Beliefs and errors in voting choices: A restatement of the theory of fiscal illusion

This paper reformulates the theory of fiscal illusion to make it more compatible with the median-voter model of collective choice. It emphasizes the requirement that misperceptions about marginal tax-costs and benefits must be permanent to have any significant effect on the level of public expenditures. The Lancaster-Becker model of consumer demand is then used to demonstrate the peculiar effects of permanent misperceptions on consumer demand. It can be shown, for example, that other things being the same, a Republican who underestimates continuously the marginal benefits of public activities may demand more public goods than a Democrat who overestimates those same benefits in a permanent fashion.     

The calculus of consent after thirty years

It is shown that the basic normative argument of thecalculus is moored to a collectivistic unanimity norm. As most scholars working in the field of public choice, including the authors of the seminalcalculus, would otherwise reject collectivistic normative premises, a re-interpretation of the status of the unanimity principle of thecalculus seems unavoidable. The paper argues that this can be done if the basic formation of a society is not characterized as starting from a given set of individuals but rather in terms of the formation of clubs. This amounts to the same thing as substituting universalistic ethical premises by particularistic ones which are more in line with standard economic methodology.     

The free rider problem: Experimental evidence

This paper addresses the need to learn more about the relative desirability of the current FASB and its alternatives. It responds to this need by demonstrating how a given standards-setting alternative might be preliminarily analyzed in terms of its feasibility and the degree to which its theoretical objectives are operationally attainable. The analysis emphasizes that it is not the existence of possible operational shortcomings that is important, but how its operational properties compare with those of other available alternatives. The analysis itself reveals that, in spite of operational shortcomings, standards-setting by means of a demand-revealing process may be an alternative worthy of further consideration both in its own right, and as a basis of comparison for assessing the relative strengths and limitations of the current FASB.     

Do local leaders know their voters? A test of guessability in India

Prominent theories of clientelism—the exchange of benefits for political support—depend on the assumption that politicians, through local agents immersed in local social networks, possess detailed information on voters’ political preferences prior to targeting. This article provides the first direct test of this assumption. It develops a behavioral measure, guessability, which gauges the ability of elected village leaders, who often function as brokers and prominent vote mobilizers, to correctly identify the partisan vote intentions of voters in their locality. It then develops a method to estimate added informational value, which compares the performance of local leaders to low-information benchmarks that capture guessability rates that can feasibly be achieved by outsiders. Original data from surveys of voters and elected village politicians across 96 village councils in Rajasthan, India indicate that while these village leaders out-perform low-information benchmarks with respect to co-partisans, they perform no better than this baseline vis-à-vis non-co-partisans.     

Eminent domain power and afterwards: Leviathan’s post-taking opportunism

This paper investigates post-taking procedures, a research area not yet fully explored. It discusses the economic implications underlying the landowner’s ‘repurchase right (RR)’ which can be invoked upon the occurrence of a so-called ‘change in use after taking.’ RR is compared with the government’s discretion regarding such changes. The lack of post-taking accountability tends to create power ripe for abuse, and RR appears to be an effective device for constraining Leviathan’s opportunism. Finally, a parsimonious estimation supports that, under the overriding-RR regime, there exists the systematic post-taking opportunism whereby ‘original public projects are changed into inappropriate projects.’     

The measurability of budget related rent-seeking

It has been suggested that the extent of rent-seeking expenditures arising from attempts to influence budget allocations should be estimated by the absolute magnitude of the observed changes in allocation. Instead, we argue that it is the extent of theex ante prospective changes that determine the level of rent-seeking, and that in the presence of countervailing activity these may be quite unrelated to the ex post observed values. We further argue that the traditional rent-seeking model of competition for a pre-specified rent is inappropriate in this context.     

On Extremism in our Time

Extremism—in attitudes and actions—appears to be expanding. What makes one prone to extremism? Umberto Eco’s The Prague Cemetery, a narrative built on diary entries of the man who forged the Protocols of the Elders of Zion, exposes the two-self nature of extremists. It also exposes the two-self nature of the Narrator, who imposes coherence on the diary entries. This essay peels off the layers of images that allow extremists of all kind to appear other than they truly are.     

