State aid programs for equalizing spending across local school districts: does the structure of the program matter, or only it’s size?

This paper provides interesting insights into an important causal mechanism underlying Murray, Evans and Schwab’s (Am. Econ. Rev. 88(4):789–812, 1998) finding that court mandated reforms result in less inequality in spending per pupil levels across rich and poor school districts within a state. Treating the choice of an education program’s structure as endogenous, following the analysis of Leyden (Public Finance/Finances Publiques 47:229–247, 1992; Public Choice 115(1–2):83–107, 2003), yields empirical results suggesting that court mandated reforms increase the likelihood that a program’s structure will include a price effect and that the inclusion of a price effect in turn results in a decrease in spending inequality.     

Taking dictatorship seriously: a reply to Quesada

Antonio Quesada (Public Choice 130:395–400, 2007) argues that a dictator has no more than two to three times the ‘average power’ of a non-dictatorial voter. If Quesada is correct, then his argument has major consequences for social choice theory; for instance, it warrants reconsidering the significance of Arrow’s Theorem. If Quesada is incorrect, however, then his position is dangerously misleading. This paper argues that Quesada is wrong. His argument depends on his own formal account of power, an account that is implausible because it disregards a basic insight common to the standard characterisations of voting power: the idea that one has power over an outcome to the extent that one is able to change that outcome. Claims about power have a counterfactual component; to assert that an individual actually has determined an outcome is also to make an assertion about what would have been the case had that individual acted differently. We can employ David Lewis’s influential account of counterfactuals to show, contra Quesada, that in a dictatorship, non-dictatorial individuals and groups cannot possibly determine a social preference. In short, Quesada is fundamentally mistaken about power, and thus also about the distribution of power in a dictatorship.     

Islam and democracy

Using the POLITY IV and Freedom House indices, Rowley and Smith (Public Choice 139(3–4):273, 2009) found that countries with Muslim majorities enjoy less freedom and are less democratic than countries in which Muslims are a minority. Because the POLITY IV and Freedom House indices have been criticized on several grounds, I?reinvestigate Rowley and Smith’s finding using the new Democracy-Dictatorship data from Cheibub et?al. (Public Choice 143(1–2):67, 2010). The empirical results confirm that countries with Muslim majorities are indeed less likely to be democratic.     

Dupuit, Pigou and cost of inefficiency in public services provision

In this paper we revisit the literature on the economic implications of inefficiency in public services provision. Most authors emphasize the need of changing public sector management practices and the scope of activities carried out by general government. Following Dupuit (1844) and Pigou (1947) we focus instead on the increase in the cost of public services’ provision, when indirect costs, associated with the excess burden of taxation, are taken into account. We rely on Hicks’ compensating variation (following Diamond and McFadden (1974) and Auerbach (1985)), and some public sector inefficiency coefficients from Afonso et al. (2005; 2006) to show that these magnification mechanisms are not only conceptually relevant, they are also important from a quantitative point of view.     

Antitrust public choice(s)

Antitrust legislation and enforcement has over the last few decades been increasingly informed by ever more sophisticated analysis while—at the same time—evidence has continued to mount that the results of antitrust remedies fall far short of the promises held out under still prevalent ‘nirvana fallacy’ (Demsetz in Journal of Law and Economics 12(1):1–22, 1969) expectations. I draw upon a recent Supreme Court decision as well as the results of Young and Shughart’s (Public Choice, 2010. doi:10.1007/s11127_009-9531-y) novel approach to the analysis of antitrust enforcement activities to discuss the extent to which public choice theory is vital in solving the puzzle regarding the “unintended” effects of antitrust (public) choices.     

Coase and Bertrand on lighthouses

Coase (Journal of Low and Economics 17(2):185–213, 1974) failed to appreciate that the construction and maintenance of nineteenth-century lighthouses were in part financed by British taxpayers. Bertrand (Cambridge Journal of Economics 30:389–402, 2006) rightly calls him to account. While agreeing with Bertrand’s conclusion, we dispute her reasoning and argue that lighthouses nevertheless could have been supplied by the private sector.     

A correction to Potters and van Winden (1992)

This note amends the model of informational lobbying presented in Potters and van Winden (Public Choice 74:269–292, 1992). In the original article, the authors find that only separating and pooling equilibria exist when the cost of lobbying is intermediate and the policymaker’s prior favors the interest group’s preferred policy. However, we prove that a semi-separating equilibrium also exists under these conditions. Implications for lobbying behavior are discussed.     

