates, that is candidates who attract the support of a large span of the electorate. These differences are explained by two complementary reasons: the opportunity for the voter to support several candidates under evaluative voting rules, and the specific pattern of strategic voting under the official, two-round voting rule.
    Keywords: Voting, In Situ Experiment, Evaluative Voting, Approval Voting, Two-round system.
    JEL: D72 C93
    Date: 2013
  5. By: Daron Acemoglu; Georgy Egorov; Konstantin Sonin
    Abstract: We provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on the Markov Voting Equilibria, which require that economic and political changes should take place if there exists a subset of players with the power to implement such changes and who will obtain higher expected discounted utility by doing so. Assuming that economic and political institutions as well as individual types can be ordered, and preferences and the distribution of political power satisfy natural “single crossing” (increasing differences) conditions, we prove the existence of a pure-strategy equilibrium, provide conditions for its uniqueness, and present a number of comparative static results that apply at this level of generality. We then use this framework to study the dynamics of political rights and repression in the presence of radical groups that can stochastically grab power. We characterize the conditions under which the presence of radicals leads to repression (of less radical groups), show a type of path dependence in politics resulting from radicals coming to power, and identify a novel strategic complementarity in repression.
    JEL: C71 D71 D74
    Date: 2013–06
  6. By: Susumu Imai (Economics Discipline Group, University of Technology, Sydney); Hajime Katayama (Waseda University); Kala Krishna (Pennsylvania State University and NBER)
    Abstract: This paper proposes a new test of the Protection for Sale (PFS) model by Grossman and Helpman (1994). Unlike existing methods in the literature, our approach does not require any data on political organization. We use quantile and IV quantile regressions to do so using the data from Gawande and Bandyopadhyay (2000). Surprisingly, the results do not provide any evidence favoring the PFS model. We also explain why previous work may have inadvertently found support for it.
    Keywords: Protection for Sale; Lobbying; Political Economy; Quantile Regression
    JEL: F13 F14
    Date: 2013–06–01
  7. By: Enrico Spolaore (Tufts University, NBER, CESIfo and CAGE)
    Abstract: Europe’s monetary union is part of a broader process of integration that started in the aftermath of World War II. In this “political guide for economists” we look at the creation of the euro within the bigger picture of European integration. How and why were European institutions established? What are the goals and determinants of European Integration? What is European integration really about? We address these questions from a political-economy perspective, building on ideas and results from the economic literature on the formation of states and political unions. Specifically, we look at the motivations, assumptions, and limitations of the European strategy, initiated by Jean Monnet and his collaborators, of partially integrating policy functions in a few areas, with the expectation that more integration will follow in other areas, in a sort of chain reaction towards an “ever-closer union.” The euro with its current problems is a child of that strategy and its limits.
    Date: 2013–06
  8. By: Bellemare, Marc F.; Carnes, Nicholas
    Abstract: It seems paradoxical that developed countries continue subsidizing agriculture even though their agricultural sectors have been declining in relative importance since the middle of the 20th century. What drives support for agricultural protection in developed countries? We answer this question by testing three competing hypotheses about what drives support for agricultural protection in the US: (i) legislator preferences, (ii) electoral incentives, or (iii) lobbying. Using data on the roll call votes of the members of the 106th through the 110th Congresses (1999-2009) and the scores given to each legislator by the Farm Bureau, our findings suggest electoral incentives explain a great deal of the variation in support for agricultural protection, but that legislator preferences and lobbying play a role, too. Moreover, legislator preferences and electoral incentives appear to be substitutes for one another. Why does Congress support agricultural protection? Because many members have electoral incentives to—and because many of those who do not still have other personal or strategic interests at stake.
    Keywords: Agricultural Policy, Agricultural Protection, Farm Bill, Congress, Voting, Lobbying
    JEL: D72 Q18
    Date: 2013–06–16
  9. By: Alessandro Fedele (Free University of Bolzano‐Bozen, School of Economics and Management.); Pierpaolo Giannoccolo (Dipartimento di Scienze Economiche, Università di Bologna)
    Abstract: How do wage and other financial benefits affect the set of candidates for political office? We answer the question by studying self-selection into politics of individuals with heterogeneous skills and heterogeneous motivations. Our predictions are in line with the efficiency wage results proposed by the extant literature when a benchmark model is considered with skills as the sole characteristic of individuals. Welfare is increasing in the politicians’ wage since the best, i.e., high-skilled, individuals are attracted to politics only if remuneration covers their high opportunity costs. Our findings are remarkably different when also motivation is taken into account. Welfare is not likely to be maximum when the politicians’ wage is maximum for individuals are attracted whose motivation is well fitted with the market rather than the public sector. Finally, we provide an overview of the labor market of politicians in some Western countries and suggest that the Italian case might be representative of our inefficiency wage mechanism, which we call moneycracy.
