A Comparative Study of the Effects of Institutional Arrangements in Municipal Solid Waste Services in Korea

In Korea, local governments are primarily responsible for providing municipal solid waste services to citizens. This paper examines the effects of different institutional arrangements and characteristics on cost savings, efficiency gains and productivity in the delivery of municipal solid waste services to citizens. In order to carry out this research, a hybrid cost function approach was employed, and cross-sectional time-series data from local governments of Korea covering a ten-year period (2000–2009) were used for empirical analysis. Empirical findings indicated that there were no effects of contracting-out on cost savings, efficiency and productivity gains in Korea. Specifically, the solid waste service costs were not significantly lower under contracting-out than under direct public delivery. In addition, contrary to the arguments of the proponents of privatization or contracting-out, efficiency and productivity gains were actually higher under direct public delivery than when contracted out.     

What is the cost of voting?

Despite a wealth of literature on the determinants of electoral turnout, little is known about the cost of voting. Some studies suggest that facilitating voting slightly increases turnout, but what ultimately matters is people's subjective perceptions of how costly voting is. This paper offers a first comprehensive analysis of the subjective cost of voting and its impact on voter turnout. We use data from an original survey conducted in Canada and data from the Making Electoral Democracy Work project which covers 23 elections among 5 different countries. We distinguish direct and information/decision voting costs. That is, the direct costs that are related to the act of voting and the costs that are related to the efforts to make (an informed) choice. We find that the cost of voting is generally perceived to be very small but that those who find voting more difficult are indeed less prone to vote, controlling for a host of other considerations. That impact, however, is relatively small, and the direct cost matters more than the information/decision cost.     

Applying Insights from Transaction Cost Economics to Improve Cost Estimates for Public Sector Purchases: The Case of U.S. Military Acquisition

ABSTRACT

This article uses Transaction Cost Economics (TCE) to help characterize, explain, and ultimately reduce the cost growth that plagues many of today's major investments in military capabilities. There is mounting evidence of a systematic bias in initial cost estimates of new weapon systems purchased by the U.S. military. Unrealistically low cost estimates result in cost overruns. Fixing cost overruns can substantially impact public budgets and military readiness. Cost estimates serve a dual function: first, as an integral part of the decision-making process to evaluate military purchases/investments, and second, as a baseline for future defense budgets. In the first case, underestimating costs can result in too many new weapon program starts and excessive investments in those systems. In the second case, unrealistically low cost estimates result in overly optimistic budgets. Budgets planned on the basis of optimistic cost estimates create the illusion of more resources available than actually exist. Two factors are often blamed for unrealistically low cost estimates: bad incentives (psychological and political-economic explanations), and bad forecasts (methodological explanations). While briefly exploring the former, the focus of this study is on cost estimating methodology. Conventional public cost estimating techniques focus on the production costs of public purchases (input costs, learning curves, economies of scale and scope, etc.). The goal of this article is to improve cost estimates by expanding conventional cost estimating methodology to include TCE considerations. The primary insight of TCE is that correctly forecasting economic production costs of government purchases or acquisitions is necessary, but not sufficient. TCE emphasizes another set of costs—coordination and motivation costs (search and information costs; decision, contracting, and incentive costs; measurement, monitoring, and enforcement costs, etc.). This study encourages public officials and cost analysts to capture these costs and to understand key characteristics of public-private transactions (uncertainty, complexity, frequency, asset specificity, and market contestability) to generate more complete and reliable cost estimates and improve public sector purchases.     

公共物品供给的交易费用多维度分析

制度分析学派通过不同制度的交易费用状况的比较,对各种制度的特征进行了较充分的分析.但是,对于公共物品的供给制度来说,由于公共物品的公共性价值特征导致的交易费用的复杂性,不能在单一维度的视角下笼统地仅考虑费用的数量大小,由此来评判制度安排和公共决策的好坏.因为除了信息不对称因素所产生的交易费用以外,有相当一部分被视为诱发交易费用的行为实际上是在体现和保证物品的公共性,这些费用表现为公共协商的成本和对损失方补偿的费用.试图从多种维度对公共物品供给中的交易费用进行分析,不仅对信息不对称如何产生交易费用进行了描述,还对公共协商和对损失方补偿产生的费用所表现出的公共性价值进行了解析;并借用了公共选择学派的广义宪政经济学理论,探讨了交易费用的最优解;最后倡导建立具有公共性特征的公共物品供给的交易费用现.     

