Admissible and sincere strategies under approval voting

This essay reasses the assumptions of the Brams-Fishburn theory of approval voting, and proposes modifications to make the theory correspond better with likely voting choices. With a small number of candidates, voters who use the inadmissible strategy of voting for all candidates can help to produce a result that better reflects the voters' wishes than is possible with admissible strategies, so we propose a widening of the definition of admissibility to encompass this case. With more than three candidates, we define first-order admissible strategies, which are the most likely strategies to be used in practice, and are also strongly sincere, in that a vote for any candidate is always accompanied by votes for all more or equally-preferred candidates. Their number is less under approval voting than under plurality voting. Both proposed modifications strengthen the technical arguments favoring approval voting over plurality voting.     

The dynamics of financial globalization: Technology,market structure,and policy response

The development of increasingly transnationalized (globalized) financial markets raises several key issues for the analysis of politics, public policy, and the national state. This article suggests that financial globalization increasingly constrains policymakers and circumscribes the policy capacity of the state. After looking briefly at a range of approaches to the process of financial globalization itself, the author suggests that technological change is the main independent variable, by reducing transaction costs and dramatically increasing the price sensitivity of financial markets across borders, while at the same time making possible a range of economies of scale. These very developments have a knock-on effect throughout the domestic and international economies. They in turn make obsolescent the political economies of scale — the governance structures — which have characterized economic policy in modern nation-states, undermining the capacity of the state to produce public goods. At the same time, globalized financial markets interact with rapidly changing interest group structures and divided state structures, especially through regulatory arbitrage. Without the development of transnational regimes capable of regulating global financial markets, the structural basis of the national state itself is being undermined, and Polanyi's Great Transformation is over.     

The stability of stated preferences for public goods: Evidence from recent budget games

We have investigated the stability of the individual response in recent budget games based on survey data, which is an important requirement for the reliability of this instrument. Budget games have gained popularity due to the problems encountered with alternative methods to determine preferences for public goods, such as the analysis of actual public expenditure date using median-voter theory or similar approaches. The short-term test-retest correlations (within an interval of one month) turn out to be rather low, typical around 0.3. No explanation of the test-retest differences could be found from the usual socio-economic and political characteristics of the respondents or from information characteristics of the survey design. Also, the pattern of budget-game outcomes for different countries and different periods is rather similar. The cumulative evidence suggests that the survey response to budget games is generated to a large extent by very general notions on the (un)desirability of public goods: defence is bad, education and health care are good. This implies that outcomes are often not related to the actual level and structure of public expenditure or revenues. As a result, the individual responses, even to the more sophisticated budget games, are subject to large uncertainty margins. Our results should warn researchers and, even more important, policy makers against giving too much weight to stated preferences for public expenditure or taxation levels obtained from budget games. Of course, further research is needed to obtain the precise limits of the instrument, including laboratory experimental economics.     

The possibility of a desirable minimal state

There is a near consensus that organized special interests use influence to expand government into activities that are detrimental to the public at large. Consequently, as Lee (1989) suggests, it would be desirable if the general public had more control over political decisions — if government were more responsive to the public interest. However, the public interest like rent-seeking, is a subjective concept (Pasour, 1987).The possible existence of a desirable minimal state is not disproved by an approach that assumes utilities are interpersonally comparable. Individual utilities are subjective and ordinal and hence, cannot be added or weighted to determine the level of government that is socially optimal. If one accepts the subjectivist approach, it follows that no one can decide upon any policy whatever in the absence of an ultimate ethical or value judgment (Rothbard, 1982: 212). In this respect, determining the desirable minimal state is no different from determining whether an individual government program is desirable (or whether it represents rent-seeking waste).     

Equity concern and the political economy of protection in New Zealand

A number of empirical models have found protection to be greatest for industries employing poorly skilled, low paid workers. This has caused some economists, notably Robert Baldwin, to suggest that equity concern by politicians in an alternative to the interest group hypothesis. This paper reports the result of a test on New Zealand data that shows that this equity concern is absent for industries with few employees or firms. Equity concern variables were only important for industries with many employees and firms. This suggests that equity concern is selective and may be reconcilable with self-interest motivations.I am grateful to John Tressler, Richard Harris and an anonymous referee for their helpful comments.     

