nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒12‒03
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Shared Mandates, Moral Hazard and Political (Mis)alignment in a Decentralized Economy By Antonio Estache; Grégoire Garsous; Ronaldo Seroa da Motta
  2. Political Budget Cycles: Evidence from Italian Cities By Alberto Alesina; Matteo Paradisi
  3. India's Electronic Voting Machines (EVMs): Social construction of a "frugal" innovation By Herstatt, Maximilian; Herstatt, Cornelius
  4. Get Rid of Unanimity: The Superiority of Majority Rule with Veto Power By Laurent Bouton; Aniol Llorente-Saguer; Frédéric Malherbe
  5. Immigration, Cultural Distance and Natives' Attitudes Towards Immigrants: Evidence from Swiss Voting Results By Brunner, Beatrice; Kuhn, Andreas
  6. Solving the Inverse Power Problem in Two-Tier Voting Settings By Matthias Weber
  7. Receiver's access fee for a single sender By Martin Gregor

  1. By: Antonio Estache; Grégoire Garsous; Ronaldo Seroa da Motta
    Abstract: This paper investigates the effects of political (mis)alignment on public service deliverywhen mandates are shared between state and local governments. We analyze sewage treatmentpolicies in the State of São Paulo, Brazil. Based on a regression discontinuity design, we establisha causal relationship between political alignment and higher sewage treatment provision.Conceptually, we find that, with uncertain local commitment and weakly enforceable localobligations, shared mandates lead to a moral hazard issue implying service under-provision.When political alignment is an option, our results show that it attenuates such moral hazardeffects.
    Keywords: political alignment; infrastructure provision; moral hazard; regression discontinuity design
    JEL: H40 H54 H70 P48
    Date: 2014–11
  2. By: Alberto Alesina; Matteo Paradisi
    Abstract: The introduction of a new real estate tax in Italy in 2011 created a well designed natural experiment to test the strategic choice of fiscal variables (a tax rate) in relation to elections. We find substantial evidence of "political budget cycles", with municipalities choosing lower tax rates when close to elections. The evidence on political budget cycles is stronger in localities in the South of Italy. The well documented lower level of "social capital" in this region may account for less attention and lower control of politicians. Cities with large preexisting deficits did not set lower rates before elections, presumably because the deficit was a salient political problem and incumbents did not want to look as aggravating it.
    JEL: H0
    Date: 2014–10
  3. By: Herstatt, Maximilian; Herstatt, Cornelius
    Abstract: After the 2009 general elections in India a controversy started about the electronic voting machines (EVM) that are used nationwide since 2004. Political parties, activists, and academics raised suspicion that the machines might have been manipulated to alter the election outcome. There is no proof that EVMs have been manipulated in any of the past elections, however, concerned people claim that the risk is there. This paper takes a closer look at the Indian voting technology and the discussions around alleged security holes. The authors take a closer look at this particular controversy. Additionally we want to provide the reader with information about the Indian electronic voting system more generally. This includes reasons to change from the earlier paper ballot system and design challenges for EVM in the Indian context. We are writing within the frame of a theoretical model called Social Construction of Technology (SCOT), developed by Wiebe Bijker and Trevor Pinch (1987). Along the lines of this model we argue that after the EVM has been adopted in India, different "relevant social groups" interpreted the EVM in diverse ways. From the social constructivist perspective we argue there has been not just one but at least three different EVMs. With time the "interpretative flexibility" diminished and "relevant social groups" more or less agreed on one interpretation of the EVM. The EVM has "stabilized" and the controversy has been closed basically. We show the SCOT model to be helpful for structuring the controversy in a fruitful manner. The research questions adressed here are: How did the ECI and EVM manufacturers react to allegations made by political parties, VeTA, and voting security researchers that EVMs are vulnerable to manipulation? How was the election practice affected?
    Date: 2014
  4. By: Laurent Bouton; Aniol Llorente-Saguer; Frédéric Malherbe
    Abstract: A group of agents wants to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We analyze a simple voting system - majority rule with veto power (Veto) - that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in the EU institutions and could help to inform debates about policy reforms in cases such as juries in the US.
    JEL: D70
    Date: 2014–08
  5. By: Brunner, Beatrice (Zurich University of Applied Sciences (ZHAW)); Kuhn, Andreas (Swiss Federal Institute for Vocational Education and Training)
    Abstract: We combine community-level outcomes of 27 votes about immigration issues in Switzerland with census data to estimate the effect of immigration on natives' attitudes towards immigration. We apply an instrumental variable approach to take potentially endogenous locational choices into account, and we categorize immigrants into two groups according to the cultural values and beliefs of their source country to understand how the cultural distance between natives and immigrants affects this relationship. We find that the share of culturally different immigrants is a significant and sizable determinant of anti-immigration votes, while the presence of culturally similar immigrants does not affect natives' voting behavior at all in most specifications. The cultural distance between immigrant and native residents thus appears crucial in explaining the causal effect of immigration on natives' attitudes towards immigration, and we argue that the differential impact is mainly driven by natives' concerns about compositional amenities. We finally show that the elasticity of the share of right-wing votes in favor of the Swiss People's Party is much more elastic with respect to the share of culturally different immigrants than natives' attitudes themselves, suggesting that the party has disproportionally gained from changes in attitudes caused by immigrant inflows.
    Keywords: instrumental variable, endogenous residential choice, cultural distance, cultural values and beliefs, voting behavior, attitudes towards immigration, immigration, rightwing votes
    JEL: D72 F22 J15 J61 R23
    Date: 2014–08
  6. By: Matthias Weber (CREED, University of Amsterdam)
    Abstract: There are many situations in which different groups make collective decisions by committee voting, where each group is represented by a single person. Theoretical concepts suggest how the voting systems in such committees should be designed, but these abstract rules can usually not be implemented perfectly. To find voting systems that approximate these rules the so called inverse power problem needs to be solved. I introduce a new method to address this problem in two-tier voting settings using the coefficient of variation. This method can easily be applied to a wide variety of settings and rules. After deriving the new method, I illustrate why it is to be preferred over more traditional methods.
    Keywords: inverse power problem, indirect voting power, two-tier voting, Penrose’s Square Root Rule
    JEL: D71 D72
    Date: 2014–02–10
  7. By: Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: We study a game in which a sender with verifiable private information has to pay an access fee that is announced by a receiver to be able to convey her message to the receiver. The setting is motivated by the literature of pay-and-lobby politics, which finds that politicians decide to schedule informative meetings with lobbyists on the basis of their campaign contributions. We solve the game for all timings, prior beliefs, and noise and valuation parameters. We identify the receiver's tradeoff between the amount of information and the amount of revenue. At the tradeoff, the receiver decides to not receive an informative signal from the sender. Whether `burying one's head in the sand' increases or decreases welfare depends on the degree of the receiver's benevolence.
    Keywords: disclosure, persuasion, hard evidence, access fee, lobbying
    JEL: C72 C78 D72 D83
    Date: 2014–05

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