Public pension reform in Japan

The March 2000 pension reform in Japan focused on the long-term financial sustainability of the country's two-tiered public pension system. The government opted for incremental changes in order to maintain pension solvency through 2060. Those changes could reduce future pension funding liability by an estimated one-third. Further, the decision to avoid structural reforms of its pension programs was based on fiscal considerations. Expanding general revenue funding for the first tier from the current share of one-third to cover the entire cost would require increases in the consumption tax that proved to be politically unacceptable. Fully privatizing the second, earnings-related tier would entail transition costs too great to bear at a time of rising budget deficits. In addition, the Japanese public generally supported the sharing of financial burden for public pension programs through a combination of benefit cuts, a raise in the pensionable age, and contribution rate increases. If current cost projections prove to be inaccurate, future pension reviews (scheduled every 5 years) will give the government further opportunity to fine-tune program changes.     

Assigning priority to environmental policy interventions in a heterogeneous world

Failure to consider costs as well as benefits is common in many policy initiatives and analyses, particularly in the environmental arena. Economists and other policy scientists have demonstrated that integrating both cost and benefit information explicitly into the policy process can be vital to ensuring that scarce funds go as far as they can toward achieving policy objectives. The costs of acquiring and analyzing such information, however, can be substantial. The objective of this paper is to help policy analysts and practitioners identify the conditions under which integrating cost and benefit information is likely to be vital to effective decisionmaking, and the conditions under which failing to use both cost and benefit data would result in little, if any, loss in efficiency. These points are illustrated through a conceptual discussion and an empirical analysis of a conservation initiative in the United States. © 2003 by the Association for Public Policy Analysis and Management.     

Explaining the Decision to Withdraw from a U.S. Presidential Nomination Campaign

We contend that a candidate’s decision to exit from a U.S. presidential nomination campaign is a function of three sets of considerations: the potential for profile elevation, party-related costs, and updated perceptions of competitiveness. We analyze data from eleven post-reform presidential nomination campaigns and find support for all three considerations. Specifically, our results suggest that in addition to candidates’ competitiveness, the decision to withdraw is a function of candidates’ closeness to their party and ability to raise their profile. At the same time, some of our results contradict the conventional wisdom regarding presidential nomination campaigns, as we find no evidence that media coverage or cash on hand directly affect the duration of a nomination candidacy.     

Perceptions,fear, and economic loss: an application of prospect theory to environmental decision making

Most of the analysis of costs associated with the introduction of risky prospects has concerned contingent costs amenable to insurance programs. An important missing element is the current cost associated with changes in uncertainty. These costs are not amenable to insurance plans and require compensation in order to prevent transfers. In a novel approach, this paper develops an application of prospect theory to such questions, in an intergenerational context. The importance of such an application is demonstrated in a case study of the high-level nuclear waste repository (HNWR) siting decision. As a case study, the costliness of obtaining some elements of the analysis leads to a simulation approach, comparing prospect costs at the three sites that were under consideration by the U.S. Department of Energy. Finding that such costs can be large, we argue for a reassessment of current risk analysis approaches. On a policy note, on the basis of the prospect cost analysis here, the choice of the Yucca Mountain, Nevada, HNWR site seems ill-advised.     

Cost and the calculus of voting

Downs's (1957) theory of voting maintains that individuals balance the costs of voting against anticipated benefits in deciding whether to vote. However, most empirical tests of his theory have concluded that costs play little role in individuals' decisions to vote or abstain, and that benefits are the determining factor. Unfortunately, the existing empirical tests of the theory have been inadequate, especially in regard to the measurement of the cost of voting. Using data from the Comparative State Elections Project, we develop an improved indicator of the cost of voting. When this measure of cost is used in a test of Down's theory, we find, contrary to most earlier research, that the cost of voting seems to be a more important determinant of participation than the factors associated with voting benefits in Downs's model.The authors shared equally in the research reported; the order in which they are listed was determined randomly.     

