nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒12‒03
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Democratic support and corruption: Lessons from East Europe By Enste, Dominik; Acht, Martin
  2. Politicians' Payments in a Proportional Party System By Heléne Berg
  3. Complex Ballot Propositions, Individual Voting Behavior, and Status quo Bias By Zohal Hessami; Sven Resnjanskij
  4. Immigrant Voters, Taxation and the Size of the Welfare State By Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
  5. Electoral Reform and Voter Coordination By Jon H. Fiva; Simon Hix
  6. Do Higher Wages Produce Career Politicians? Evidence from Two Discontinuity Designs By Jan Palguta; Filip Pertold
  7. Politics from the Bench? Ideology and Strategic Voting in the U.S. Supreme Court By Tom S. Clark; B. Pablo Montagnes; Jörg L. Spenkuch
  8. Alt-Right Activism, Alternative Facts and Persecution of Refugees in the United States By Filiz Ruhm
  9. Are Some Dictators More Attractive to Foreign Investors? By Abel FRANCOIS; Sophie PANEL; Laurent WEILL
  10. Presidential Cycles in the United States and the Dollar-Pound Exchange Rate: Evidence from over Two Centuries of Data By Rangan Gupta; Mark E. Wohar
  11. Should Straw Polls be Banned? By Ali, S. Nageeb; Bohren, Aislinn

  1. By: Enste, Dominik; Acht, Martin
    Abstract: It has been recognized that the support for democracy seems to be increasing with the time spent in a democratic system. An individual's life experience living under democratic rule positively affects the support for democracy as a political system. Therefore it seemed inevitable that the newly democratic eastern European member countries of the European Union would reap the benefits of democratization and slowly foster democratic support. However, recent backlashes to democratic rule in those countries seem to be contradictory. Therefore this paper investigates whether people's rising democratic capital in these new democracies also increases the support for democracy in those countries. Furthermore we examine if the quality of other institutions and especially corruption play a role in shaping the support for democracy and whether the positive effect of democratic capital on democratic support might be undermined. We find that the recent repercussions to democratic rule in eastern European countries are no coincidence. The effect of people's rising democratic capital on the support for democracy is negative in those countries. It has therefore been falling. Moreover, we establish that the increased experiences of corruption in these states undermine the support for democracy. Specifically, that democracy and corruption are complementary institutions. Only in the absence of corruption can the experience of democracy have its full effect on prodemocratic attitudes.
    JEL: D02 D72 P37
    Date: 2018
  2. By: Heléne Berg
    Abstract: Is politics a lucrative business? The question is approached in this paper, as one of few to quantify the monetary returns to holding political office in a typical developed democracy where parties are the main political actors. By applying a difference-in-difference setting with a carefully chosen control group to rich data on candidates to the Swedish national parliament, both short and long-run effects of being elected on different types of income are estimated. Results show that, yes, mostly thanks to relatively high remuneration while still in office, politics can be a lucrative business. In the long-run however, the effect is instead compositional in the sense that ex-politicians receive more pension income and work less.
    Keywords: returns to politics, difference-in-difference
    JEL: C23 D72 J44
    Date: 2018
  3. By: Zohal Hessami; Sven Resnjanskij
    Abstract: One concern about direct democracy is that citizens may not be sufficiently competent to decide about complex policies. This may lead to exaggerated conservatism in the voting decision (status quo bias). To investigate how complexity affects individual voting behavior, we develop a novel measure of proposition complexity (using official pre-referendum booklets) and combine it with post-referendum survey data from Switzerland. Using Heckman selection estimations to account for endogenous variation in participation rates, we find that an increase in proposition complexity from the 10th to the 90th percentile would decrease voters' approval by 5.6 ppts, which is often decisive: an additional 12% of the propositions in our sample would be rejected.
    Keywords: voting behavior, proposition complexity, direct democracy, status quo bias, Heckman probit model
    JEL: D72 D78
    Date: 2018
  4. By: Arnaud Chevalier; Benjamin Elsner; Andreas Lichter; Nico Pestel
    Abstract: This paper studies the impact of immigration on public policy setting. We exploit the sudden arrival of eight million forced migrants in West Germany after WWII. These migrants were poorer than the local population but had full voting rights and were eligible for social welfare. We show that cities responded to this shock with selective tax raises and shifts in spending. Voting data suggests that these changes were partly driven by the immigrants’ political influence. We further document a strong persistence of the effect. The initial migration shock changed the preferences for redistribution of the following generations.
    Date: 2018
  5. By: Jon H. Fiva; Simon Hix
    Abstract: Electoral reform creates new strategic coordination incentives for voters, but these effects are difficult to isolate. We identify how the reform of the Norwegian electoral system in 1919, when single-member districts (SMDs) were replaced with multi- member proportional representation (PR), shaped voter behavior. Our dataset allows us to measure vote-shares of parties in the pre-reform SMDs and in the same geographic units in the post-reform multi-member districts. The electoral reform had an immediate effect on the fragmentation of the party system in Norway, due in part to strategic party entry. We find, though, that another main effect of the reform was that many voters switched between existing parties, particularly between the Liberals and Conservatives, as the incentives for these voters to coordinate against Labor were removed by the introduction of PR. This has implications for how we understand electoral reform, particularly in the early part of the 20th century.