Collective decision making and the limits on the organization's size

This essay clarifies the relationship between the technology of organizational decision making and the limits on the size of the group of decision makers within the organization. Viewing the number and quality of decision makers, and the time required for decision making as inputs in the production of collective decisions, we show that there exist generic organizational forces that offset the incentive to unlimited expansion of the organization. Even in a long run competitive environment with perfect markets for managers, unlimited duplication of the firm may not be economically feasible. We first analyze in a general setting and then illustrate in two stylized examples, the interplay between individual decisional quality, time required for an individual decision, direct and indirect costs of decision making, and the optimal number of decision makers (for example, management size).We are indebted to an anonymous referee of this journal and to P. Aranson for their very helpful comments and suggestions.     

Public choice and public policy: The vulnerability of economic advice to the interpretation of politicians

The confidence with which politicians defend their policies is in marked contrast to the qualifications which academic researchers attach to their results. The difference is indicative of a failure of the political market, whereby politicians have an incentive to select policies for electoral and ideological reasons and to minimise any uncertainty associated with policy effectiveness. In this scenario dissension between economists is of value if it alerts individuals to the sensitivity of policy answers to the framework in which they are derived. Moreover, with government failure, public choice analysts are faced with the problem of how best to amend policy advice in order to allow for potential distortion at the hands of politicians.The authors are Senior Lecturers in Economics and Members of the Centre for Fiscal Studies, University of Bath. They wish to acknowledge the very helpful comments of Professors Gordon Tullock, Harry Collins and an anonymous referee. Any errors that might remain are, of course, the sole responsibility of the authors.     

Promise and peril

The size of the federal budget tells only one part of the tale of government's presence in the market economy. The enormous amounts of non-tax dollars government requires to be spent on regulation – estimated at $647 billion per year – powerfully argue for some sort of regulatory scorekeeping. Regulatory costs are equivalent to over one-third of the level of government spending. A regulatory budget can be an effective tool both for spurring reform and monitoring regulatory activity.At bottom, today's rulemaking process is plagued by the fact that agency bureaucrats are not accountable to voters. And Congress – though responsible for the underlying statutes that usually propel those unanswerable agencies – nevertheless can conveniently blame agencies for regulatory excesses. Indeed, Americans live under a regime of Regulation Without Representation.A regulatory budget could promote greater accountability by limiting the regulatory costs agencies could impose on the private sector. Congress could either specify a limit on compliance costs for each newly enacted law or reauthorization of existing law, or Congress could enact a more ambitious full-scale budget paralleling the fiscal budget, a riskier approach. A comprehensive budget would require Congress to divide to a total budget among agencies. Agencies' responsibility would be to rank hazards serially, from most to least severe, and address them within their budget constraint. In either version of a regulatory budget, any agency desiring to exceed its budget would need to seek congressional approval.Regulatory costs imposed on the private sector by federal agencies can never be precisely measured, and a budget cannot achieve absolute precision. Nonetheless, a regulatory budget is a valuable tool. The real innovation of regulatory budgeting is its potential to impose the consequences of regulatory decisionmaking on agencies rather than on the regulated parties alone. Agencies that today rarely admit a rule provides negligible benefit would be forced to compete for the right to regulate. While agencies would be free to regulate as unwisely as they do now, the consequences could be transfer of the squandered budgetary allocation to a rival agency that saves more lives.Budgeting could fundamentally change incentives. Under a budget, adopting a costly, but marginally beneficial, regulation will suddenly be irrational. Congress would weigh an agency's claimed benefits against alternative means of protecting public health and safety, giving agencies incentives to compete and expose one another's bogus benefits. Budgeting could encourage greater recognition of the fact that some risks are far more remote than those we undertake daily. In the long run, a regulatory budget would force agencies to compete with one another on the most important bottom line of all: that their least-effective rules save more lives per dollar spent (or correct some alleged market imperfection better) than those of other agencies.There are clear benefits to regulatory budgeting, but there are also pitfalls. For instance, under a budget, agencies have incentives to underestimate compliance costs while regulated parties have the opposite incentive. Self-correcting techniques that may force opposing cost calculations to converge are only at the thought- experiment stage. However, limitations on the delegation of regulatory power and enhancing congressional accountability can help.Certain principles and antecedents can help ensure that a regulatory budgeting effort succeeds. Explicitly recognizing that an agency's basic impulse is to overstate the benefits of its activities, a budget would relieve agencies of benefit calculation responsibilities altogether. Agencies would concentrate on properly assessing only the costs of their initiatives. Since an agency must try to maximize benefits within its budget constraint or risk losing its budget allocation, it would be rational for agencies to monitor benefits, but Congress need not require it.Other ways to promote the success of a budget are to: establish an incremental rather than total budget; collect and summarize annual report card data on the numbers of regulations in each agency; establish a regulatory cost freeze; implement a Regulatory Reduction Commission; employ separate budgets for economic and environmental/social regulation; and control indirect costs by limiting the regulatory methods that most often generate them.A regulatory budget is not a magic device alone capable of reducing the current $647 billion regulatory burden. Yet a cautious one deserve consideration. Having good information is an aid in grappling with the regulatory state just as compiling the federal fiscal budget is indispensable to any effort to plan and control government spending.     