Law-and-economics: why Gordon Tullock prefers Napoleon Bonaparte over the Duke of Wellington; and why he may end up on St. Helena

Most scholars in the field of law-and-economics lean to the view that the common law is efficient. Tullock, however, argues that the common law is inefficient and suggests dramatic modifications to the American legal system, transforming it from a common law system to a civil code system and abandoning the adversarial proceedings in favor of an inquisitorial process. This essay summarizes and critically evaluates the thrusts of Tullock’s 1988 article and his 1997 book, which, together direct a full-frontal attack on the Anglo-Saxon common law system.     

Agenda trees and sincere voting: a response to Schwartz

Schwartz (Public Choice 136:353–377, 2008) has identified a controversy within the voting theory literature pertaining to the representation of agenda structures and the consequent definition of sincere voting. This note responds to Schwartz’s remarks by arguing that the kind of agenda tree he uses does not adequately represent some common parliamentary agendas, and that consequently his definition of sincere voting cannot always be applied.     

Conceptualizing the Relationship Between Persuasion and Legitimacy: Official Framing in the Case of the Chinese Communist Party

In the debate on authoritarian resilience, the importance of persuasion to regime legitimacy has been widely acknowledged, yet a conceptual framework explaining the role of persuasion is still lacking. Against this backdrop, we argue that the framing perspective (Benford and Snow 1988) provides a useful basis for such a framework. Drawing on Beetham’s (1991) legitimacy model, we contend that the ruling elites in authoritarian regimes propagate official frames in a continuous effort to reproduce the belief of the populace in the elites’ leadership qualities and their determination to serve the common interest. In the empirical part of our paper we look at the case of China, where the Chinese Communist Party (CCP) has in recent years reemphasized persuasion as a means of reproducing legitimacy. We then apply our theory in an analysis of the conceptual shifts in the CCP’s frames and ideology, as propagated under its secretary general, Hu Jintao.     

The curious commentary on the citation practices of Avner Greif

Rowley’s (Public Choice 140:275–285, 2009) claim that I have “expropriated” (p. 276) intellectual property rights from Professor Landa by insufficiently citing her works is vacuous. It failed, among other faults, to recognize the substantive distinction between the lines of research pursued by Professor Landa and myself. Her analysis of trust is preferences-based while my analysis is beliefs-based. We talk about similar issues but what we say is very different.     

Step return versus net reward in the voluntary provision of a threshold public good: An adversarial collaboration

This research concerns how costs and benefits affect the voluntary provision of threshold public goods. Cadsby and Maynes (J. Public Econ. 71:53–73, 1999) hypothesized that the difference between the value and cost of such a good, its net reward, influences the likelihood of provision. Croson and Marks (Exp. Econ. 2:239–259, 2000) focused on the ratio of group payoff to total cost, the step return. We find that step return is the best predictor overall, although net reward has some impact, negatively affecting the probability of provision with inexperienced participants and positively affecting it with experienced participants.     

District magnitude and representation of the majority’s preferences—a reply and new perspectives

We reply to the comment of John Carey and Simon Hix on our original contribution entitled “District Magnitude and Representation of the Majority’s Preferences: Quasi-Experimental Evidence from Popular and Parliamentary Votes” in Public Choice 151:585–610 (2012). District magnitude does not necessarily affect deviations between political representatives and their district voters in a strictly monotonic way but monotonicity is upheld for deviations between representatives and the national majority. We provide new perspectives and caution against evaluating electoral systems by focusing on individual politicians’ behavior but neglecting aggregation effects.     

The unanimity rule revisited: the case of revisions of hybrid constitutions

Unsolved issues of efficient public investment in stochastic-dynamic models of the economy are examined using results from incomplete markets general equilibrium theory. The analysis delivers two previously unarticulated findings. First, the equilibrium interest rate can be used to bound the socially optimal discount rate for a public investment. Second, a new non-market mechanism (CRM) that is welfare improving over alternatives in the Groves class is introduced. The second finding amends the well-known characterization theorem of Green and Laffont (Incentives in Public Decision-Making, North-Holland, New York, 1979) and identifies a new class of direct-revelation mechanisms for public goods provision in stochastic-dynamic settings.     

