Will you still trust me tomorrow? The causal effect of terrorism on social trust |
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Authors: | Benny Geys Salmai Qari |
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Institution: | 1.CER-ETH – Center of Economic Research at ETH Zurich and CEPR,Zurich,Switzerland;2.CER-ETH – Center of Economic Research at ETH Zurich,Zurich,Switzerland |
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Abstract: | The absence of a deselection threat in incumbents’ last term in office can be negative or positive for the polity. Some politicians may reduce their efforts, while others may pursue beneficial long-term policies that may be unpopular in the short term. We propose a novel pension system that solves the effort problem while preserving the willingness to implement long-term policies. The idea is to give politicians the option to choose between a flexible and a fixed pension scheme. While in the fixed scheme, performance has no impact on the pension, the pension increases with short-term performance in the flexible scheme, using the vote share of the officeholder’s party in the next election as a performance indicator. Such a pension choice improves the well-being of citizens since officeholders are encouraged to invest in those activities that are beneficial for society. We analyze the properties and consequences of such a system. Finally, we extend the pension system with choice to non-last-term situations and derive a general welfare result. |
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