    Keywords: Keywords: Politicians’ remuneration, Skills, Motivation, Moneycracy
    JEL: P16 J45 J24 J32
    Date: 2013–06
  10. By: Bulut, Harun; Collins, Keith J.
    Abstract: We consider a political economy where government cares about risk-averse farmers’ loss of income and yet incurs political cost if it provides monetary support to farmers. Government evaluates three options: 1) ex-post disaster aid; 2) ex-ante insurance option with perfect information; 3) ex-ante insurance with imperfect information (farmers are over-confident about their risk). It is assumed that marginal political cost is high enough so that the possibility of monetary support to farmers in the absence of economic loss is ruled out. In comparing 1) and 2), we find that government prefers farmers manage their risks through fairly priced insurance In comparing 1) and 3), if the information problems prevent risk-averse farmers to take up full insurance under actuarially fair rates, government prefers to subsidize farmers’ insurance ex-ante rather than providing disaster aid ex-post (subject to political cost) for a wide range of parameter values.
    Keywords: Agricultural risk, crop insurance, disaster assistance, Agribusiness, Crop Production/Industries, Political Economy, Risk and Uncertainty, D81, G22, Q12, Q18,
    Date: 2013–06–06
  11. By: Ibrahim Ahmed Elbadawi; Raimundo Soto
    Abstract: Natural resources have been blamed for inducing slow growth and sparking civil conflicts and violence. This paper first develops a model to account for the hazard of armed civil conflicts as a manifestation of the natural resource curse which is mediated by the quality of both economic and political institutions. We then use recently published data on institutional quality and natural resource rents to measure the potential impact of the resource curse on violent civil conflicts using a panel of data for over 100 countries in the period 1970O2010. Our model explicitly accounts for the role of good economic and political institutions in deterring the recourse to violence as well as the extent to which they might weaken the resource rents effect.
    Keywords: oil and natural resource curse, armed civil conflict, economic growth, democracy, political checks and balances
    JEL: Q34 Q38 E02
    Date: 2013
  12. By: Alessandro Fedele (Free University of Bolzano‐Bozen, School of Economics and Management.); Paolo Naticchioni (University of Cassino and Southern Lazio)
    Abstract: In this paper we study optimal choices of self-selection into politics and commitment once in office of citizens with heterogeneous ability and heterogeneous motivation. Politicians can moonlight, i.e., they can work in the market sector while appointed in parliament. Our theoretical framework shows that high-ability citizens might enter politics. Yet while high-ability non-motivated (market-fit) politicians are likely to shirk, high-ability motivated (public-fit) ones are more committed to the parliamentary activity. We test our predictions by using a unique database of Italian parliamentarians for the period 1996-2006. We show that both market-fit and public-fit parliamentarians are positively selected from the Italian population. We also find that commitment of the market-fit parliamentarians in terms of voting attendance is negatively affected by income opportunities, whilst this is not the case for public-fit ones.
    Keywords: Keywords: Moonlighting Politicians, Motivation
    JEL: P16 J45 J24 J32
    Date: 2013–06
  13. By: Barbara ERMINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Raffaella SANTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: In this paper we re-examine the effects of globalization on fiscal decentralization of OECD by using the overall KOF index of globalization and its main subcomponents - economic, political and social integration. Using different indicators of fiscal decentralization, we find a positive impact of the overall index of globalization on both revenue and expenditure decentralization side, although not robust across different panel data specifications. Focusing on the links between decentralization and different aspects of globalization, we find that both economic and social integration foster fiscal decentralization, whereas political integration checks growth of it.
    Keywords: Economic integration, Fiscal decentralization, Globalization, Panel data analysis, Political integration, Social integration
    JEL: F15 F5 H7 H87
    Date: 2013–06
  14. By: Alphonce, Roselyne; Alfnes, Frode; Sharma, Amit
    Abstract: Consumers sometimes prefer stricter food regulations as voters than as consumers. A prime example is that battery-cage eggs were the most sold types of eggs in California in 2008 when 63% of voters supported the animal welfare proposition forbidding battery-cage eggs starting from from 2015. In this paper, we investigate whether a similar consumer-citizen duality might exist in willingness to pay for food safety standards in restaurants. Using a split sample willingness to pay survey we find that consumers have a higher willingness to pay for improved restaurant food safety standards when voting than when acting as consumers. The results are discussed in the light of the literature on trust, social choice and public choice theory.
    Keywords: Consumer-Citizen Duality, WTP, Food-Safety in Restaurants, United States, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2013

This nep-pol issue is ©2013 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.