An economic approach to social choice — II

There is a formal equivalence between games, societies, and economies. Lindahl equilibrium for a game or society corresponds to competitive equilibrium for the equivalent economy. Results on existence and optimality of competitive equilibrium thus apply to the theory of games and societies. The “core” for a game or society as derived by extension from the core of an economy is “too large” to be interesting. An example illustrates that the α-core may be disjoint from the set of Lindahl equilibria. However, if the power of coalitions to inflict negative externalities is suitably restricted, Lindahl equilibria must be in the α-core.     

An economic analysis of voting in Sweden

Using data from the Swedish Election Studies between 1985 and 1994 supplemented with time series on inflation and unemployment, I compare the impact of macro- and microeconomic variables on the individual vote. The principal finding is that macroeconomic variables influence the vote a bit more than microeconomic variables do. In consequence, both self-interest and public interest appear to be important explanations of economic voting in Sweden. Macroeconomic variables have, however, been much more influential in determining election outcomes. Since previous studies of economic voting have used cross-sectional data only, it is also worth noting that panel estimates indicate a much greater impact of macroeconomic variables on the individual vote than cross-sectional estimates do.     

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...     

Building institutional capacity for policy analysis: An alternative approach to sustainability

The project approach to development assistance has been criticized for failing to build lasting capacity. The problem lies not in the project approach itself, but in a failure to understand the constraints to capacity development and a consequent misdirection of effort. Policy analysis capacity is developed as an example. Policy analysis requires skills and abilities that public sector institutions in developing countries cannot sustain, owing to a combination of structural and organizational factors, among which personnel constraints are key. These factors inhibit the effectiveness of the standard approach, which seeks to establish analytic capacity within a specialized government unit (‘internal’ capacity). An alternative approach is to build ‘process’ capacity—the ability to get analysis done by other institutions, rather than the ability to do analysis internally. The author concludes that project strategies should be redirected toward a greater emphasis on building process capacity as a useful adjunct to internal capacity.     

On romantic love—An analysis of open system economic behavior

Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.The study of romantic love can provide insight into the general process of introducing novelty into a system of interacting variables. Novelty, however, is functional only in an open system characterized by uncertainty where the variables have not all been functionally looped and system slacks are readily available to accommodate new things. In a closed system where all the objective functions and variables must be compatible to achieve stability and viability, adjustments in the value of some variables through romantic idealization may be dysfunctional if they represent merely residual responses to the creative combination of the variables in the open sub-system.     

An expanded approach to analyzing policy-minded candidates

A random pivot model is used to expand the theory of policy-minded candidates. Previous results (Wittman, 1977, 1983; Cox, 1984; Hansson and Stuart, 1984) are derived under weaker assumptions. New results about candidate strategies in multiple elections are also obtained. The thrust of these results supports Calvert's (1985) finding that office-seeking and policy-mindedness are countervailing forces in election contests.Delivered at the 1989 Annual Meetings of the American Political Science Association, Atlanta, GA, 31 August–3 September 1989. An earlier draft of this paper was delivered at the Public Choice Society Meetings, Orlando, FL, 17–19 March 1989. I would like to thank Chuck Cameron, Don Wittman, and Henry Chappell for their comments on an earlier draft of this paper. I am greatly indebted to Gary Cox for his helpful suggestions in revising this paper. I would also like to thank three anonymous referees.     

An alternative approach to explaining political popularity

Previous empirical work on the relationship between political popularity and economic events has either not attempted to model the alternative policies of the different parties, or has modelled them in a rather simplistic manner. It has also typically assumed that voters are backward-looking in contrast to recent work on expectations theory. An approach is outlined which is based on a forward-looking comparison of the parties and incorporates the effect of news. An alternative derivation relying on the evaluation of the stock of goodwill built up for each party is also suggested. Empirical evidence from the Gallup opinion poll provides some support for these hypotheses.     

Whom do you trust? An analysis of executive and congressional economic forecasts

Economic forecasts play an increasing role in U.S. budgetary and fiscal policies. This paper analyzes the accuracy and bias of economic forecasts prepared by the Executive Branch and Congress. Short-run forecasts by the Executive Branch for the forthcoming year do not appear biased. They are as accurate as private forecasts and the forecasts of the Congressional Budget Office (CBO); they are not sensitive to political factors such as the size of the deficit. At the same time, the accuracy of Executive branch's short-run economic forecasts has not improved over the period from 1962 to 1984, and the forecasts themselves can be well approximated by simple, single-equation models that use a small number of variables. In contrast to short-run forecasts, long-run economic forecasts of both the Executive branch and CBO are consistently optimistic. The degree of optimism increases with the length of the forecasting horizon and the degree of fiscal pressure the year in which they are issued. The Reagan Administration's long-run forecasts, while typically optimistic, have not been rosier than those issued under previous administrations.     

