nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒09‒06
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Competition, Political Donations, Economic Policy and Growth By John Maloney; Andrew Pickering
  2. Moderating Political Extremism: Single Round vs Runoff Elections under Plurality Rule By Bordignon, Massimo; Nannicini, Tommaso; Tabellini, Guido
  3. Organizing for prosperity : collective action, political parties and the political economy of development By Keefer, Philip
  4. Tax Limits and Local Democracy By Revelli, Federico
  5. Do Institutions Affect Social Preferences? Evidence from Divided Korea By Kim, Byung-Yeon; Choi, Syngjoo; Lee, Jungmin; Lee, Sokbae; Choi, Kyunghui
  6. The bidding paradox: why rational politicians still want to bid for mega sports events By Michiel de Nooij; Marcel van den Berg
  7. The curse of uninformed voting: An experimental study By Jens Großer; Michael Seebauer
  8. Making Friends to Influence Others: The Effect of Corruption onthe Creation, Allocation and Impacts of Social Capital By Gregmar Galinato; Hayley Chouinard; Phil Wandschneider
  9. A political theory of Russian orthodoxy: Evidence from public goods experiments By Grigoriadis, Theocharis

  1. By: John Maloney; Andrew Pickering
    Abstract: Greater political competition reduces the extent of rent-seeking or resource diversion by politicians in government. However, the potency of this effect depends on whether or not there are limits on donations to candidates standing for election, and on the objectives of donors themselves. Data from the US states suggest that the corruption-political competition gradient is stronger under laissez-faire regimes. Consistent with our notion of 'weakly benign' donors, limits are associated with better policies and stronger growth performance at low levels of political competition, whilst laissez-faire is preferred when political competition is high.
    Keywords: political competition, political donations, rent-seeking, economic policy, growth
    JEL: D72 H11 H70
    Date: 2013–08
  2. By: Bordignon, Massimo (Università Cattolica del Sacro Cuore); Nannicini, Tommaso (Bocconi University); Tabellini, Guido (Bocconi University)
    Abstract: We compare single round vs runoff elections under plurality rule, allowing for partly endogenous party formation. Under runoff elections, the number of political candidates is larger, but the influence of extremist voters on equilibrium policy and hence policy volatility are smaller, because the bargaining power of the political extremes is reduced compared to single round elections. The predictions on the number of candidates and on policy volatility are confirmed by evidence from a regression discontinuity design in Italy, where cities above 15,000 inhabitants elect the mayor with a runoff system, while those below hold single round elections.
    Keywords: electoral rules, policy volatility, regression discontinuity design
    JEL: H72 D72 C14
    Date: 2013–08
  3. By: Keefer, Philip
    Abstract: The ability of citizens to act collectively plays a central role in major debates in the political economy of development, including the causes and consequences of democratization and clientelism. This essay uses two lines of research to underscore the importance of explicitly introducing the organization of collective action into these debates. Exhaustive research on the management of open access resources demonstrates that citizens'ability to act collectively depends on non-trivial organizational arrangements that allow leaders to sanction free-riding and allow members to replace leaders if they shirk. Other research demonstrates wide variability in the organization of political parties. In countries where political parties do not have these two organizational characteristics, public policies are less friendly to economic development. This evidence suggests that in future research on democracy, state-building and development, citizen organization should be a central object of analysis.
    Keywords: Parliamentary Government,Microfinance,Corporate Law,Politics and Government,Political Systems and Analysis
    Date: 2013–08–01
  4. By: Revelli, Federico (University of Turin)
    Abstract: Based on a theoretical model where state limits on local government policy elicit a move from private value (position issue) to common value (valence issue) voting, I exploit exogenous variation in tax limitation rules in over 7,000 Italian municipalities during the 2000s to show that fiscal restraints provoke a fall in voter turnout and number of mayor candidates, and a rise in elected mayors’ valence proxy and win margins. The evidence is compatible with the hypothesis of hierarchical tax imitations fading the ideological stakes of local elections and favoring valence-based party line crossing, thus questioning the influential accountability postulate of the fiscal decentralization lore
    Date: 2013–07
  5. By: Kim, Byung-Yeon (Seoul National University); Choi, Syngjoo (University College London); Lee, Jungmin (Sogang University); Lee, Sokbae (Seoul National University); Choi, Kyunghui (University of Tokyo)
    Abstract: The Cold War division of Korea, regarded as a natural experiment in institutional change, provides a unique opportunity to examine whether institutions affect social preferences. We recruited North Korean refugees and South Korean students to conduct laboratory experiments eliciting social preferences, together with standard surveys measuring subjective attitudes toward political and economic institutions. Our experiments employ widely used dictator and trust games, with four possible group matches between North and South Koreans by informing them of the group identity of their anonymous partners. Experimental behavior and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitarian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, two groups show little difference in the trust game, once we control for more egalitarian behavior of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward institutions are more strongly associated with the experimental behaviors among South Korean subjects than among North Korean subjects.
