nep-pol New Economics Papers
on Positive Political Economics
Issue of 2017‒07‒30
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Two conditions for the application of Lorenz curve and Gini coefficient to voting and allocated seats By Colignatus, Thomas
  3. New media and politics: An assessment of 2016 South African local government elections By Joshua Ebere Chukwuere; Chijioke Francis Onyebukwa
  4. Who Are Nonvoters? By Lyn Ragsdale; Jerrold G. Rusk
  5. Does Gerrymandering Violate the Fourteenth Amendment? Insight from the Median Voter Theorem By Craig McLaren
  6. Political Connections and the Informativeness of Insider Trades By Jagolinzer, Alan D.; Larcker, David F.; Ormazabal, Gaizka; Taylor, Daniel
  7. Institutions and Political Party Systems: The Euro Case By Jesús Fernández-Villaverde; Tano Santos
  8. Can Gender Quotas in Candidate Lists Empower Women? Evidence from a Regression Discontinuity Design By Bagues, Manuel F.; Campa, Pamela
  9. School Boards and Student Segregation By Hugh Macartney; John D. Singleton
  10. Is electoral punishment important for democracy? The role of social capital and religious resources By Ambra, Poggi;
  11. The Medieval Roots of Inclusive Institutions: From the Norman Conquest of England to the Great Reform Act By Charles Angelucci; Simone Meraglia; Nico Voigtländer
  12. The Effects of Political Competition on the Funding of Public-Sector Pension Plans By Sutirtha Bagchi
  13. Does It Matter How and How Much Politicians are Paid? By Duha T. Altindag; Elif S. Filiz; Erdal Tekin
  14. Between-Group Contests over Group-Specific Public Goods with Within-Group Fragmentation By Dasgupta, Indraneel; Neogi, Ranajoy Guha

  1. By: Colignatus, Thomas
    Abstract: The Lorenz curve and Gini coefficient are applied here to measure and graph disproportionality in outcomes for multiseat elections held in 2017. The discussion compares Proportional Representation (PR) in Holland (PR Gini 3.6%) with District Representation (DR) in France (41.6%), UK (15.6%) and Northern Ireland (NI) (36.7%). In France the first preferences of voters for political parties show from the first round in the two rounds run-off election. In UK and NI the first preferences of voters are masked because of strategic voting in the single round First Past the Post system. Thus the PR Gini values for UK and NI must be treated with caution. Some statements in the voting literature hold that the Lorenz and Gini statistics are complex to construct and calculate for voting. Instead, it appears that the application is actually straightforward. These statistics appear to enlighten the difference between PR and DR, and they highlight the disproportionality in the latter. Two conditions are advised to enhance the usefulness of the statistics and the comparability of results: (1) Order the political parties on the ratio (rather than the difference) of the share of seats to the share of votes, (2) Use turnout as the denominator for the shares, and thus include the invalid and wasted vote (no seats received) as a party of their own. The discussion also touches upon the consequences of disproportionality by DR. Quite likely Brexit derives from the UK system of DR and the discontent about (mis-) representation. Likely voting theorists from countries with DR have a bias towards DR and they are less familiar with the better democratic qualities of PR.
    Keywords: General Economics, Social Choice, Social Welfare, Election, Majority Rule, Parliament, Legislative, Party System, Representation, Proportion, District, Voting, Seat, Equity, Inequality, Lorenz, Gini coefficient, Voting Paradox, Arrow's Impossibility Theorem
    JEL: A10 D63 D71 D72
    Date: 2017–07–21
  2. By: Mirza Ashfaq Ahmed (University of Gujrat)
    Abstract: In political realm, the political-specific brand equity is gaining growing attention. This effort is to develop a political-specific measurement model to get insight regarding the voter?s behavior, voter choices, voting intentions and to generate more valid and reliable results. The literature from the relevant domains including Marketing, Politics, and Behavioral sciences has been reviewed to develop a good understanding and insight into relevant published material and the trends that have emerged there from to review the types of measures. Based on the reviewed measures and their literally proven chronological cause-effect relationships, a conceptual model of voter based brand equity has been proposed. Following questions are hypothesized: (1) what is the contribution of political socialization process in the development of social identity and emotional response? (2) Do the social identity and emotional response positively influence the party trust and party commitment? (3) Do the party trust and party commitment positively influence the voting intentions of the voters? (4) Does the party loyalty have moderating role among the structural relationships of the model constructs? The results indicate that to improve the voting intentions political parties have to engage themselves in the political socialization process.
