The impact of consumer advocates on regulatory policy in the electric utility sector

We examine the effect of consumer advocate participation in administrative procedures on regulatory policy. We use a unique panel database of rate reviews conducted for US electric utilities from 1980 to 2007 to assess how state consumer advocates affect Public Utility Commission decisions on utilities’ allowed financial returns and rate structures. We find first that utilities experience fewer rate reviews in states with consumer advocates, consistent with utilities strategically postponing requests for rate increases. Second, after controlling for observed and unobserved state characteristics, we find that PUCs in states with consumer advocates permit returns on equity that are on average 0.45 percentage points lower than states without advocates—equivalent to a $7.9 million (3.7 %) reduction in average utility operating income, all else equal. Third, consumer advocates are associated with lower residential rates relative to other customer classes. Our findings provide statistical support for the thesis that institutionalizing interest group representation in administrative procedures is one way for legislatures indirectly to influence agency-determined policies.     

Beyond the problem projects paradigm: Defining and revitalizing “severely distressed” public housing

Abstract

This article challenges the utility of the concept of “severely distressed” public housing, arguing instead that the program has systemic problems and that the 6 percent of developments recently identified as severely distressed by the National Commission on Severely Distressed Public Housing are merely those furthest along a continuum. Applying the commission's own criteria to nationwide program data that reveal dramatically increased resident impoverishment during the past decade, the article reveals the need for a more inclusive definition of severe distress.

While acknowledging the moral and political imperative to ameliorate conditions in the worst‐off places first, the article cautions against overreliance on a problem projects paradigm that could obstruct calls for systemwide reforms. The article advocates an action‐oriented research agenda, emphasizing data collection on a variety of ill‐understood socioeconomic aspects of public housing conditions and enabling policy analysts to set clearer goals about what sustainable revitalization of public housing should entail.     

Do supermajority rules limit or enhance majority tyranny? evidence from the US States, 1960–1997

Buchanan and Tullock (1962) demonstrates that supermajority rules can reduce tyranny of majority problems in a democracy. However, recent theoretical work by Dixit, Grossman, and Gul (2000) postulates that this static analysis of supermajority rules may be inadequate to explain political decisions in a dynamic setting. In fact, supermajority rules may increase the incidence of majority tyranny because of rotating political representation. Using data from US state legislatures we examine the effect of supermajority rules on different categories of government expenditures and tax revenues during the latter half of the 20th century. We find supermajority rules have little effect on general government expenditures and tax revenues. However, supermajority rules are associated with lower public welfare transfers, which supports the traditional analysis of the fiscal effects of supermajority rules.     

When Government Subsidizes Its Own: Collective Bargaining Laws as Agents of Political Mobilization

Government policies can activate a political constituency not only by providing material resources to, or altering the interpretive experiences of, individual citizens, but also by directly subsidizing established interest groups. We argue that state laws mandating collective bargaining for public employees provided organizational subsidies to public sector labor unions that lowered the costs of mobilizing their members to political action. Exploiting variation in the timing of laws across the states and using data on the political participation of public school teachers from 1956 to 2004, we find that the enactment of a mandatory bargaining law significantly boosted subsequent political participation among teachers. We also identify increased contact from organized groups seeking to mobilize teachers as a likely mechanism that explains this finding. These results have important implications for the current debate over collective bargaining rights and for our understanding of policy feedback, political parties and interest groups, and the bureaucracy.     

Interacting with Consumer Advocates

This article explores the role of consumer advocacy. Those involved in public policy formation and administration – regulators, governments and other public policy makers – share an interest in effective consumer advocacy. Those who make our laws, as well as those who are custodians of its adjudication, compliance, monitoring and enforcement, share a common position with many consumer advocates – they all work to advance the long‐term interests of consumers.     