Private sector shrinkage and the growth of industrialized economies: Reply

Further tests and thoughts on the OECD data lead me to conclude that, if anything, my 1986 paper underestimated the magnitude of the inverse relation between economic growth and government size. If one takes the nominal-based measure of government scale, as advised by Saunders, the significance levels, coefficient magnitudes and goodness of fits improve over what I found with my initial investigation. I would suggest that Saunders reconsider his reluctance to believe that the size of the public sector is unrelated to economic growth in OECD countries over this time period.One additional thought appears relevant to the current policy debate concerning budget deficits and economic performance within the major industrialized economies. The empirical work displayed here and in my 1986 paper suggests serious problems associated with the various proposals urging governments to raise taxes and/or ease fiscal policy. Elsewhere, I have suggested that available empirical evidence implies that plans to increase taxes as a way out of budget deficits are plans that carry the potential for raising government spending and possibly future deficits as well. Coupled with the evidence presented here, we should also recognize the potential of tax increases to raise the level of government participation in a country and, accordingly, exert inverse influences on its future economic performance as well. As suggested in my 1986 paper, the empirical evidence may suggest the following irony: While political participants may crave larger and larger non-market resource allocations, their future ability to satisfy that craving may very well be severely constrained by the satisfaction of that same appetite.     

Food safety regulation: is the Delaney clause the problem or symptom?

The Delaney anticancer amendment to the Food, Drug, and Cosmetic Act of 1938 is a prominent example of zero risk legislation. The relevant clauses prohibit a finding of safety for any relevant substance found to induce cancer in humans or animals. It is argued that the Delaney approach to safety regulation is not only misguided, but that relaxation of the law - for example, to permit substances that pose insignificant cancer risks - would produce only marginal improvement in regulation. A major shift in regulation that permits some form of cost-benefit analysis is the only way to move toward rational policy choices.Professor of Economics, Rutgers University. I am grateful to William Ascher, Richard A. Merrill, and two referees for helpful comments on earlier drafts.     

Growth controls: policy analysis for the second generation

The 1970s spawned a first generation of growth controls which featured explicit (or implicit) restrictions on residential housing construction. These restrictions were typically implemented in small, affluent, and predominantly white suburban communities. Policy analysis responded by focusing almost singlemindedly on how such supply-side restrictions might increase housing prices and drive out the poor. The 1980s and 1990s have, however, given birth to a more comprehensive second generation of controls which many major cities and metropolitan areas are considering. This generation ties commercial and industrial as well as residential development to the reduction of the negative externalities and congestion costs associated with growth. To fully evaluate this second generation, policy analysis must take into account not only housing price effects and the rate of job creation but also the full range of amenity effects associated with differing rates of growth and attendant levels of traffic congestion, air pollution, and other public bads. We develop a framework for such second generation growth control analysis using San Diego as an example.     