    Keywords: Political Marketing, Socialization Process, Voting Intentions, Party Politics
    JEL: M00 M00
    Date: 2017–07
  3. By: Joshua Ebere Chukwuere (North West University); Chijioke Francis Onyebukwa (North West University)
    Abstract: In recent times, the role of media in politics has increased significantly. With the inception of the new form of media communication, the interaction between the importance of media and politicization remain complementary. During the 2016 South African Local Government Elections, the new media featured as one of the prominent medium of political interaction between various political stakeholders across the country. This paper argues that the role of new media facilitated political interaction across the political terrain of the country during the election. It also argues that political actors increased their use of new media not only to advance their political ideas but also to receive feedbacks from the electorates. Therefore, this paper identifies that the new media created an interactive forum linking the political parties, Independent Electoral Commission (IEC) and the electorates. In other words, this medium increased existing interaction within the South African political environment particularly during the just concluded 2016 Local Government Elections.
    Keywords: Local Government Elections, new media, politics, South Africa
    Date: 2017–07
  4. By: Lyn Ragsdale (Rice University); Jerrold G. Rusk (Rice University)
    Abstract: This paper examines the motivations of individuals who do not vote in American elections from 1968 through 2012. Existing research portrays American nonvoters as a large monolith of people who lack psychological involvement in politics, do not have adequate personal resources to participate, have insufficient social networks to be engaged, or are not sufficiently mobilized by candidates and campaigns. Instead, our paper maintains that uncertainty in the national campaign context ?the economic, mass communication, legal, and international environments--drives individual citizens? decisions about whether to vote. When there is high uncertainty in the national campaign context, people are more likely to vote. When there is low uncertainty in the national campaign context, citizens are less likely to vote. The paper further develops a theoretical distinction between the external uncertainty found in the national campaign context and the internal uncertainty citizens feel about which candidate will adequately address the external uncertainty. In considering this internal uncertainty, four types of nonvoters emerge as they respond differently to the lack of clarity. First, the politically ignorant non-voters do not follow the campaign or the candidates so avoid internal uncertainty about them. Second, the indifferent follow the campaign and the candidates, but see no differences between the candidates, leaving internal uncertainty about them. Third, the dissatisfied know a good deal about the campaign context and the candidates but see one or more candidates negatively. They too do not vote because internal uncertainty about the candidates remains unresolved. Finally, the personal hardship nonvoters pay attention to the campaign and the candidates but do not vote because of personal hardship associated with unemployment. The paper first considers broad differences between voters and nonvoters in their knowledge of politics and attitudes toward elections. It then estimates a model of nonvoting across the time period. Finally, it considers in greater detail the four different types of nonvoters, who they are, and what motivates them not to participate. The study finds that at the presidential level, there are considerable numbers of dissatisfied nonvoters who do not vote because they have negative views of one or both candidates. At the midterm level, nonvoters are more likely to be politically indifferent, not having clear-cut views of one or both candidates.
    Keywords: elections, participation, uncertainty
    Date: 2017–05
  5. By: Craig McLaren (Department of Economics, University of California Riverside)
    Abstract: This paper argues that “gerrymandering†understood here to mean the intentional redrawing of legislative district boundaries to benefit a given party, robs opposition voters of implicit bargaining power.. Using the Median Voter Theorem and statistical examples, this paper argues that the presence of minority voters in a legislative district influences the majority party’s choice of candidate, whenever minority voters are present in sufficient number to pose a credible challenge. When, through gerrymandering, lawmakers insure that minority voters cannot mount such a challenge, they deny such voters equal protection under the law.
    Keywords: Election, Election Law, Voter Protection, Voting, Voting Law, Gill vs. Whitford, gerrymandering, median voter theorem
    Date: 2017–07
  6. By: Jagolinzer, Alan D.; Larcker, David F.; Ormazabal, Gaizka; Taylor, Daniel
    Abstract: This paper examines the relation between political connections and informed trading by corporate insiders in the context of the Financial Crisis. The unprecedented magnitude of government intervention, the substantial impact of this intervention on firm value, and the political nature of the intervention provide a powerful setting to examine the relation between political connections and informed trading. Consistent with political connections providing corporate insiders with an information advantage, we find strong evidence of a relation between political connections and the informativeness of their trades. Consistent with this relation stemming from private information related to government intervention, we find the relation is strongest during the period in which TARP funds were dispersed, and strongest among politically connected insiders at banks that received TARP funds. Examining insider trades around the announcements of TARP infusions, we find evidence of significant trading thirty days in advance of the announcement, and that these trades predict the market reaction to the announcement. Notably, we find these relations are present only for the trades of politically connected insiders. Overall, our results suggest that politically connected insiders had an information advantage during the Crisis and traded to exploit this advantage.