    Keywords: social preferences, experiment, institutions, market economy, democracy
    JEL: C92 C93 D03 P20
    Date: 2013–08
  6. By: Michiel de Nooij; Marcel van den Berg
    Abstract: This paper discusses reasons why politicians still favor hosting mega events despite the discouraging evidence regarding their financial benefits: (1) early political enthusiasm, (2) tying side-projects to the bid to raise political support, (3) biased reading of history, (4) the winners curse, (5) redistribution and lobbying, (6) a media bias in favor of hosting and (7) boosting happiness and pride of residents. Bringing happiness to the people might be a valid reason for hosting a mega event, however, economists are yet insufficiently capable of capturing this effect. Moreover, alternative explanations for political support cannot be deemed invalid ex ante.
    Keywords: Bidding; Bidding; mega sport events; Olympic games; lobbying; happiness
    JEL: D61 D72 H54 L83
    Date: 2013–08
  7. By: Jens Großer; Michael Seebauer
    Abstract: We study majority voting over two alternatives in small groups. Individuals have identical preferences but are uncertain about which alternative can better achieve their common interest. Before voting, each individual can get informed, to wit, buy a valuable but imperfect signal about the better alternative. Voting is either voluntary or compulsory. In the compulsory mode, each individual can vote for either of the two alternatives, while in the voluntary mode they can also abstain. An uninformed random vote generates negative externalities, as it may override informative group decisions in pivotal events. In our experiment, participants in groups of three or seven get informed more often with compulsory than voluntary voting, and in this way partly counteract the curse of uninformed voting when they cannot avoid it by abstaining. Surprisingly, uninformed voting is a common phenomenon even in the voluntary mode! A consequence of substantial uninformed voting is poor group efficiency in all treatments, indicating the need to reconsider current practices of jury and committee voting.
    Date: 2013–08–27
  8. By: Gregmar Galinato; Hayley Chouinard; Phil Wandschneider (School of Economic Sciences, Washington State University)
    Abstract: We examine the effect of corruption on social capital investment in an association and its allocation in a political economy context. Our model explains how agents invest to form social capital which is used to produce a club good for association members and influence industry-wide policy. Government corruption affects the number of agents that invest in social capital and the contribution per agent, but varies with agent productivity. We find that high productivity agents prefer to influence policy while low productivity agents focus on production. Furthermore, social capital does not necessarily increase welfare if socially sub-optimal regulations are implemented.
    Keywords: association, corruption, social capital
    JEL: D71 D73
    Date: 2013–01
  9. By: Grigoriadis, Theocharis
    Abstract: In this paper, I test the effects of religious norms on the provision of public goods. My evidence is drawn from public goods experiments that I ran with regional bureaucrats in Tomsk and Novosibirsk, Russia. I introduce three treatments, which I define as degrees of Eastern Orthodox collectivist enforcement: 1. Solidarity, 2. Obedience, and 3. Universal discipline. I argue for the existence of an Eastern Orthodox hierarchy in the Russian bureaucracy that facilitates the delivery of public goods under conditions of universal discipline and the principal´s overfulfillment. Eastern Orthodox hierarchy is enforced through universal disciplinary monitoring, which induces collective punishment when the public good is not delivered. Contrary to conventional wisdom about freeriding in administrative institutions, higher ranks in Russian bureaucracies are associated with less freeriding. --
    Keywords: public goods experiments,bureaucracy,enforcement,Russia,religion,incomplete information,hierarchy
    JEL: C91 C92 D72 D73 P21 P26 P32 P51 Z12
    Date: 2013

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