Setting the record straight: A note on sophisticated voting under Borda's method

The purpose of this note is to correct some inaccuracies in the literature regarding sophisticated voting under Borda's method. It is shown that if a single candidate must be elected and voters vote sophisticatedly under Borda's method, then: (1) Contrary to both Black's (1976) and Ludwin's (1978) claims, a voter's undominated voting strategy may require him not to give top ranking to his most preferred candidate; (2) Contrary to Black's (1976) claim, an undominated strategy may be such that all candidates except the most preferred one are ranked last; (3) Whereas a candidate who constitutes the true bottom preference of an absolute majority of the voters will never be elected if voters vote sincerely, this candidate may be elected if voters vote strategically; (4) The election of a candidate who constitutes the true top preference of an absolute majority of the voters is not systematic: ceteris paribus this candidate may be definitely elected when voters vote sincerely but not when they vote strategically, as well as vice versa.     

The politics of digits: evidence of odd taxation

From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases.     

Better that ten guilty persons escape: punishment costs explain the standard of evidence

It is generally agreed that the conviction of an innocent person (type-I error) should be avoided even at the cost of allowing a certain number of acquittals of criminals (type-II error). The high standard of evidence that is usually required in criminal procedure reflects this principle. Conversely, the established model of optimal deterrence that follows the seminal work of Becker (1968) shows that the two types of error are equally detrimental in terms of deterrence and thus it prescribes the minimization of the sum of errors with no primacy given to type-I errors over type-II errors. This paper explains that when the costs of punishment are positive, and guilty individuals are, on average, more likely to be found guilty than innocent ones, wrongful convictions are more socially costly than wrongful acquittals. This justifies the bias against wrongful convictions without resorting to any ad hoc assumption about the relative weight of the two errors.     

Gauging the potential for social unrest

It stands to reason that social unrest does not erupt out of the blue. Although there are a great many reasons why social dismay might descend into social disorder, only few yardsticks or indices can plausibly be used to gauge the potential for social unrest (PSU). If policy makers want to undertake public action to prevent social dismay escalating into social disruption, they obviously need to draw on practical sensors. This paper assesses critically the adequacy of two such measures, the polarization (P) index, and the total relative deprivation (TRD) index. The paper proposes a tentative guide to selecting between these two measures. A review of three stylized scenarios suggests that, where income redistributions reduce the number of distinct income groups, and when each group is characterized by a strong sense of within-group identity, the P index surpasses the TRD index as a basis for predicting PSU. When the within-group identification is weak, however, it is better to use the TRD index to predict PSU.     

Policymaking and policy analysis in Latin America—A return journey

This paper reviews and updates the conceptual approaches of the author's Journeys Towards Progress (1963). It focuses first on distinctions explaining differences in the path of policymaking and in its effectiveness. Distinctions are made between pressing and autonomously chosen policy problems, between privileged problems and neglected ones that must manage to “ride the coattails” of the former to receive attention, and between policy tasks that are tackled with more motivation than understanding and those with the opposite characteristic. Addressing then similarities in experience with policymaking, the paper first comments on fracasomania (the failure complex) and on the incapacity ever to be surprised at both consequences and determinants of under-development. Indirect and unanticipated effects of policies are illustrated through a Colombian example. A Concluding Lament suggests that the watch for side-effects must be unusually wide-angled in today's Latin America.     

Theorien als latente Quellen von Normativität und Verantwortung in der Hochschullehre: Die Bedeutung von didaktischen und fachspezifischen Theoriedebatten am Beispiel des politikwissenschaftlichen Teilgebiets „Internationale Beziehungen“

The article deals with normative aspects that are negotiated in didactic and subject-specific theoretical debates and thus gain relevance in teaching. It turns out that the didactic theories provide divergent answers to the question of what should be taught how and by whom. Similarly, the example of theoretical debates in International Relations shows that, from a subject-specific perspective, there can often be a lack of consensus on the essentials that are to be taught. Such conflicting requirements, however, demonstrate the instructors’ scope for action, which they should realize and use responsibly. Due to academic pluralism, it seems possible that the societal pluralism, which is sometimes perceived as crisis-laden, can be used productively for teaching.     