    Keywords: electoral reform, proportional representation, voter behavior
    JEL: D72
    Date: 2018
  6. By: Jan Palguta; Filip Pertold
    Abstract: Wages paid to politicians affect both the selection of candidates into electoral races and the on-the-job performance incentives of incumbents. We differentiate between selection and incentive effects using two regression discontinuity designs based on: 1) population thresholds shifting politicians' wages and 2) electoral seat thresholds splitting candidates into those who narrowly won or lost. We find that higher wages do not increase the electoral incumbency advantage, suggesting that the incentive effect of higher wages does not impact re-election rates. We further show that higher wages motivate narrowly elected incumbents to run again much less often than past narrowly non-elected candidates.
    Keywords: re-election; political selection; electoral competition; wages; incumbency advantage; regression discontinuity design; municipal legislatures;
    JEL: M52 J45 H57 H70
    Date: 2018–11
  7. By: Tom S. Clark; B. Pablo Montagnes; Jörg L. Spenkuch
    Abstract: Supreme Court justices often vote along ideological lines. Is this due to a genuinely different interpretation of the law, or does it reflect justices' desire to resolve politically charged legal questions in accordance with their personal views? To learn more about the nature of decision-making in the Court, we differentiate between votes that were pivotal and those that were not. When a justice's choice decides the outcome of a case, her ideology plays an even greater role in determining her vote - both relative to her choices on other cases and relative to other justices voting on the same case. We develop and empirically assess a model of voting in which judges trade off expressive and instrumental concerns. The evidence we present suggests that justices vote strategically, at least in part, to affect precedent.
    Date: 2018
  8. By: Filiz Ruhm (Plymouth State University)
    Abstract: Syrian displacement began in late 2011 and intensified between 2013 and 2016. With this intensification, the media coverage and political discourse in the United States shifted dramatically to demonize refugees, associating them with terrorism, and touting their potential as a grave security threat to the country. As a candidate, Donald Trump called ?to stop the tremendous flow of Syrian refugees into the United States,? citing their numbers ?incorrectly- as reaching the ?tens of thousands.? Trump -repeatedly said that the U.S. government had little information about the Syrian refugees it accepted, asked for extreme vetting,? drawing a link between refugees and a mass murder perpetrated by an American killer. Later, President-elect Trump accused Syrian refugees of links to terrorism, declaring that they are ?definitely in many cases, ISIS-aligned.? All these contributed to normalizing xenophobic and anti-refugee rhetoric. After January 20th, 2017 the Trump administration?s March 6th Executive Order on immigration included a 120-day shutdown of the U.S. Refugee Resettlement program.Though refugees are among the world?s most powerless and marginalized groups, live in perilous legal and political limbo and mostly non-violent, this paper, based on social constructivist theoretical framework, will look into persecution of refugees by Alt-Right Activists in the U.S.
    Keywords: Refugee, activism, social constructivism
    Date: 2018–11
  9. By: Abel FRANCOIS (University of Lille); Sophie PANEL (IRSEM); Laurent WEILL (LaRGE Research Center, Université de Strasbourg)
    Abstract: Since political uncertainty is greater in dictatorship than in democracy, we test the hypothesis that foreign investors scrutinize public information on dictator to assess this risk. In particular, we assume they use five suitable dictators’ characteristics: age, political experience, education level, education in economics, and prior experience in business. We perform fixed effects estimations to explain FDI inflows on an unbalanced panel of 100 dictatorial countries from 1973 to 2008. We find that educated dictators are more attractive to foreign investors. We obtain strong evidence that greater educational attainment of the leader favors FDI. We also find evidence that education in economics of the leader enhances FDI. By contrast, age, political experience, and prior experience in business have no relationship with FDI. Our results are robust to several tests and checks, including the comparison with democracies.
    Keywords: foreign direct investment, dictatorship, leader characteristics, political risk. Classification-JEL F21, F23.
    Date: 2018
  10. By: Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Mark E. Wohar (College of Business Administration, University of Nebraska at Omaha, Omaha, USA, and School of Business and Economics, Loughborough University, Leicestershire, UK.)
    Abstract: In this paper, we analyze the impact of the U.S. presidential cycles on the dollar relative to the British pound over the longest possible monthly period of 1791:01 to 2018:10, based on an Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) model. The usage of over two centuries of data controls for sample selection bias, while an EGARCH model accommodates for omitted variable bias. We find that over the entire sample period, the Democratic regime does indeed depreciate the dollar relative to the pound. However, when we identify structural breaks based on formal statistical analysis, we find that the full-sample result is primarily driven by the period covering 1827:01 to 1932:09, but in the recent period of 1932:10 to 2018:10, when Democrats have been in power, the dollar has in fact appreciated relative to the pound.
    Keywords: Exchange Rate, U.S. Presidential Cycles
    JEL: C32 D72 F31
    Date: 2018–11
  11. By: Ali, S. Nageeb; Bohren, Aislinn
    Abstract: A Principal appoints a committee of partially informed experts to choose a policy. The experts' preferences are aligned with each other but conflict with hers. We study whether she gains from banning committee members from communicating or "deliberating'' before voting. Our main result is that if the committee plays its preferred equilibrium and the Principal must use a threshold voting rule, then she does not gain from banning deliberation. We show using examples how she can gain if she can choose the equilibrium played by the committee, or use a non-anonymous or non-monotone social choice rule.
    Keywords: Collusion; Committees; Deliberation; information aggregation
    JEL: D7 D8
    Date: 2018–09

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