Explaining collective action with rational models

We note the failure of a rational egoist model of human behavior to generate successful predictions of important economic and political behaviors including collective action. Alternative models are presented that combine rational, utility-maximizing features with concerns about collective welfare. The performance of these models in explaining contributing behavior in an experimentally-induced public goods game is compared to the performance of a rational egoist and collective welfare model. The results indicate that a model in which subjects are presumed to trade off benefits to self with benefits to others provides a better explanation of actual contributing behavior than either the rational egoist or collective welfare models, but still explains only a small amount of the individual variance in contributing behavior.The Institute for Political Economy, Utah State University provided important financial support for this study. Donald Cundy, Alan Huston, Joe Oppenheimer, John Orbell, and Randy Simmons provided valuable comments on earlier drafts.     

The power of the proposal maker in a model of endogenous agenda formation

In a distributive setting, this study examines a voting procedure for which agenda formation is endogenous. It is found, not surprisingly, that agenda formation is another avenue for strategic manipulation of the voting process and provides the member to first take the floor an asymmetric advantage. What is surprising is the degree of this advantage. We find that the initial proposal maker earns a share of the fixed resource exceeding 1 - for an -majority rule and this is regardless of the number of members. The voting rule is found to be an effective instrument in at least partially offsetting the power of the proposal maker while maintaining the stability of the voting process.The author gratefully acknowledges the comments of Peter Aranson, two anonymous referees, and the participants of seminars at Georgetown and Johns Hopkins. This paper was presented under the title The Alternating Offer Model as a Voting Procedure at the 1986 Public Choice Society Meetings and the 1986 Summer Econometric Society Meetings. The comments of Dennis Mueller and David Starrett at those meetings are most appreciated. Any remaining errors are, of course, my own.     

Science and the climate change regime

Given rapidly increasing losses from extreme climate events, the world community already has a common interest in action to mitigate and adapt to climate change. However, this common interest is not well served through continued promotion of either mandatory (legally-binding) policies or do nothing policies by various participants in the regime established by the U.N. Framework Convention on Climate Change. The common interest would be better served by a third way, comprised of voluntary no regrets policies that are commensurate with the limited political power of the regime and already have succeeded on small scales in reducing vulnerabilities to extreme climate events and in reducing greenhouse gas emissions. Both mandatory and do nothing policies, as well as the regime itself, have depended upon scientists for political support in the past. But scientists might better serve the common interest of the world community through support of a third way in the future.     

Protectionist policies as the regulation of international industry

The political feasibility of protectionist policies that regulate international industry derives from the absence of overt collusion among domestic import-competing producers. The regulation of international industry cannot be explicit since governments would thereby be perceived to be approving (or instigating) international collusion. Hence, voluntary export restraints have been popularly presented with a focus on the difficulties confronted by domestic import-competing producers and a de-emphasis on the mutual gains to domestic and foreign producers from monitoring by a foreign government of a restrictive export cartel arrangement. Similarly, trigger-price mechanisms have popularly been explained in terms of the need for anti-dumping measures to preserve fair competition. Likewise, the involuntary export tax derived in the first instance from an administratively validated (but, as demonstrated by Kalt's econometric analysis, contentious) complaint of unfair foreign competition. Voluntary export restraints, trigger-price mechanisms, and involuntary export taxes are however protectionist devices, the beneficiaries of which can transcend national jurisdictions, and which have in common the characteristic that the gains to domestic industry interests derive from the regulation of foreign competitors.A previous version of this paper was presented at a conference on Economics and Power organized by the FWS Institute of Zug and held at Interlaken, Switzerland in July 1988.     

Contending discourses in the electric and magnetic fields controversy: The social construction of EMF risk as a public problem

The issue of adverse health effects from electric and magnetic fields (EMFs) has been brewing for the last decade or so. While the epidemiological evidence persists in linking proximity-to-powerlines to a few forms of cancer, exposure and dose remain undefined, and no clear mechanism of action has been identified. Despite this scientific ambiguity, there are frequent calls for governmental action; and yet, there is no unanimity on what action is appropriate, even among those asserting that something ought to be done. This article analyzes the various ways that the EMF problem has been socially constructed through distinctive forms of public discourse and the sources of contention among these different forms. It should appeal to interpretive policy analysts and to those interested in the valuative assumptions behind policy claims. Those oriented exclusively to the technical side of EMF may find the interpretation offered here somewhat unsettling, however, since it relativizes many of the factual claims surrounding the issue. Attention is also given to the ways that multiple EMF discourses are accommodated in the absence of scientifically conclusive evidence.     