Paradoxes of public-sector managerialism,old public management and public service bargains

This chapter considers three paradoxes or apparent contradictions in contemporary public management reform–paradoxes of globalization or internationalization, malade imaginaire (or successful failure) paradoxes, and paradoxes of half-hearted managerialism. It suggests that these three paradoxes can be explained by a comparative historical institutionalism linked to a motive-and-opportunity analysis of what makes some public service systems more susceptible to reform than others. It further argues that such explanations can be usefully linked together by exploring public service reform from the perspective of ‘public service bargains’ or PSBs (that is, explicit or implicit bargains between public servants and other actors in the society). Accordingly, it seeks to account for the three paradoxes of public management reform by looking at the effect of different PSB starting-points on reform experience, and at the way politician calculations over institutional arrangements could account for PSB shifts in some circumstances but not others.     

From weakest-link to best-shot: The voluntary provision of public goods

It has traditionally been assumed that the socially available amount X of a public good is the simple sum of the separate amounts x _i produced by the i = 1, ..., I members of the community. But there are many other possibilities of practical importance. Among them are: (i) Weakest-link rule, where the socially available amount is the minimum of the quantities individually provided, and (ii) Best-shot rule, where the socially available amount is the maximum of the individual quantities. The former tends to arise in linear situations, where each individual has a veto on the total to be provided (e.g., if each is responsible for one link of a chain); the latter tends to arise when there is a single prize of overwhelming importance for the community, with any individual's effort having a chance of securing the prize. In comparison with the standard Summation formula of ordinary public-good theory, it is shown that underprovision of the public good tends to considerably moderated when the Weakest-link function is applicable, but aggravated when the Best-shot function is applicable. In time of disaster, where the survival of the community may depend upon each person's doing his duty, the conditions for applicability of the Weakest-link rule are approximated. This circumstance explains the historical observation that disaster conditions tend to elicit an extraordinary amount of unselfish behavior.     

Euvoluntariness and just market exchange: moral dilemmas from Locke’s Venditio

It is a maxim of Public Choice that voluntary exchanges should not be interfered with by the state. But what makes a voluntary market exchange truly voluntary? We suggest, contra much of the economics literature, that voluntary exchange requires consent uncoerced by threats of harm, but that this is not sufficient. In particular, a person pressured to exchange by the dire consequences of failing to exchange—e.g., dying of thirst or hunger—is still coerced, and coerced exchange cannot be voluntary. The weaker party’s desperation gives the other party unconscionable bargaining power. We argue for a distinction, based on a neologism: in the case of coercion by circumstance but not by threat, exchange is still voluntary in the conventional sense, but it is not euvoluntary (i.e., truly voluntary). We will argue that all euvoluntary exchanges are just, while non-euvoluntary exchanges may or may not be unjust; that in competitive markets all exchanges are just, even those that are not euvoluntary, while in bilateral monopolies some exchanges are neither euvoluntary nor just. We will propose a mental device, the “fictitious negotiation”, to determine the just price in non-euvoluntary market exchanges. A primitive version of these ideas can be found in a little known monograph by John Locke, which we will analyze in detail.     

Television, code law, and integrated markets

The rise in network broadcasting may just be coincidental with the rise in federal regulation. Other possible explanations for the rise of the regulatory state include Democratic control of Congress and the size of the economy. Television ownership rates are herein found to have a negative relationship with the count of Federal Register pages. It is also noted that regulation at the state level was not completely crowded out by the rise in federal social regulation and the decline in economic regulation.     

Two Roles for Elections: Disciplining the Incumbent and Selecting a Competent Candidate

This paper presents a political economy model in which the voterswant to control moral hazard on the part of the incumbent andselect a competent candidate to be in office. We focus on electionswhich take place repeatedly as the basic disciplinary and screeningmechanism. It is shown that incomplete information of the votersabout the (economic) competence of the incumbent helps to overcomethe lame duck effect of a government with foreseeable end. Asecond finding is that economic performance strongly influences thereelection of the incumbent. In particular, in (stationary perfectBayesian) equilibrium, if economic performance is bad, theincumbent will not be reelected. We also prove that having thepossibility of reelecting a government increases the welfare of thevoters to the no reelection benchmark.     

Risk-aversion and prudence in rent-seeking games

This paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n=2, prudence is a necessary and sufficient condition for risk-aversion to decrease rent-seeking efforts compared to risk-neutrality. An intuition for this result is given based on a self-protection model.