nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒01‒18
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Electoral Imbalances and their Consequences By Prato, Carlo; Wolton, Stephane
  2. The role of non-voting in shifts in support for Italian political parties (2006-2008) By Luana Russo
  3. Voting In Legislative Elections Under Plurality Rule By Hughes, Niall
  4. Rational Ignorance, Elections, and Reform By Prato, Carlo; Wolton, Stephane
  5. Multicandidate Elections: Aggregate Uncertainty in the Laboratory By Laurent Bouton; Micael Castanheira; Aniol Llorente-Saguer
  6. Risk Preferences and Misconduct: Evidence from Politicians By Dylan Minor
  7. Divided Majority and Information Aggregation: Theory and Experiment By Laurent Bouton; Micael Castanheira; Aniol Llorente-Saguer
  8. Lobbying, Inside and Out: How Special Interest Groups Influence Policy Choices By Wolton, Stephane
  9. Political realism and models of the state - Antonio de Viti de Marco and the origins of Public Choice By Giuranno, Michele; Mosca, Manuela
  10. Political Parties in Canada: What Determines Their Entry, Exit and the Duration of Their Lives? By Pinaki Chakraborty; Bharatee B. Dash; J. Stephen Ferris; Stanley L. Winer

  1. By: Prato, Carlo; Wolton, Stephane
    Abstract: This paper studies the consequences for the electoral process of reputational and partisan imbalance; that is, asymmetries in voters' evaluations of candidates' quality (for example, due to incumbency) and of party labels (for example, due to ideology). Our theory is predicated on the notion that voters are ``rationally ignorant'' as they face cognitive constraints on their ability to acquire and process political information. Our model rationalizes key empirical regularities identified in the literature: the strong effect of incumbency on electoral outcomes, the existence of an incumbency spending advantage, as well as the moderate electoral impact of partisan redistricting. We explain why current methods used to identify the sources of the incumbency advantage are likely to produce biased estimates, and suggest ways to resolve this issue. We also highlight how campaign finance reforms should be precisely tailored to the type and level of imbalance they are meant to address.
    Keywords: Elections; Attention; Imbalance; Reputation; Incumbency Advantage; Partisanship
    JEL: D70 D72 D78 D83
    Date: 2014–03–26
  2. By: Luana Russo
    Abstract: The 2008 Italian Parliamentary Elections showed the highest abstention rate in Italianhistory (19.5%) up until that moment (a new record was set in 2013). Even though thisabstention rate might seem quite low in comparison with some other Western democracies,it has been steadily increasing over time. Furthermore, recent research shows that theintermittent non-vote is increasing as well. The voter’s individual decision on whether or notto vote depends on the circumstances at each election, taking into consideration the type ofelection, the quality of the candidates, and so forth. By employing an ecological inferencemethod on the Italian aggregate data, this paper assesses what happened in terms ofelectoral realignment and differential abstention. It also aims to find out which parties arenow gaining or losing support from non-voters in the 2008 Parliamentary Italian elections.
    Date: 2014–12–01
  3. By: Hughes, Niall (Department of Economics University of Warwick)
    Abstract: Models of single district plurality elections show that with three parties anything can happen - extreme policies can win regardless of voter preferences. I show that when single district elections are used to fill a legislature we get back to a world where the median voter matters. An extreme policy will generally only come about if it is preferred to a more moderate policy by the median voter in a majority of districts. The mere existence of a centrist party can lead to moderate outcomes even if the party itself wins few seats. Furthermore, I show that while standard single district elections always have misaligned voting i.e. some voters do not vote for their preferred choice, equilibria of the legislative election exist with no misaligned voting in any district. Finally, I show that when parties are impatient, a fixed rule on how legislative bargaining occurs will lead to more coalition governments, while uncertainty will favour single party governments Classification-JEL Numbers: C71 ; C72 ; D71 ; D72 ; D78
    Keywords: Strategic Voting ; Legislative Elections ; Duverger's Law ; Plurality Rule ; Polarization ; Poisson Games
    Date: 2015
  4. By: Prato, Carlo; Wolton, Stephane
    Abstract: This paper studies how voters' demand for reform affects the probability that economic reforms are adopted and, conditional on being adopted, their quality. We consider a model of electoral competition with rationally inattentive voters in which the success of policy changes is tied to a politician's unobservable competence. We show that when the demand for reform is high, the electoral process becomes over-responsive: Candidates promise reforms despite their inability to carry-out welfare-improving policy changes. As voters must then choose between potentially harmful reforms or no reform, high demand for reform tends to be associated with lower probability of reform and/or lower quality of reform. We explain how our results help organize the mixed evidence regarding the impact of crises on the likelihood of reform.
    Keywords: Crises ; Reforms ; Rationally Ignorant Voters ; Campaigns
    JEL: D70 D72 D78 D83
    Date: 2013–03–16
  5. By: Laurent Bouton (Georgetown University, Université Libre de Bruxelles, CEPR and NBER); Micael Castanheira (Université Libre de Bruxelles, FNRS and CEPR); Aniol Llorente-Saguer (Queen Mary University of London)
    Abstract: The rational-voter model is often criticized on the grounds that two of its central predictions (the <i>paradox of voting</i> and <i>Duverger's Law</i>) are at odds with reality. Recent theoretical advances suggest that these empirically unsound predictions might be an artifact of an (arguably unrealistic) assumption: the absence of <i>aggregate uncertainty</i> about the distribution of preferences in the electorate. In this paper, we propose direct empirical evidence of the effect of aggregate uncertainty in multicandidate elections. Adopting a theory-based experimental approach, we explore whether aggregate uncertainty indeed favors the emergence of non-Duverger's law equilibria in plurality elections. Our experimental results support the main theoretical predictions: sincere voting is a predominant strategy under aggregate uncertainty, whereas without aggregate uncertainty, voters massively coordinate their votes behind one candidate, who wins almost surely.
