nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒04‒23
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Multi-attribute compositional voting advice applications (MacVAAs) : a methodology for educating and assisting voters and eliciting their preferences By Korthals R.A.; Levels M.
  2. Center-State Political Transfer Cycles in India By Manjhi, Ganesh; Keswani Mehra, Meeta
  3. Rethinking the political economy of decentralization: how elections and parties shape the provision of local public goods. By Raúl A. Ponce-Rodríguez; Charles R. Hankla; Jorge Martinez-Vazquez; Eunice Heredia-Ortiz
  4. Mass Media, Instrumental Information, and Electoral Accountability By Christian Bruns; Oliver Himmler
  5. Domestic facilitators and impediments to EU democracy promotion in its Eastern neighbourhood: The cost-benefit balance of norm adoption By Buscaneanu, Sergiu
  6. Measuring the extent and implications of corporate political connections in prewar Japan By Tetsuji Okazaki; Michiru Sawada
  7. Unbundling Political and Economic Rationality: a Non-Parametric Approach Tested on Spain By Salvador Bertomeu; Antonio Estache
  8. Social Mobility and Stability of Democracy: Re-evaluating De Tocqueville By Acemoglu, Daron; Egorov, Georgy; Sonin, Konstantin
  9. The political economy of multilateral aid funds By Simon, Jenny; Valasek, Justin Mattias
  10. Are E-Petitions Operative for Change? On the Effectiveness and the Transformative Potential of E-Petitioning By Oya Morva
  11. Who Disapproves of TTIP? Multiple Distrust in Companies and Political Institutions By Hans Pitlik
  12. Accountability, Political Views, and Bureaucratic Behavior: A Theoretical Approach By Sangyub Ryu; Yongjin Chang
  13. Referenda Under Oath By Nicolas Jacquemet; Alexander James; Stéphane Luchini; Jason Shogren

  1. By: Korthals R.A.; Levels M. (GSBE)
    Abstract: This paper introduces a technique to elicit voter preferences, by integrating multi-attribute compositional analyses Macs with a voting advice application VAA. The technique requires users to make trade-offs between different positions on a single issue, and between different issues. MacVAAs more closely resemble the electoral decision-making process in elections in which more than two parties participate than classic VAAs. MacVAAs also overcomes the assumption of issue orthogonality and assumption of rationality that classic VAA erroneously make. Results of a field application of the technique during the 2012 Dutch parliamentary elections in 2012 are presented. Advantages and disadvantages are discussed.
    Keywords: Economic Methodology: General; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior;
    JEL: B40 D72
    Date: 2016
  2. By: Manjhi, Ganesh; Keswani Mehra, Meeta
    Abstract: This paper attempts to answer two basic questions -- first, whether an election affects the transfers to the states through different component heads such as - grants from the center, loan from the center, finance commission transfer and grants in aids. Secondly, whether different transfer variables and the characteristics of the incumbent government will be able to create the possibility of retaining the power? Using the Arellano-Bond dynamic panel-data estimation methods (GMM) on a balanced panel data from 1980-2010 for 16 Indian states, we find that the right wing and coalition government is less likely to transfer the resources to the states. However, the state level ruling party which is either the same party at the center or ally get more transfers from the center than a non-coalition ruling party. Unlike the political budget cycles in the most literatures, the political transfer cycle is visible in the post-election period, which supports the possibility that while the announcements and promises are made before the election, the actual realization is observed only after the election. This may also be on account of attracting votes in the legislative assembly elections at the state level. The paper is extended to the logit and probit specifications of the model. It is found that; higher voters’ turnout in the state is more likely to win the election. Further, inflation reduces the possibility of winning the election, whereas more experienced government has a higher probability of winning the election. Moreover, our result also show that, the right wing government is more likely to win the election as they also behave more opportunistically and the coalition government where states are its allies lowers the possibility of winning the election.
    Keywords: Opportunist Incumbent; Political Budget Cycle, Political Transfer Cycle, Indian Federation
    JEL: E6 H5 H7
    Date: 2016–04–10
  3. By: Raúl A. Ponce-Rodríguez; Charles R. Hankla; Jorge Martinez-Vazquez; Eunice Heredia-Ortiz
    Abstract: As more and more of the world’s states devolve power and resources to sub-national governments, decentralization has emerged as one of the most important global trends of the new century. Yet there is still no consensus concerning the benefits of decentralization and how to design institutions that can realize these benefits. In this paper, we investigate the political conditions under which the decentralization of authority will improve the delivery of public goods. Building off Oates’ “decentralization theorem” to include inter-jurisdictional spillovers, we develop a new theory suggesting that the interaction of democratic decentralization (the popular election of sub-national governments) and party centralization (the power of national party leaders over sub-national office-seekers) will produce the best service delivery outcomes. To test this argument empirically, we develop a new dataset of sub-national political institutions. Our analyses, which examine educational and health service delivery in 135 countries across 30 years, provide support for our theoretical expectations.
