Benevolence,malevolence and economic theory

How selfish soever man be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.—Adam Smith inThe Theory of Moral Sentiments.     

Distributional coalitions,state strength,and economic growth: Toward a comprehensive theory of economic development

High-performing economies in the Asia-Pacific region together with only mediocre economic development in Latin America prompts the question of what explains differential economic growth rates among developing countries. Combining a statist perspective with Olson's theory of interest group formation, this research hypothesizes that nations with weak distributional coalitions will more likely experience high growth and state intervention will be effective. Using a longitudinal research design, this secondary analysis involves a comparative and interactive examination of eight Asian-Pacific and twelve Latin American countries. By considering the role of the state in interaction with distributional coalitions in society, the results indicate that approximately two-thirds of the variance in national economic growth is explained.     

An economic theory of economic analysis: the case of the School of Salamanca

Public Choice - The School of Salamanca often is identified as the first economic tradition in the history of the “dismal science”. Its members anticipated principles later developed by...     

Cursed resources,or articulations of economic theory in the Gulf of Guinea

Abstract

Economic experiments, or attempts to shape national and local economies with the help of economic theory, have been typical of post-war development efforts. Economic sociologists have explored the role of such experiments to demonstrate how economics – as a set of practices, ideas and technologies – enacts its worlds. This paper examines one such case of high-powered economic theory and its enactment in an emergent West African oil economy by focusing on economist Jeffrey Sachs's advisory project in São Tomé and Príncipe. It pivots on the ‘resource curse’, an economic device that has recently gained purchase in global policy circles. This paper argues that economic devices are not simply imposed on pre-arranged worlds. Instead, they collide with and adjust to already existing politico-economic and socio-cultural conditions, resulting in complex articulations. Drawing on ethnographic material, I critique the ability of the resource curse to make sense fully of apprehensions of the past, present and future consequences of extractive industry developments. Contrasting economic accounts of an incipient curse with competing and complementary local accounts of the effects of oil wealth, I propose a new model for the sociological analysis of the variety of articulations into which an economic device, such as the curse, may enter.     

The economic theory of rent seeking

Tullock’s concept of rent seeking was the first statement of a quantitative principle about the social costs of such activities as lobbying and favor seeking. As such, this part of Tullock’s legacy to modern economics is one of his most important contributions.     

A communotropic theory of economic voting

Within the social sciences, there is a long and storied history of the effect of economic conditions on vote choice. The traditional arguments are that voters have personal (egotropic) and/or other-regarding (sociotropic) preferences and that they reward and punish politicians electorally based on economic conditions at these levels. However, there is a third option. As industries, employment, and economic conditions are not uniformly distributed across the country, preferences may be locally based. This project combines unique survey data with Metropolitan Statistical Area unemployment numbers and finds evidence of distinct preferences at a third “communotropic” level.     

Optimal taxation and economic growth: a comment

Scully (Public Choice 115: 299–312, 2003) claims that for the United States in 1960–1990, the growth-maximizing size of the state was about 19% of GDP. However if an error in the model specification is corrected and if 2001 vintage data is used (instead of 1996 vintage data), estimates of the growth-maximizing size of the state range between 9% and 29% of GDP. Further, the method spuriously identifies a ‘growth maximizing tax rate’ even if no relationship exists between growth and the size of the state. The model cannot address reliably the question it attempts to answer.     

Distributive politics,ward representation,and the spread of zoning

This analysis examines two alternative explanations for the adoption of comprehensive zoning ordinances in the years immediately following its initial adoption in New York City. The market failure explanation predicts zoning adoption in cities where externality problems (represented by heavy incidence of manufacturing) exist. The distributive policymaking model treats zoning as a form of regulation that is most likely to be found in cities where local legislators are elected from geographically-concentrated constituencies (e.g., wards) and therefore try to target policy benefits to their own constituencies while spreading the policy costs over all constituencies. Some support is found for each model. Especially striking is the interactive effect of ward representation and of economic interest (i.e., levels of home ownership).     

Democracy and the quality of economic institutions: theory and evidence

Public Choice - We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across...     

It's economic size,stupid! How global advocacy mirrors state power

Numerous empirical studies suggest that global interest communities are heavily biased in favor of wealthier countries. This research note critically reviews these works suggesting that they (i) lack a benchmark to assess the biased nature of global interest communities and (ii) conflate the concepts of “wealth” (based on GDP per capita) and “economic power” (based on GDP) into one analytical category. As a corrective to these problems, we compare variation in global interest group mobilization across countries to the size of these countries' national economies. Relying on an original dataset mapping interest groups communities at the World Trade Organization (1997–2012) and the United Nations Climate Summits (1997–2011), we show that (i) global interest representation almost perfectly reflects differences in countries' relative economic power and (ii) contrary to the conventional wisdom, wealthier countries are, relative to their economic size, actually underrepresented in global interest communities.     

Extending the economic theory of regulation to the form of policy

The mutually beneficial connection between industries and the governments that regulate them is the subject of a large literature led by Stigler (1971). What has not been studied is how firms choose their desired policies from the set including entry barriers, price floors, subsidies, and demand stimulation. We take as given that government and incumbents from the supply and demand for regulation and explore the choice of political product.     

The scope of exclusionary public response to the European refugee crisis

We know from previous research that an exclusionary reaction in public opinion is likely following a sudden and large-scale influx of refugees of the sort experienced in many European countries in 2015. Yet, we know much less about the scope of these expected reactions. This article makes a conceptual and empirical contribution to the analysis of the scope of exclusionary reactions following a refugee crisis. Conceptually, we distinguish between three scope dimensions: substantive reach, duration and politicization. Empirically, we evaluate each of the scope dimensions using seven-wave panel-data collected before, during and after the large-scale influx of refugees to Norway. We find that the expected exclusionary reaction (a) spilled over to opinion about immigration broadly speaking; (b) endured in that it lasted long after the situation in Norway had been brought under control; (c) encompassed voters of all political stripes. Nevertheless, we also document an important limitation to the scope of the reaction: The sudden influx of refugees to Norway did not cause a permanent shift in public opinion. Approximately two years after the situation had been brought under control, opinion about both refugee rights and immigration generally had reverted back to pre-crisis baseline levels. Interestingly, the conceptual and empirical analysis suggests that public opinion dynamics following a sudden and large-scale influx of refugees is similar to that found in response to other forms of large national or international crises.     

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.