Constraining Executive Action: The Role of Legislator Professionalization in Latin America

What explains the failure of legislatures with strong constitutionally endowed powers to exert themselves over the executive in practice? We examine the role of legislator professionalization in strengthening the legislature's ability to constrain executive action, conceptualizing legislator professionalization as prior legislative experience and prior professional work experience. We argue that more professionalized legislators, through the skill and knowledge they bring to the policymaking process from prior experience, will be better equipped to challenge executive authority. In a sample of four Latin American countries from 1990 through 2010, we find that legislatures are more likely to curb executive decree issuance when individual legislators are strongly professionalized, controlling for constitutional powers and several other partisan and political factors. Our findings suggest that legislatures composed of more professionalized legislators can constrain executive action, especially in the context of a unified political opposition in the legislature.     

THE PLURALITY OF FACTORS INFLUENCING POLICYMAKINC: SCHOOL REFORM LEGISLATION IN THE AMERICAN STATES, 1982–84

This paper attempts to explore recent efforts of American state legislatures to improve the quality of public schools. Which state legislatures have passed school reform legislation? At what aspects of public education is this reform legislation aimed? Are there significant variations across states in such reform legislation? What has contributed most to the passage of such legislation? Is it the socioeconomic characteristics of individual states or the structural and procedural characteristics of their legislative branch that better explain school reform legislation? Analysis of data from the 50 states reveals greater variation in legislative results that reform public schools. The regional locus of most reform was the south. Most importantly, school reform legislation was found to be influenced by the interaction of a multitude of divergent forces. This finding suggests that researchers interested in the determinants of legislative action must move beyond analysis of whether economic or political forces shape legislative outcomes to inquire how economic, political and other forces interact when a given reform effort reaches the legislative halls of the states.     

A Song of Policy Incongruence: The Missing Choir of Consumer Preferences in GMO‐Labeling Policy Outcomes

This article focuses on the degree of policy congruence, and by extension policy responsiveness, of U.S. federal‐ and state‐level GMO labeling laws from 2011–2016. Utilizing consumer survey data, evidence overwhelmingly demonstrates consumers prefer clear text‐based indication if food products contain genetically modified ingredients. However, the federal law adopted in 2016 mandates GMO labeling but with exceptions permitted to clear on‐package text labeling. The results of this study demonstrate that consumer preferences were not adequately represented at the federal level and were misaligned with state policy activities as captured in the aggregate outcome. State legislatures were actively proposing mandatory legislation with only a few cases of success, which did not adequately represent the wishes of the people. Given the misalignment and overall policy incongruence, the consequences of pending federal law are discussed in light of why the voices of the consumer choir were not heard by lawmakers.     

Maximizing models of legislative choice

A number of recent studies have reported estimates of single equation and simultaneous equations models of the decisions of state legislatures. These investigations have been ‘economic’ ones, in the sense that considerations of the relative costs and benefits to some self-interested person or group capable of affecting legislative outcomes have motivated the choice of explanatory variables. Thus, perhaps implicitly, these studies have assumed utility maximization by some critical agent(s) in the political marketplace. This essay draws attention to the implications of this maximizing assumption for the proper specification and estimation of the associated empirical models.     

Mixed-member electoral systems,best loser rules,and the descriptive representation of women

Proportional representation (PR) electoral systems are commonly considered more advantageous for the election of women compared to majoritarian electoral systems. In mixed electoral systems, female candidates are often more likely to be elected through the PR tier compared to women running in single-member district races. While most mixed systems employ a closed-list, a number of legislatures use a best loser provision whereby losing district candidates are ordered on the PR list based on their performance in single-member districts. This paper examines the extent to which best loser laws impact the election of women using candidate data from sub-national legislatures in Mexico and Germany and Japan's House of Representatives. We find the contamination of PR lists by single-member district results reduces the advantage women candidates have in the PR tier. Best loser limits the ability of political parties to use PR to represent groups underrepresented in single-member district elections.     