    Keywords: decentralization
    JEL: H70 H71 H72 H73 H74 H77
    Date: 2016–04
  4. By: Christian Bruns (University of Goettingen); Oliver Himmler (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Journalism is widely believed to be crucial for holding elected officials accountable. At the same time economic theory has a hard time providing an instrumental explanation for the existence of “accountability journalism”. According to the common Downsian reasoning, rational voters should not be willing to pay for information out of purely instrumental motives because the individual probabilities of casting the decisive vote are typically very low. We show that this rationale does not apply when a group of voters shares a common goal such as accountability and information is delivered via mass media. In contrast to the pessimistic Downsian view, rational voters can have a considerable willingness to pay for the provision of instrumental information in these scenarios. Our model thus reconciles the rational voter approach with the common perception of journalism as a watchdog that holds elected officials accountable.
    Keywords: accountability, elections, information, media
    JEL: D72 D83 H41
    Date: 2016–01
  5. By: Buscaneanu, Sergiu
    Abstract: This paper argues that the balance between the size of EU incentives and the costs of democratic transformation has impeded democratic consolidation in Eastern ENP countries. Whereas the cost-benefit balance of norm adoption appears to be a relevant predictor of regime trajectories in this region, patterns of economic development do not match those of political regimes. Institutional design seems to fit better regime dynamics in Eastern ENP countries, but it is also possible that the nature of main political institutions depends on the regime. The road from institutions to the regime is a two-way road. Finally, the number of parties in power within executives does not say much about regime trajectories. The degree of a pro-European (Western) stance of the governing party or coalition must be incorporated into the analysis. To this end, a coalitional government that had a strong pro-EU identity proved to be a promising facilitator of external democracy promotion efforts.
    Keywords: cost-benefit balance,structures,institutions,actors,regimes,Eastern ENP countries
    Date: 2016
  6. By: Tetsuji Okazaki; Michiru Sawada
    Abstract: This paper explores the extent of political connections of firms, and examines their implications on firm values, using firm-level data from prewar Japan. We collect the data of directors, their positions in the House of Representatives, stock prices and financial performance, on publicly traded companies in late 1920s and early 1930s Japan. It is found that almost 20% of the publicly traded companies had political connections through politician directors. Especially, firms in the regulated industries such as the electric power and railroad, were more likely to have political connections. Overall, there is no evidence that connections with politics added firm values. On the other hand, with respect to those firms that newly obtained political connections, we found that the stock returns improved from the pre-election period to the post-election period.
    Date: 2016–03
  7. By: Salvador Bertomeu; Antonio Estache
    Abstract: The paper suggests a method to distinguish between various possible motivations (e.g. political vs economic) underlying policy implementation such as public investments. The true motivation can be revealed by modelling each policy goal, as the focus of the optimization anchoring a data envelopment analysis of the efficiency of the observed implementation. The approach is tested on Spain's land transport infrastructure policy since it is argued by many observers to be driven more by political than economic concerns. The method clearly shows that investments have generally been more consistent with a political objective (the centralization of economic power) than with an economic objective (maximizing mobility).
    Date: 2016–03
  8. By: Acemoglu, Daron; Egorov, Georgy; Sonin, Konstantin
    Abstract: An influential thesis often associated with De Tocqueville views social mobility as a bulwark of democracy: when members of a social group expect to join the ranks of other social groups in the near future, they should have less reason to exclude these other groups from the political process. In this paper, we investigate this hypothesis using a dynamic model of political economy. As well as formalizing this argument, our model demonstrates its limits, elucidating a robust theoretical force making democracy less stable in societies with high social mobility: when the median voter expects to move up (respectively down), she would prefer to give less voice to poorer (respectively richer) social groups. Our theoretical analysis shows that in the presence of social mobility, the political preferences of an individual depend on the potentially conflicting preferences of her "future selves", and that the evolution of institutions is determined through the implicit interaction between occupants of the same social niche at different points in time. When social mobility is endogenized, our model identifies new political economic forces limiting the amount of mobility in society - because the middle class will lose out from mobility at the bottom and because a peripheral coalition between the rich and the poor may oppose mobility at the top.