    Keywords: Political Connections; Insider Trading; Financial Crisis; Troubled Asset Relief
    JEL: G14 G20 G28 G30 K2
    Date: 2017–07
  7. By: Jesús Fernández-Villaverde; Tano Santos
    Abstract: This paper argues that institutions and political party systems are simultaneously determined. A large change to the institutional framework, such as the creation of the euro by a group of European countries, will realign – after a transition period – the party system as well. The new political landscape may not be compatible with the institutions that triggered it. To illustrate this point, we study the case of the euro and how the party system has evolved in Southern and Northern European countries in response to it.
    JEL: D72 F30 F40
    Date: 2017–07
  8. By: Bagues, Manuel F. (Aalto University); Campa, Pamela (University of Calgary)
    Abstract: We provide a comprehensive analysis of the short- and medium-term effects of gender quotas in candidate lists using evidence from Spain, where quotas were introduced in 2007 in municipalities with more than 5,000 inhabitants, and were extended in 2011 to municipalities with more than 3,000 inhabitants. Using a Regression Discontinuity Design, we find that quotas raise the share of women among council members but they do not affect the quality of politicians, as measured by their education attainment and by the number of votes obtained. Moreover, within three rounds of elections, women fail to reach powerful positions such as party leader or mayor, and we do not observe any statistically or economically significant changes in the size and composition of public finances.
    Keywords: gender quotas in candidate lists, regression discontinuity design
    JEL: D72 H72 J16
    Date: 2017–07
  9. By: Hugh Macartney; John D. Singleton
    Abstract: This paper provides the first causal evidence about how elected local school boards affect student segregation across schools. The key identification challenge is that the composition of a school board is potentially correlated with unobserved determinants of school segregation, such as the pattern of household sorting and the degree to which boards are geographically constrained in defining zones of attendance. We overcome this issue using a regression discontinuity design at the electoral contest level, exploiting quasi-random variation from narrowly-decided elections. Such an approach is made possible by a unique dataset, which combines matched information about North Carolina school board candidates (including vote shares and political affiliation) with time-varying district-level racial and economic segregation outcomes. Focusing on the political composition of school board members, two-stage least squares estimates reveal that (relative to their non-Democrat counterparts) Democrat board members decrease racial segregation across schools. These estimates significantly differ from their ordinary least squares counterparts, indicating that the latter are biased upward (understating the effects). Our findings suggest that school boards realize such reductions in segregation by shifting attendance zones, a novel measure of which we construct without the need for exact geocoded boundaries. While the effect of adjusting boundaries does not appear to be offset by within-district neighborhood re-sorting in the short run, we uncover causal evidence of “white flight” out of public schools in districts in which boards have acted to reduce segregation.
    JEL: I21 I24 I28
    Date: 2017–07
  10. By: Ambra, Poggi;
    Abstract: Electoral punishment is the main instrument that citizens have to keep government accountable, answerable and accessible to the people they serve. The aim of this paper is to empirically investigate whether individual social resources - social capital and religious resources - may enhance the probability that individuals value electoral punishment important for democracy. We use data from the 2012 European Social Survey Multilevel Data and a multilevelapproach. Our findings lend support to the view that social resources matter in determining the importance of electoral punishment, even if the importance of each resource varies across countries. Social capital has a complex effect on the importance of electoral punishment: trust reduces the probability that individuals value electoral punishment, while social participation increases it. Religious resources result negatively correlated with the importance of electoral punishment suggesting that loyalty versus religious values and traditions imply unconditional citizens’ support for government. Finally, some religions seem to have a specific role in enhancing the importance of electoral punishment confirming an active role of religious values and authorities in shaping individual political behaviors.