    Keywords: Rational voter model, Multicandidate elections, Plurality, Aggregate uncertainty, Experiments
    JEL: C92 D70
    Date: 2015–12
  6. By: Dylan Minor (Harvard Business School, Strategy Unit)
    Abstract: When seeking new leaders, business and government organizations alike often need individuals that are less risk averse, or even risk-seeking, in order to improve performance. However, individuals amenable to increased risk-taking may be more likely to engage in misconduct. To study this issue, we explore US political scandals and the implicated politicians' portfolio choices. We find that a politician allocating all of her portfolio to risky investments has double the odds of being involved in a political sandal compared to a politician allocating all of her portfolio to safe investments. This suggests that those who are more willing to take risks in their personal finances are also more likely to engage in misconduct. We validate portfolio choice as a measure of risk preferences by correlating actual high-stakes investment choices (average $700,000 US) to conventional laboratory lottery choices (average $51 US) of wealthy investors.
    Date: 2016–01
  7. By: Laurent Bouton (Georgetown University, Université Libre de Bruxelles, CEPR and NBER); Micael Castanheira (Université Libre de Bruxelles, FNRS and CEPR); Aniol Llorente-Saguer (Queen Mary University of London)
    Abstract: We propose a theory-based experimental approach to compare the properties of <i>approval voting</i> (AV) with those of <i>plurality</i>. This comparison is motivated by the theoretical predictions that, in our aggregate uncertainty setup, AV should produce close to first-best outcomes, while plurality will not. The experiment shows, first, that welfare gains are substantial. Second, both aggregate and individual responses are in line with theoretical predictions, and thus with strategic voting. Finally, subjects' behavior under AV highlights the need to study equilibria in asymmetric strategies.
    Keywords: Multicandidate elections, Information aggregation, Plurality, Approval Voting, Laboratory experiments
    JEL: C72 C92 D70
    Date: 2015–12
  8. By: Wolton, Stephane
    Abstract: Scholars have long recognized two classes of special interest group (SIG) expenditures: inside lobbying, which is intended to influence the content of a bill; and outside lobbying, which is intended to influence the likelihood a bill is enacted into law. This paper juxtaposes both lobbying activities within a single model. Policy choices are a function of the decision-maker's assessment of SIGs' willingness to engage in outside lobbying. Importantly, inside lobbying expenditures do not always reflect SIGs' outside lobbying capacities and therefore cannot adequately measure SIG influence. Consequently, empirical studies of SIG influence which exclusively consider inside lobbying expenditures--as nearly all existing tests do--are likely to produce spurious results. The paper highlights that strong SIG influence is consistent with a small effect of inside lobbying expenditures on policy choice.
    Keywords: interest groups ; influence ; contributions ; lobbying ; issue advocacy
    JEL: D70 D72 D78 D83
    Date: 2016–01–02
  9. By: Giuranno, Michele; Mosca, Manuela
    Abstract: It is well known that one of the features of Public Choice, political realism, in Italy is embedded in a time-honored tradition going back to Machiavelli, and perpetuated by G. Mosca and Pareto in their political and sociological writings. The scientific spirit, which in their era led to the foundation of various social disciplines, fostered the application of economic analysis to the political sphere. In this context the initiator of the pure theory of public finance, Antonio de Viti de Marco (1858-1943), formulated an economic model of the state, consisting of two types of constitutional extremes: the absolute state, and the democratic state. In this work, we ask how this model may be reconciled to G. Mosca and Pareto’s theory of the ruling class, which De Viti de Marco agreed with. Finally, we analyze the validity of this theoretical construction for the interpretation of collusion, rent seeking and “clientelismâ€, i.e. the redistribution of extracted rent, which takes place in the form of discretionary allocation of public jobs, public contracts and other corporative favours. What emerges provides reasons to reflect upon for further developments in Public Choice.
    Date: 2015–12
  10. By: Pinaki Chakraborty (National Institute of Public Finance and Policy); Bharatee B. Dash (National Institute of Public Finance and Policy); J. Stephen Ferris (Department of Economics, Carleton University); Stanley L. Winer (Department of Economics, Carleton University)
    Abstract: Governments provide private goods as well as public services. We present a model of the private good - public good mix in public expenditure, and then apply it to explain the composition of spending by Indian state governments. The model explains why the publically provided private good to public good ratio is a decreasing function of the real income of voters, and is also decreasing in the degree of political competition. These hypotheses are tested on a panel of 14 Indian states for fiscal years 1987/88 to 2011/12. The long run results of three alternative ARDL models are broadly consistent with the proposed hypotheses, particularly the relationship between the private good share of state expenditures and real per capita incomes. They suggest that rising incomes and more effective political competition work together to improve a state’s policy mix and, in this sense, economic development becomes at least partially endogenous.
    Keywords: Private versus public goods, the spending composition of Indian State Governments, electoral competition, swing voters, partisan rents, the relative price of publically supplied private goods, ARDL panel models.
    JEL: H42 H72 O53 C23
    Date: 2015–12–31

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