    Keywords: De Tocqueville; democracy; dynamics.; institutions; Social mobility; stability
    JEL: D71 D74
    Date: 2016–04
  9. By: Simon, Jenny; Valasek, Justin Mattias
    Abstract: In 2014 over $60 billion was mobilized to help developing nations mitigate climate change, an amount equivalent to the GDP of Kenya. Interestingly, breaking from the traditional model of bilateral aid, donor countries distributed nearly fifty percent of their aid through multilateral aid funds (OECD, 2015). In this paper, we show that by delegating aid spending to an international fund, donor countries mitigate a "hold-up" problem that occurs when donor countries are tempted to allocate aid based on, say, a regional preference. That is, under bilateral aid, donor-country bias decreases the incentive of recipient countries to invest in measures such as good governance that increase the effectiveness of aid. By delegating allocation decisions to a fund, however, donor countries commit to allocating aid via centralized bargaining, which provides recipient countries with an increased incentive to invest. Additionally, we show that allocating funding by majority rule further increases recipient-country investment, since higher investment increases the probability that a recipient's project will be selected by the endogenous majority coalition, and detail conditions under which majority is the optimal voting rule.
    Keywords: Aid policy,Climate change,International organizations
    JEL: F35 O19 H87
    Date: 2016
  10. By: Oya Morva (Istanbul Universty)
    Abstract: During the last decade, with the progress of new information and communication technologies, electronic petitioning systems have emerged as a productive way for individuals to communicate with the authorities or policy makers about diverse issues. Although, they are designed to enable citizens to influence decision–making in the policy making process, there is an ongoing discussion on their effectiveness: one side of this discussion regards e-petitions as a new form of activism that enables greater political participation, and hence fortifies democracy. According to this view, e-petition campaigns can be an operative tool to help citizens to put issues on the political agenda, they are capable of producing a desired result, and thus they can cause a change over and transform political decisions. On the other side of this discussion, there is an opposite view that considers the transformative potential of an online petition as very moderate. Within this study, this transformative potential, the effectiveness of e-petitions, is discussed and analysed. With this aim, the paper uses the case studies from to determine the extent to which e-petitioning worked when ending a campaign successfully.
    Keywords: online petitions, e-petitions, e-petitioning, effectiveness,
  11. By: Hans Pitlik (WIFO)
    Abstract: In 2013, EU and USA initiated a new political dialogue regarding a further deepening of bilateral trade and investment relations, the TTIP (Transatlantic Trade and Investment Partnership). In some EU member countries, anti-TTIP street protests and political activists received substantial support. The paper is concerned with the drivers of public support or disapproval of TTIP. In particular, we focus on the role of (dis-)trust in companies and in political institutions for attitude formation concerning economic regulation. We use data from a Eurobarometer Survey conducted in November 2014 to assess the determinants of individual approval or disapproval of TTIP by European citizens. By means of a mixed-level logit regression it can be shown that disapproval is highly correlated with a lack of trust in European institutions and in large companies. Our results moreover indicate that anti-TTIP political activism has a strong impact on TTIP-related preferences.
    Keywords: trust, institutions, European Union, free trade, TTIP
    Date: 2016–03–08
  12. By: Sangyub Ryu (Hankuk University of Foreign Studies); Yongjin Chang (International University of Japan)
    Abstract: This study aims to theoretically develop a framework to predict bureaucratic behaviors with the political view dimension and the accountability dimension by adopting and extending Hirschman's (1970) exit, voice, and loyalty. The political ideology dimension is dichotomized based on whether a bureaucrat's political ideology is congruent or incongruent with his/her overhead political principals. The bureaucratic accountability dimension is also dichotomized between accountability to the overhead political principals and accountability to the public sentiment. With the given dimensions, the exit, voice, loyalty, and silence scenarios are discussed as possible bureaucratic behaviors. In addition, the stay scenario is discussed for passive bureaucrats regardless of the two dimensions. By incorporating studies on bureaucrats' political views, accountability, and Hirschman's bureaucratic behaviors, this study expects to contribute to a better understanding of bureaucrats.
    Date: 2016–04
  13. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Alexander James (University of Oxford [Oxford]); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Ecole Centrale de Marseille - AMU - Aix-Marseille Université - EHESS - École des hautes études en sciences sociales - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique); Jason Shogren (Departement of Economics and Finance, University of Wyoming - University of Wyoming)
    Abstract: Herein we explore whether a solemn oath can eliminate hypothetical bias in a voting referenda, a popular elicitation mechanism promoted in non-market valuation exercises for its incentive compatibility properties. First, we reject the null hypothesis that a hypothetical bias does not exist. Second, we observe that people who sign an oath are significantly less likely to vote for the public good in a hypothetical referenda. We complement this evidence with a self-reported measure of honesty which confirms that the oath increases truthfulness in answers. This result opens interesting avenues for improving the elicitation of preferences in the lab and beyond.
    Keywords: Dichotomous Choice Mechanism,Hypothetical bias,Oath,Preference revelation
    Date: 2016

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