An economic analysis of the voting on Michigan's tax and expenditure limitation amendment

This paper investigates electorate behavior on Proposal C, a proposed amendment to the Michigan constitution, whose passage would have limited taxes and expenditures in the State of Michigan. Voting behavior was analyzed within the framework of the basic hypotheses: that the electorate tended to vote on Proposal C in its economic interests, narrowly conceived. The results were contradictory, with some groups voting against their economic interests and others voting as the hypothesis would predict. Further, a relatively low percentage of the total voting variance was explained, indicating that perhaps other variables than economic ones influenced voting behavior.     

The economic approach to political behavior: Governors,bureaucrats, and cost commissions

Cost control commissions provide two primary types of recommendations: widespread benefits-widespread costs and widespread benefits-narrow costs. Both types of recommendations are not of the form predicted by the standard economic models of political behavior. The paper explores why governors sanction these commissions and the types of recommendations governors will accept. Legislators use the maxim of concentrate benefits-spread costs to maximize votes. Governors, however, face a lower return to concentrated benefit policies and a lower cost from concentrated cost policies. This leads a governor to favor at the margin, policies which have widespread benefit-widespread cost or widespread benefit-concentrated cost. Evidence from 5 state cost control commissions support the difference between the politicians. The cost control commissions sanctioned by governors have proposed recommendations of the widespread benefit-widespread cost and widespread benefit-concentrated cost form. Governors accepted approximately two-thirds of the widespread benefit-concentrated cost proposals, although they were more likely to accept recommendations of the widespread benefit-widespread cost nature. Recommendations which required legislative approval saw a lower likelihood of acceptance. This is consistent with the view that legislators prefer concentrated to widespread benefit recommendations. qu][The politician's] favorite strategy is to create a commission to study a problem and make recommendations that may then be used as political cover. Call it government by commission.     

Campfire decision-making and strategic management: A politics and leadership approach to economic development

Privatization is recommended unconditionally by some scholars as the optimal means for achieving economic development. While privatization can be helpful medicine, it provides no universal cure for all the ills associated with low economic growth. A country's economic and political institutions are intertwined. Mandating privatization without being mindful of both political and economic consequences to such a policy can bring undesirable consequences during and after policy implementation. This paper proposes that to enhance the likelihood of economic growth a leader should blend economics with politics. Sensitive political leadership can stimulate a bonding among citizens, a bonding which can generate the commitment to risk by investing personal savings, to work the long hours which much precede the rewards, and often to be satisfied by a job well done rather than with material reward. Analogous to the chief executive officer of a successful corporation, the effective political leader involves stakeholders, steers decision processes, takes reasonable risks, encourages private investment, and rations public resources according to national priorities. Collective decision-making guided by the political leader, who also acts as a strategic manager during implementation, is offered as a model for development.     

An innovative approach to metropolitan management in the philippines

The paper describes the historical development of metropolitan planning and administration in Metro Manila, and identifies five major problems: the sectoral isolation of planning; the inadequate involvement of local government; inadequacies in planning methods; weaknesses in the system of resource management; and institutional fragmentation. The development of the Capital Investment Folio process, its institutional framework and the main characteristics and results of applying the approach are described. The benefits and lessons which have emerged are then set out and their possible application elsewhere discussed. The main achievements of CIF are progress towards a rational system of urban planning; the generation of consensus within government about Manila's investment strategy; a more widespread appreciation of opportunity costs; and a new understanding of how to plan under conditions of uncertainty. It remains for CIF to be integrated into the national resource allocation process, and to be fully accepted by national government agencies. Local government still needs to be positively involved in the planning process.     

Environmental mediation: An alternative approach to policy stalemates

Environmental mediation is a new and innovative attempt to overcome the policy stalemates that frequently hinder effective environmental policymaking. It brings together environmentalists, business groups, government officials, and a neutral mediator in an attempt to negotiate a binding settlement to a specific controversy. This essay describes this approach, discusses its advantages over more traditional dispute resolution processes, and explains how it is able to produce acceptable agreements in such a difficult policy area.