Economic growth and environmental quality are compatible

Man's relationship to the natural environment and nature's influence upon human life are among the oldest topics of speculation. Until modern times the major reason for concern was the prospect of diminishing returns. It was thought that population and economic growth would press against natural resource limits, and that economic welfare would fall to subsistence levels.In modern times in developed nations the prospect of diminishing returns has been avoided. Population increase has abated to rates which promise stability in population numbers. Technology, capital accumulation, and improvements in labor force have yielded increasing returns. Per capita output grows at 2 or 3 % per year.The modern concern is quality of environment and quality of life. The technology, industrialization and agglomeration which have yielded increasing returns of goods per capita have side effects. These are pollution and crowding, increased needs for public goods, expanded monopoly in the market places, and dilemmas of choice from affluence. The task for modern societies is to bend their enlarged technology and productive power to improving quality of environment and, more generally, quality of life.Presented at the Man and Land Symposium on Economic Growth and the Quality of Life, College of Liberal Arts, Oregon State University, Corvallis, Oregon, May 10, 1973.     

Between science and politics: assessing the risks of dioxins in Canada and the United States

Conclusions The history of U.S. and Canadian risk assessments for dioxin is an increasingly familiar tale of debates within the scientific community played out in the political arena. Uncertainty among scientists creates the possibility of large disparities between different governments' policies. However, the pattern of differences that emerges reflects the context in which science policy decisions are made within each agency and within each country. The political environment has implications not just for how mandated science is received, but for how it is conducted.Many features of the dioxin case are consistent with observations by others. In the cases of formaldehyde, alachlor, alar, and amaranth, EPA relied on mathematical models to assess the risks of potential carcinogens, while Health and Welfare Canada relied on the more traditional safety factor approach.³⁵ This body of evidence is suggestive of national styles of transscience. Features of the U.S. style include explicit rationales for regulatory decisions, reliance on consistent and explicit risk assessment principles, and public debate over scientific aspects of public policy. The Canadian style is exemplified by closed decisionmaking, case-by-case review, and the absence of public discussion of the scientific basis for government decisions.The differences between FDA and EPA in this case study suggest an important caveat, however. The U.S. style is most clearly reflected in the implementation of the non-discretionary environmental, health and safety statutes passed by the U.S. Congress since 1970. More closed and traditional styles of regulatory decisionmaking may survive within the U.S. as vestiges of a more deferential past.Even less than pure science, trans-science is not a universal enterprise. When scientists do reach agreement, it can be a powerful force that can even overcome political and national differences (Haas, 1989). However, when science is uncertain, as is typically the case in assessing the risks of toxic chemicals, there is more room for political factors to shape the way different countries interpret science in making policy decisions.     

The pits and the core: Simple collective decision problems with concave preferences

This essay extends the theory of simple collective decision problems to spatial games in which (contrary to the traditional assumption) each agent's preferences are concave, in the sense that the alternatives that the agent does not prefer to any particular reference alternative together constitute a convex set. Such concave preferences might characterize decision problems in which, say, a site must be selected for some obnoxious facility, such as a prison, garbage dump, or facility for managing hazardous materials. The results indicate that, under these conditions, the (weak -)core can be structurally unstable, changing discontinuously with apparently minor perturbations of the decision problem. The main theorem identifies a curious property of the core when the set of feasible alternatives is compact and convex and each agent's preferences are strictly concave. Namely, a point in the feasible set's interior can belong to the core only if there is no feasible alternative that makes every member of any winning coalition strictly worse off. In this sense, an interior point belongs to the core only if it lies in the pits.A preliminary version of this essay was presented at the West Coast Conference on Small Groups Research, Stanford University, 17 April 1985, and the Experimental Social Choice Workshop, Utah State University, Logan, Utah, 20–21 June 1985. This material is based on work supported by grants from the National Science Foundation (Grants SES 83-12123 and SES 84-10094), the Real Estate Center and Department of Decision Sciences of The Wharton School, and the Research Fund of the University of Pennsylvania.