Optimal linear contracts under common agency and uncertain central bank preferences

We analyze the effects of imperfectly known central banker’s preferences on optimal linear contracts offered by the government and an interest group. These effects depend on the type of uncertainty faced by the principals. When the central bank’s output target is uncertain the results by Campoy and Negrete (Public Choice 137:197–206, 2008) under perfectly known preferences obtain. Uncertainty about the central banker’s degree of conservatism or about its degree of “selfishness” has a multiplicative impact on the principals’ instruments in the agent’s best response function; this may generate an inflation bias independently of the type of contract offered by the interest group.     

The social sub-optimality of competitive elections: comment

Buchler (Public Choice 133(3-4): 439–456, 2007) models elections as methods of making social choices among different options, and argues that increased electoral competition may produce inferior outcomes. However, competitive elections also play a role in affecting the behavior of candidates, and of elected officials in office. Once this role is recognized, competitive elections must be seen as a necessary (but not sufficient) ingredient in the production of socially-optimal government.     

Oxytocin and the Biological Basis for Interpersonal and Political Trust

Political scientists have documented the many ways in which trust influences attitudes and behaviors that are important for the legitimacy and stability of democratic political systems. They have also explored the social, economic, and political factors that tend to increase levels of trust in others, in political figures, and in government. Neuroeconomic studies have shown that the neuroactive hormone oxytocin, a peptide that plays a key role in social attachment and affiliation in non-human mammals, is associated with trust and reciprocity in humans (e.g., Kosfeld et al., Nature 435:673–676, 2005; Zak et al., Horm Beh 48:522–527, 2005). While oxytocin has been linked to indicators of interpersonal trust, we do not know if it extends to trust in government actors and institutions. In order to explore these relationships, we conducted an experiment in which subjects were randomly assigned to receive a placebo or 40 IU of oxytocin administered intranasally. We show that manipulating oxytocin increases individuals’ interpersonal trust. It also has effects on trust in political figures and in government, though only for certain partisan groups and for those low in levels of interpersonal trust.     

District magnitude and representation of the majority’s preferences: a comment and reinterpretation

Drawing on new data that combine recorded votes from the Swiss National Assembly with canton-level referendum results on identical legislative proposals, Portmann et al. (Public Choice 151:585–610, 2012) develop an innovative strategy to identify the effect of district magnitude on the relationship between representatives and their constituents. We replicate PSE’s central result and also estimate a related model that allows for the possibility of non-monotonicity in the relationship between district magnitude and representatives’ deviance from referendum median voters. Our results indicate that representatives elected in low-magnitude multi-member districts deviate from canton-level majorities less than either MPs from single-member districts or those from high-magnitude multi-member districts.     

On the empirical relevance of Condorcet’s paradox

Condorcet’s paradox occurs when there is no alternative that beats every other alternative by majority. The paradox may pose real problems to democratic decision making such as decision deadlocks and democratic paralysis. However, its relevance has been discussed again and again since the celebrated works of Arrow (Social choice and individual values, 1963) and Black (The theory of committees and elections, 1958). The discussion varies from one extreme to the other: from very relevant to practically irrelevant. This paper tries to bring more clarity to the discussion by reviewing the literature on the empirical relevance of Condorcet’s paradox. Since a definition of the paradox for even numbers of voters and alternatives, and for weak voter preferences is missing in the literature, we first define the paradox clearly and simply. Then, three topics are investigated, namely domain conditions, culture and the likelihood of the paradox, and the empirical detection of the paradox. Domain conditions express regularities in voter-preference profiles that prevent the paradox. Frequent observations of these domain conditions would make Condorcet’s paradox empirically less important. Cultures define probability distributions over the set of voter preferences. Observation of cultures might be a first step to indicate the relevance of the paradox. The empirical detection of the paradox speaks for itself; we will try to identify the number of observations of the paradox so far. The overall conclusion is that the empirical relevance of Condorcet’s paradox is still unsettled.     

A rejoinder to “A commentary on ‘Does the Fed contribute to a political business cycle?’ ”

Jerry Tempelman (Public Choice 132:433–436, 2007) claims that “advances in macroeconomic theory and in the implementation of monetary policy” make discretionary monetary policy preferable to a rules-based system. His supporting evidence is based on the performance of the Fed during the Volcker–Greenspan regimes. His evidence is inappropriate and his conclusion supporting discretion over rules unwarranted.