Legislative Capacity and Credit Risk

Legislatures differ in their institutional capacity to draft and enact policy. While strong legislatures can increase the congruence of policy outcomes to the electorate's preferences, they can also inject uncertainty into markets with their ability to alter the political economic landscape. We argue that this uncertainty will manifest in a state's ability to borrow and hypothesize a negative relationship between legislative capacity and creditworthiness. Using ratings of general obligation bonds issued by the American states over nearly two decades and data on the institutional capacity of state legislative assemblies, we find support for the claim that having a legislature that is better equipped to affect policy change increases credit risk evaluations. The results we present broaden our understanding of the importance of legislative institutions, the determinants of credit risk, and the economic implications of democratic responsiveness.     

Political environment and voluntary disclosure in the U.S.: Evidence from the Carbon Disclosure Project

We investigate whether the political leaning of the state where a given firm is headquartered is related to that firm's decision to voluntarily disclose climate change information. We study S&P 500 firms that were surveyed by the Carbon Disclosure Project (CDP) and find that firms headquartered in more Democratic states are more likely to disclose carbon emissions information to the CDP. Furthermore, firms in more Democratic states are more likely to permit public disclosure of their survey responses and tend to receive higher disclosure scores. We consider two political variables, one based on political power and one based on public political preference. Our results are consistent with political power driving the firm's willingness to voluntarily disclose information about climate change. These results suggest that the relation between the political environment and disclosure is more closely linked to concerns over regulatory threats as opposed to acquiescence to social norms.     

Effects of Administrators' Aspirations,Political Principals' Priorities,and Interest Groups' Influence on State Agency Budget Requests

This article addresses a long‐standing question in public budgeting: What factors influence bureau/agency budget request decisions? Empirical results confirm the complexity of variables that explain different levels of budget requests by over 1,000 state administrative agencies. The expected significant influence of administrator (agency head) aspirations was clearly present. But other important sources enter into the decision of agencies to satisfy rather than maximize. These include the strategic roles, activities, and priorities of governors, legislatures, and interest groups. These political principals' influence operates to constrain, discipline, or even augment agency budget requests.     

Separated Powers in the United States: The Ideology of Agencies,Presidents, and Congress

Government agencies service interest groups, advocate policies, provide advice to elected officials, and create and implement public policy. Scholars have advanced theories to explain the role of agencies in American politics, but efforts to test these theories are hampered by the inability to systematically measure agency preferences. We present a method for measuring agency ideology that yields ideal point estimates of individual bureaucrats and agencies that are directly comparable with those of other political actors. These estimates produce insights into the nature of the bureaucratic state and provide traction on a host of questions about American politics. We discuss what these estimates reveal about the political environment of bureaucracy and their potential for testing theories of political institutions. We demonstrate their utility by testing key propositions from Gailmard and Patty's (2007) influential model of political control and endogenous expertise development.     

After Citizens United: How outside spending shapes American democracy

We study the political consequences of lifting restrictions on the funding of groups engaging in outside spending (e.g., independent political advertising) in elections. Theoretically, we assume that outside spending changes the salience of candidate-specific attributes relative to their party labels. Empirically, we employ a difference-in-differences design that exploits the removal of state-level restrictions on the funding of outside spending mandated by the federal-level rulings in both Citizens United and SpeechNow.org v. FEC. We find strong evidence that these regulatory changes increase the electoral success of Republican candidates, thereby leading to more ideologically conservative legislatures. We find no effect on polarization. Consistent with our theory, the size of our estimated effects depends on the power of labor unions and the alignment of business interests with the Republican party.     

When Are Nudges Desirable? Benefit Validity When Preferences Are Not Consistently Revealed

Cost-benefit analysis, as a tool of general use in policy analysis or as a mandated analytical process in some rulemaking, provides protocols for assessing the relative efficiency of policy alternatives. However, inconsistent and apparently irrational decisions by consumers in some situations call into question the validity of inferring the values that consumers place on outcomes from their observed choices. It also opens the door for “nudges” that change the architecture of choice to promote more “rational” consumer choice. Differences between decision utility and experience utility and the willingness of consumers to pay for reductions in temptation provide conceptual bases for thinking about the efficiency of nudges. However, assessment of nudges and their role in behavioral public administration should also recognize that heterogeneous preferences can result in increases in utility for some and decreases for others. Therefore, nudges require systematic assessment like other policy instruments.     