How Weak Recognition and Measurement in the Federal Budget Encouraged Costly Policy: The Case of "Supervisory Goodwill"

The budget process is the primary means by which federal policymakers allocate resources. The failure of the budget to recognize and measure the full cost of federal programs encourages the Congress and president to skew resource allocation toward policies whose budgetary costs are underestimated. These "low-cost" policies often increase costs to taxpayers without providing taxpayers with benefits. Recent examples of this phenomenon are found in the "supervisory goodwill" cases. This article reviews these cases, the budgetary weaknesses they identify, the influence these weaknesses had on legislators, and the unnecessary costs for taxpayers that result from the supervisory goodwill policy. Specifically, the federal budget did not recognize the cost that would result from encouraging financial institutions to assume the assets and liabilities of insolvent savings and loans. The budget's recognition of costs failed a second time by not recording expenditures when the government abrogated its contracts with acquirers. Both actions raised costs to taxpayers unnecessarily. In addition to analyzing budgetary weaknesses and their potential costs, this article also reviews two proposed budgetary reforms that could address the budgetary failures highlighted by the supervisory goodwill cases.     

Covert Costs of Privatization: Lessons from the Closure of Three Public Chronic Care Hospitals in Massachusetts

This article analyzes the process of applying cost/benefit analysis to decisions about privatizing public services. This process is examined in the context of a decision by the Commonwealth of Massachusetts to save costs by closing three of its seven public chronic hospitals. A postaudit of the outcomes from the closure showed that the realized cost savings were less than those projected in the original proposal. This shortfall could be traced to a failure to include certain relevant costs in the original proposal. Based on the findings, the article concludes with a discussion of policy recommendations for better analyses of similar decisions.     

Contracting Public Sector Services: A Meta-Analytic Perspective of the International Evidence

The performance framework adopted for this review includes five dimensions — economic, social, democratic, legal and political issues. This article presents summary findings from a statistical (meta-analytic) review of the performance measurements found in the available international literature on privatisation and contracting-out government services… This enables an assessment to be made of the extent to which reform objectives appear to have been achieved in practice. The article discusses the gains which result from contracting reforms, and the extent to which these gains accrue to various stakeholders — whether community, customers, the organisation or government.     

How do coalition signals shape voting behavior? Revealing the mediating role of coalition expectations

Existing empirical research suggests that there are two mechanisms through which pre-electoral coalition signals shape voting behavior. According to these, coalition signals both shift the perceived ideological positions of parties and prime coalition considerations at the cost of party considerations. The work at hand is the first to test another possibility of how coalition signals affect voting. This coalition expectation mechanism claims that coalition signals affect voting decisions by changing voters' expectations about which coalitions are likely to form after the election. Moreover, this paper provides the first integrative overview of all three mechanisms that link coalition signals and individual voting behavior. Results from a survey experiment conducted during Sweden's 2018 general election suggest that the coalition expectation mechanism can indeed be at work. By showing how parties' pre-electoral coalition behavior enter a voter's decision calculus, the paper provides important insights for the literature on strategic voting theories in proportional systems.     

Place of registration and place of residence: the non-linear detrimental impact of transportation cost on electoral participation

The French case offers a very valuable opportunity for testing the impact of transportation costs on the individual decision of turnout, because in France, voters can be registered in a municipality other than their residential municipality. Voters with a non-residential registration have to travel great distances in order to cast their ballots compared to voters with a residential registration. Our empirical analysis, based on a unique dataset extracted from the French Census database, uses a selection model to estimate the probability of voting of an individual voter with a non-residential electoral registration and assesses the impact of the distance to the voting municipality on this probability. The analysis shows that distance and in fine the cost of voting have a highly significant impact on electoral turnout: at the median distance (22 km), a 1% increase in distance induces a reduction of 0.01% in turnout in the first round of the 2012 French presidential election and 0.007% in the second round. Moreover, the impact of distance is non-linear: an increase in distance for voters with a short distance to travel is more detrimental to turnout than the same increase for voters who travel great distances. The results are robust to several checks, ranging from analyzing other elections to changes in the estimation method. This analysis provides new insights in the issue of voting cost and its impact on electoral turnout.     

