The rise and demise of theocracy: theory and some evidence

This paper models theocracy as a regime where the clergy in power retains knowledge of the cost of political production but which is potentially incompetent, quarrelsome, or corrupt. This is contrasted with a secular regime where government is contracted out to a secular ruler, and hence the church loses the possibility of observing costs and creates for itself a hidden-information agency problem. The church is free to choose between regimes—a make-or-buy choice—and we look for the range of environmental parameters that are most conducive to the superiority of theocracy and therefore to its occurrence and persistence, despite its disabilities. Numerical solution of the model indicates that the optimal environment for a theocracy is one in which the “bad” (high-cost) state is disastrously bad but the probability of its occurrence is not very high. Quantitative evidence on the rise of ancient Israelite theocracy and the current surge of Islamic theocratic fundamentalism provides surprisingly strong support for this prediction. Lastly, supportive evidence is suggested by two rare instances of a theocracy’s peaceful demise.     

IMF conditionality: theory and evidence

This article analyzes whether and to what extent reliance on conditionality is appropriate to guarantee the revolving character of the resources of the International Monetary Fund (IMF). The paper presents theoretical arguments in favor of conditionality, and those against the use of conditions. It summarizes the track record of program implementation and discusses the evidence of factors determining implementation. Whether proponents or critics of conditionality can be supported by existing data analysis is also investigated, as is the success of conditionality in terms of outcomes. The final section draws policy implications.     

Insuring legislative wealth transfers: theory and evidence

Authorities rely on reports from private citizens to detect and enforce more than a trivial portion of effective law-breaking. The present article is the first to study the cultural aspect of peer reporting experimentally. By collecting data in a post-Soviet country (Moldova), we focus in particular on how the Soviet legacy of using citizens as private informants may have a long-lasting effect on their willingness to cooperate with state authorities. We then contrast those effects with peer reporting behavior in France, a Western society. Our results suggest that participants in Moldova view cooperation with authorities as less socially acceptable than their counterparts in France. Our results also suggest that participants in Moldova engage less frequently in peer reporting than individuals in France. However, we also find that less peer reporting does not necessarily imply less tax compliance. Participants in both countries exhibit very similar tax compliance rates. We explain the effect of peer reporting on tax compliance in Moldova using the country's past experience during the Soviet era, when being reported to authorities was common and carried grave consequences.

     

A public choice theory of the Great Contraction: Further evidence

We benefitted from comments by John Johnson and Lloyd Blenman. M. Bala Subrahmanyam, Steven Moore, and Thomas Lewis provided valuable research assistance. Any remaining errors are our own.     

Human rights and discourse theory: some critical remarks

In this short piece, I suggest that Seyla Benhabib’s discourse-theoretic account of human rights succeeds in avoiding the charge of anti-parochialism only at the cost of failing to provide concrete and plausible enough guidance in identifying the holders, duty-bearers, and objects of human rights. I then conclude with a few reflections on what type of guidance may be plausibly expected from a discourse-theoretic approach.     

Letting the good times roll: A theory of voter inference and experimental evidence

This paper examines inference and attribution in a simple and ubiquitous strategic situation: a voter is faced with discerning whether a leader worked on his or her behalf after observing an informative, but noisy signal about the leader's performance. We characterize perfect Bayesian equilibria, quantal response equilibria (QRE), and provide a simple model of a heuristic-based approach, referred to as strategic naivete, within a wide class of such environments. We also discuss experiments conducted to examine human behavior within such an environment. While it is clear that the observed behavior is inconsistent with perfect Bayesian equilibrium, distinguishing between QRE and strategic naivete will require further work. We conclude with a discussion of the broader implications of probabilistic and/or heuristic-based attribution processes for electoral politics and political economy.     

Social security and private saving: theory and historical evidence

This article is a nontechnical presentation of the debate that has gone on during the past decade over whether the U.S. social security system has depressed private saving in the economy. The heart of the article is an assessment of economist Martin Feldstein's original evidence, presentation of the alternative evidence that concluded that currently available historical data do not support the proposition that social security reduces private saving, and an evaluation of the contradictory evidence presented by Feldstein in response to the alternative evidence. The article concludes that, although the total body of evidence is inconclusive, the historical evidence fails to support the hypothesis that social security has reduced private saving. The Office of Research, Statistics, and International Policy, as part of its ongoing research mission, investigates the interrelationship between social security and the economy. This article presents an examination of one of several aspects of this relationship relevant to public policy considerations and is intended to make previously published technical papers available to a broader audience.     