Competition and switching in public service markets: Can they reduce inequalities?

Regulatory reforms to public infrastructure services across European Union (EU) countries were aimed at increasing consumer welfare by introducing competition and choice into service markets. However, empirical evaluations have questioned whether these reforms have benefitted all consumers, suggesting that vulnerable groups of service users (especially those with lower levels of formal education), might be locked into poorly performing services. We assess the relationship between the level of competition in electricity and fixed telephony markets in EU countries and evaluate the affordability of these services for different socio‐educational layers. Our findings show that – although in countries where there is a relatively high frequency of switching, inequalities between socio‐educational groups are smaller and eventually disappear – competition as such does not play a part. These results suggest that demand‐side regulation that successfully enables consumer switching has the potential to equalize social welfare, thereby reflecting a possible convergence of regulatory instruments and the central aims of the welfare state in this context.     

Political Equilibrium and the Provision of Public Goods

This paper treats interest groups – peoplein their role as consumers of a public goodand people in their role as taxpayers – asthe unit of account for representativevoting. Each group is allowed to make aneffort to support its preferred candidateand, at the margin, the effort-benefitratio is the political price the group iswilling to pay to secure an additionaldollar of benefits.

Under reasonable assumptions, a uniqueequilibrium is assured and itscharacteristics are quite intuitive. Inparticular, the marginal political benefit(from consumers) of the last unit of outputmust equal the marginal political cost(from taxpayers). Alternatively, the rateat which the politician can transformtaxpayer income into consumer surplus mustequal the ratio of their political prices. The result will be optimal only on the rareoccasion when the effort-benefit ratios ofthe two groups are equal.

Since political goals are themselves ``public goods'' for thetwo interest groups,they face all the normal free riderproblems. Moreover, even small differencesin the effort-benefit ratios of the twogroups lead to large welfare losses.

How bad can things get? Each group has anincentive to try to overcome free-riderproblems and divert resources from privatesector activities to politics. And anyincrease in political effort is alwaysrewarded. However, (1) the marginal returnis always higher for the group with thesmaller effort-benefit ratio; (2) thedifferential return between the two groupsgrows the further we stray from optimality;and (3) both groups face diminishingreturns. These incentives may act asnatural checks on political outcomes –placing some limit on the amount of wasteand inefficiency democracy is likely toproduce.

The influence of a producer (of the publicgood) group that collects a rent increasesthe likelihood that public goods will beoverproduced. In fact, it is conceivableto have a good with no value to consumersproduced, solely because of the influenceof producers. Comparative static analysisreveal that the political system willrespond to changes in market conditions ina way similar to economic markets. Themagnitude of these shifts differs fromeconomic markets, however. For goods thatare being overproduced, the politicalmarketplace overresponds to changes indemand and underresponds to changes incosts. The converse is true for goods thatare being underproduced.

     

The theory of economic regulation and public choice and the determinants of public sector bargaining legislation

In this study we used the theory of economic regulation and public choice to derive a model to explain the pattern of public sector bargaining laws among the states. We find this type of legislation is influenced by the following demand factors: (1) the extent of public sector union membership, which represents the interest group hypothesis, has a positive influence on pro-union legislation; (2) the extent of employer opposition to unions, as measured by unfair labor practice charges against employers in representation elections, has a negative effect on bargaining laws; (3) two taste variables — the salaries of public employees and the percent of nonwhite employment in the state — have a positive influence on these laws. A result which will be surprising to many people is that the extent of private sector union membership has no significant influence on the passage of public sector bargaining legislation.Our empirical analysis indicates that supply factors are also important in explaining the pattern of public employee bargaining laws across the state. We find that states are more likely to enact pro-union legislation under the following conditions: (1) constituents appear to hold pro-labor views as represented by their Congressmen's voting record; (2) neighboring states have passed mandatory bargaining laws; and (3) when competition is greater among the political parties.