    Keywords: electoral punishment, religion, social capital, poverty, multi-level models
    JEL: C23 D72 I3 O15 A13
    Date: 2017–07–19
  11. By: Charles Angelucci; Simone Meraglia; Nico Voigtländer
    Abstract: The representation of merchant interests in parliaments played a crucial role in constraining monarchs’ power and expanding the protection of property rights. We study the process that led to the inclusion of merchant representatives in the English Parliament, using a novel comprehensive dataset for 550 medieval English towns (boroughs). Our analysis begins with the Norman Conquest in 1066 – an event of enormous political change that resulted in largely homogeneous formal institutions across England. From this starting point, we document a two-step process: First, monitoring issues and asymmetric information led to inefficiencies in the king’s tax collection, especially with the onset of the Commercial Revolution in the 12th century. This gave rise to mutually beneficial agreements (Farm Grants), whereby medieval merchant towns obtained the right of self-administered tax collection and law enforcement. Second, we show that Farm Grants were stepping stones towards representation in the English Parliament after its creation in 1295: local autonomy meant that subsequently, extra-ordinary taxation (e.g., to finance wars) had to be negotiated with towns – and the efficient institution to do so was Parliament. We show that royal boroughs with trade-favoring geography were much more likely to be represented in Parliament, and that this relationship worked through Farm Grants. We also show that medieval self-governance had important long-term consequences and interacted with nationwide institutional changes. Boroughs with medieval Farm Grants had persistently more inclusive local elections of public officials and MPs, they raised troops to support the parliamentarians during the CivilWar in 1642, and they supported the Great Reform Act of 1832, which resulted in the extension of the franchise.
    JEL: D02 D73 N43 P14 P16
    Date: 2017–07
  12. By: Sutirtha Bagchi (Department of Economics, Villanova School of Business, Villanova University)
    Abstract: In politically competitive jurisdictions, there can be strong electoral incentives to underfund public pensions in order to keep current taxes low. I examine this hypothesis using panel data for 2,000 municipal pension plans from Pennsylvania. The results suggest that as a municipality becomes more politically competitive, it tends to have pension plans that are less funded. The effects of political competition are driven by municipalities that have a higher proportion of less informed voters and are absent for pension plans offered by municipal authorities. The negative relationship between political competition and funding status is present for state pensions as well.
    Keywords: Public-sector pensions; political competition; unfunded liabilities; actuarial funded ratio
    JEL: H75 J45
    Date: 2017–07
  13. By: Duha T. Altindag; Elif S. Filiz; Erdal Tekin
    Abstract: An important question in representative democracies is how to ensure that politicians behave in the best interest of citizens rather than their own private interests. Aside from elections, one of the few institutional devices available to regulate the actions of politicians is their pay structure. In this paper, we provide fresh insights into the impact of politician salaries on their performance using a unique law change implemented in 2012 in Turkey. Specifically, the members of the parliament (MPs) in Turkey who are retired from their pre-political career jobs earn a pension bonus on top of their MP salaries. The law change in 2012 significantly increased the pension bonus by pegging it to 18 percent of the salary of the President of Turkey, while keeping the salaries of non-retired MPs unchanged. By exploiting the variation in total salaries caused by the new law in a difference-in-differences framework, we find that the salary increase had a negative impact on the performance of the retired MPs. In particular, the overall performance of these MPs was lowered by 12.3 percent of a standard deviation as a result of the increase in salary caused by the new law. This finding is robust to numerous specification tests. Furthermore, results obtained from an auxiliary analysis suggest that one of the mechanisms through which MPs reduce their performance is absenteeism.
    JEL: J22 J26 J33 J45
    Date: 2017–07
  14. By: Dasgupta, Indraneel (Indian Statistical Institute); Neogi, Ranajoy Guha (Indian Statistical Institute)
    Abstract: We model a contest between two groups of equal population size over the division of a group-specific public good. Each group is fragmented into sub-groups. Each sub-group allocates effort between production and contestation. There is perfect coordination within sub-groups, but sub-groups cannot coordinate with one another. All sub-groups choose effort allocations simultaneously. We find that aggregate rent-seeking rises, social welfare falls, and both communities are worse off when the dominant sub-groups within both communities increase their population shares relative to the respective average sub-group population. Any unilateral increase in fragmentation within a group reduces conflict and makes its opponent better off. The fragmenting community itself may however be better off as well, even though its share of the public good falls. Thus, a reduced share of public good provisioning cannot be used to infer a negative welfare implication for the losing community.
    Keywords: contest, group-specific public good, local public good, ethnic conflict, within-group fragmentation
    JEL: D72 D74 O10 O20
    Date: 2017–07

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