Theories of legislation: some Austrian evidence and general conclusions

Abstract. After defining legislation as an extended process which includes initiation, preparation, legislation proper as well as implementation, an empirically derived threefold typology of laws differentiating them according to the groups most active in the initiation phase is proposed. Taking into consideration the official and unofficial policy theories of these groups, predictions can be made about the degree of effectiveness of laws. Some empirical evidence supports these assumptions. In this way a better understanding of the extended lawmaking process and the conditions for the successful implementation of laws may be achieved.     

Logrolling under fragmented authoritarianism: theory and evidence from China

This paper provides a rigorous theoretical and empirical analysis of the effect of logrolling between interest groups on social welfare in a non-democratic political system. In particular, we focus on China, where bureaucratic interest groups are separate vertical organizations reaching down from Beijing to the provinces and cities. The key question in this paper is: what are the effects of the logrolling of parochial interest groups on state policies and social welfare in autocracies? We address this question both theoretically and empirically. The theory predicts a specific distortion in resource allocation because of logrolling, while the empirical results confirm the theoretical prediction. We find policy outcomes under logrolling are characterized by excessive spending on all the interest groups’ preferred goods and insufficient spending on public goods. We test the existence of logrolling between the Ministry of Civil Affairs and Ministry of Health in China. Our result shows logrolling between the two ministries lead to inefficiencies in social security and health care policies.     

The committee outlier debate: A review and a reexamination of some of the evidence

An ongoing and controversial topic of congressional scholars is the question “Are committees ‘preference outliers’ vis-a-vis their parent chamber?” Despite numerous research efforts showing isolated cases of outlying committees, little evidence shows a systematic tendency for committees to be unrepresentative of their legislature. A paper which comes close to being an exception is Weingast and Marshall's (1988) analysis of “the industrial organization of Congress,” which reports evidence of many and very strongly outlying committees. However, the apparently strong evidence is due more to the authors' incorrectly executed methods than to a general tendency for committees to be outliers. In this note I review the state of the committee-outlier debate and also show that Weingast and Marshall's empirical results cannot be replicated. I accordingly provide the correct results once their statistical tests are properly executed.     

Risk aversion and rent-seeking: An extension and some experimental evidence

Theoretical investigations indicate that the risk attitudes of individuals will effect the amount of rent that can be assumed to be dissipated by rent-seeking activities. Following this line of investigation we extend Hillman and Katz's work to a small numbers case and demonstrate that the degree to which a monopoly rent is dissipated is dependent upon the structure of the risk attitudes of two risk averse individuals.Our earlier laboratory results were evaluated with respect to the risk neutral Cournot-Nash predictions. However, given the uncertainty present in the rent-seeking experiment, our ability to reject these risk neutral predictions may not be, in fact, a failure for the model but a result of risk aversion. In laboratory experiments in which we control for the relative risk attitudes of individual agents, we show that risk aversion matters. The relative risk aversion of individuals affects the level of rent-seeking activity and the extent to which rents are dissipated. In our experiments, the relatively less risk averse individuals dissipated relatively more rent.     

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...     

Flexible specialization versus post-Fordism: theory,evidence and policy implications

There is widespread agreement that something dramatic has been happening to the international economy over the past two decades: rapid and radical changes in production technology and industrial organization, a major restructuring of world markets, and consequent large-scale changes in the policies of economic management at the internahonal, national and regional levels. At the same time there is a great deal of confusion about how to characterize these changes, the mechanisms at work, and the policy implications for different groups of economic and political actors. One way of accomplishing these tasks is to postulate a change of basic manufacturing organization from a ‘Fordist’ pattern that prevailed in the years of the long post-1945 boom to a ‘post-Fordist’ successor in the later 1970s and 1980s. Many people habitually conflate three approaches to industrial change under this heading: flexible specialization, regulation theory, and a more diverse body of explicitly ‘post-Fordiit’ analyses. The resulting problem is that significant differences of approach are concealed bv a suerficial similaritv between the proponents of flezble specialization and a sit of adparently similar bbt underlyingly divergent ideas. The purpose of this paper is to examine systematically the differences between flexible specialization, regulation theory, and other variants of ‘post-Fordism’ with respect to their fundamental assumptions and theoretical architecture, their methodological approach and use of evidence, and their policy implications.