Appeasing nihilists? Some economic thoughts on reducing terrorist activity

Recent contributions to the economics of terrorism have given contradicting recommendations for campaigning against terrorism, from the proposal to deprive terrorists of their resources to the proposal of raising the opportunity costs of terrorism by increasing the wealth of the affected regions. Within a simple framework which differentiates between the decision to become an active terrorist and the decision to support terrorists and which allows for reciprocal reactions to anti-terrorism policies, it is argued here that undifferentiated deterrence may indeed backfire, but so may an increase of the opportunity costs of terrorism. A very targeted anti-terrorism policy aimed only at active terrorists would then be the most reasonable remaining approach.     

Promoting the Utilization of Performance Measures in Public Organizations: An Empirical Study of Factors Affecting Adoption and Implementation

Despite its appeal for improving government, many state and local governments have not developed performance-measurement systems, and even fewer use these systems to improve decision making. This study examines the factors that affect the utilization of performance measurement, based on the results of a national survey of state and local government officials. The goals of the study were to provide better information on the patterns of usage of performance measurement and to use this information to develop an elaborated model of the factors presumed to affect utilization. Using distinctions from the policy and evaluation literature, hypotheses were tested and confirmed: Policy adoption is driven more heavily by factors from rational and technocratic theory, whereas actual implementation is influenced by factors addressed by political and cultural considerations.     

The Aversion to Direct Cost Imposition: Selecting Climate Policy Tools in the United States

Numerous policy tools could be employed in attempting to mitigate climate change through reducing greenhouse gas emissions. Direct cost imposition through the taxation of carbon content of fossil fuels has long enjoyed support from diverse policy analysts but has proven highly difficult to advance politically in the United States and many other nations. This article considers the evolving American experience in climate policy tool selection, including extended engagement by many states over the past decade and growing federal involvement in recent Congresses. It demonstrates the enduring aversion to direct cost imposition as opposed to other policy options. This includes a brief period in late 2008 and early 2009 when prospects for direct cost imposition heightened markedly at the federal level but collapsed quickly in favor of a mélange of other approaches that are likely to be less efficient but also less direct in their imposition of costs. The article concludes with considerations of other methods to advance direct cost imposition in the American case.     

The contractual nature of budgeting: A transaction cost perspective on the design of budgeting institutions

Viewing budgets as contracts, transaction cost theory focuses on the costs of negotiating and enforcing the myriad political agreements by which policymakers allocate the government's resources. This essay provides an overview of transaction cost theory and its implications for the design of budgeting institutions. It contrasts the behavioral premises (bounded rationality and opportunism) of the transaction cost approach with those of more traditional budgetary theories, and examines whether commitment and agency costs have structured budget actors' institutional choices. Investigation of the usage of key budget instruments- entitlements, multi-year appropriations, and tax expenditures - suggests that Congress has been more discriminating in its institutional choices than is commonly supposed. Sensitivity to the importance of transaction costs would increase the effectiveness of budget reforms.     

On the accuracy of regulatory cost estimates

This study compares ex ante estimates of the direct costs of individual regulations to ex post assessments of the same regulations. For total costs the results support conventional wisdom, namely that the costs of regulations tend to be overestimated. This is true for 14 of the 28 rules in the data set discussed, while for only 3 rules were the ex ante estimates too low. For unit costs, however, the story is quite different. At least for EPA and OSHA rules, unit cost estimates are often accurate, and even when they are not, overestimation of abatement costs occurs about as often as underestimation. In contrast, for those rules that use economic incentives, unit costs are consistently overestimated. The difference between the total‐cost and the unit‐cost results is caused by frequent errors in estimates of the effects of individual rules, which suggests, in turn, that the rule's benefits may also be overestimated. The quantity errors are driven both by difficulties in determining the baseline and by incomplete compliance. In cases of unit‐cost overestimation, unanticipated technological innovation appears to be an important factor — especially for economic incentive rules, although procedural and methodological explanations may also apply. © 2000 by the Association for Public Policy and Management.     

‘Can Governments Weather the Storm in the New Communications Climate?’

Government policies of privatisation, contracting-out and de-regulation have been major driving forces of globalisation in and through the communications industry. Ironically, however, globalism makes it increasingly difficult for national and state governments to influence the communications industry at national and state levels respectively. This article argues that globalism challenges governments to manage and develop their own communications systems and activities in ways which counter some of the major features of globalism in the communications industry. The article advocates rolling communications strategies at state and federal levels and outlines ways in which such strategies could develop.