Designing a Choice Architecture for Regulators

The emergence of behavioral public administration has led to increasing calls for public managers and policy makers to consider predictable cognitive biases when regulating individual behaviors or market transactions. Recognizing that cognitive biases can also affect the regulators themselves, this article attempts to understand how the institutional environment in which regulators operate interacts with their cognitive biases. In other words, to what extent does the “choice architecture” that regulators face reinforce or counteract predictable cognitive biases? Just as knowledge of behavioral insights can help regulators design a choice architecture that frames individual decisions to encourage welfare-enhancing choices, it may help governments understand and design institutions to counter cognitive biases in regulators that contribute to deviations from public interest policies. From these observations, the article offers some modest suggestions for improving the regulatory choice architecture.     

Intergenerational transfers of public sector jobs: a shred of evidence on nepotism

The attractiveness of public sector jobs in Italy may induce parents working in this sector to use their positions and the network of relationships to favor their sons/daughters in gaining access to public sector jobs. We verify whether children of public employees effectively enjoy an advantage, estimating a model of the probability of working in the public sector controlling for individual characteristics and labor market conditions. We show that if the father is a public employee the probability of his child working in the same sector is increased by a huge 44%. This advantage is larger for low-ability individuals, “stayers” and Southern Italian residents. We interpret these findings as evidence of nepotism in public employment.     

Policy innovation in local jurisdictions: Testing for neighborhood influence in school choice policies

Before making difficult decisions, individuals tend to collect information on decision makers in reference groups. With respect to policy innovations in a decentralized public sector, this may give rise to positive neighborhood influence on adoption decisions. In this paper, U.S. school district data are used to show that decision makers indeed are heavily affected by decision makers in reference groups. The policy innovation under consideration is inter-district public school choice. The results suggest that if a given district's neighbors' expected benefits from adopting school choice policies increase, this substantially increases the original district's probability of adoption. The paper thus supports the view that the diffusion of policy innovations is stimulated by horizontal interaction among local governments.     

When marketing models clash with democracy

The application of marketing models in political and public sector contexts is examined. The assumptions in marketing of positive outcomes of (i) rapid responses to consumer concerns, (ii) the extension of choice and customisation in product development, and (iii) the application of market research techniques are considered in turn. This analysis suggests that in the political context, responding rapidly to public opinion is not necessarily a sound reaction; extending choice and customisation of products may not best serve public welfare, and applying market research techniques may not provide for the best system for policy decisions. The features of liberal representative democracy, particularly the role of deliberation, informed assent and accountability, have been neglected. Speed of response has been emphasised to the cost of democratic filters and checks on public opinion; enhanced choice, enabled by mass customisation, presents problems of social fragmentation; and the application of market research is no substitute for political discourse and engagement. Copyright © 2003 Henry Stewart Publications     

Preferences,beliefs, and values in negotiations concerning aid to Nicaragua

The paper argues that in the context of public choice for non-market goods, two assumptions of the simple model of the rational economic actor may not hold. The assumptions are that there is a direct connection between choice and outcome, and that preferences are not affected by the act of making a choice. Consequently, to understand people's preferences for public goods, it is important to measure their beliefs and values separately rather than simply to observe their choice behavior or to ask them what they would be willing to pay for the public good. In an example study, people's preferences for U.S. policies toward Nicaragua were measured and further analyzed into their beliefs about the effects of those policies on Nicaraguan outcomes, and their evaluations of the Nicaraguan outcomes. It was shown that the process of making a two-person choice changed the preferences, and that the separate measures or beliefs and values gave insight into the process of the change that would not have been available had only the preferences been measured. Implications for the contingent valuation method are explored and an alternative approach is proposed.     

Can behavioral economists improve economic rationality?

Behavioral economists recognize that we are all subject to the cognitive biases they have observed and studied in laboratory experiments. Yet the leading behavioral economists exhibit far more interest in applying those biases to market decisions than to political decision-, and see irrational decisions making as another example of market failure which justifies correction by some form of government action. We treat this as a justification for comparing the distortions of cognitive biases on market decisions with the distortions of those biases on political decisions. We also make a distinction between the rationality of individual decisions and the collective rationality of those decisions, and question Thaler’s argument that people fail to learn much from the mistakes they make in markets. We conclude that behavioral economists would do more to increase economic rationality by making the case for eliminating government policies that are clearly economically irrational and destructive. Eliminating such policies would not necessarily increase the individual rationality of political or market decisions, but it would increase the collective rationality of both.     

Public Service Motivation: A Test of the Job Attraction–Selection–Attrition Model

ABSTRACT

Public service motivation (PSM) research suggests that PSM influences employee sector choice, yet relatively little research examines how time moderates this relationship. In this research we examine public service motivation among private and public sector lawyers. Using survey data that measure sector of employment at multiple time periods, we investigate the stability of the relationship between individual reward orientations and sector employment choice over time. Our findings suggest that while PSM may not clearly predict the employment sector of a respondent's first job, it does increase the likelihood that a respondent's subsequent job is in the public sector.     

Through the Party Lens: How Citizens Evaluate TV Electoral Spots

Party affiliation is considered one of the most important factors explaining voters' party choice, but also a strong intervening variable when it comes to the effectiveness of electoral advertising. The question raised in this study is to what extent party affiliation explains voters' judgments of electoral advertising, which was investigated by using data carried out during the Swedish general election campaign 2010. The results show that party affiliation still functions as a filter when voters are exposed to electoral advertising. The findings are suggested to be understood against the background of cognitive dissonance theory and selective exposure according to which people try to avoid a state of cognitive dissonance by avoiding information that conflicts with their attitudes.     

Ethical discontinuities in public—private sector negotiation

One problem in dispute settlement negotiations between public and private sector agents is a lack of congruence in the behavioral norms the parties consider appropriate. This normative dissonance may be seen as a problem of professional ethical discontinuity. The implementation and enforcement of Superfund, in which public sector engineers negotiated with private sector lawyers, illustrates this problem. Suggested remedies include addressing the negotiation process in professional codes of ethics, avoiding professional mismatches, better training for negotiators about the ethical discontinuity problem and, in the public health setting, improving alternatives to negotiated agreements.     

Different Shades of Gray: A Priming Experimental Study on How Institutional Logics Influence Organizational Actor Judgment

This article examines whether and how judgments made by individual organizational actors may be influenced by institutional logics—the historical patterns of cultural symbols and material practices, including assumptions, values, and beliefs, by which individuals and organizations provide meaning to their daily activity, organize time and space, and reproduce their lives and experiences. Using an experimental design, the authors prime three institutional logics in three independent groups of managers (n = 98) and assess the influence of the primes on individual‐level judgment preferences. The results show that such priming affects participants' judgments in an ambiguous judgmental task, with each prime influencing judgment in a discernibly unique pattern. Consequently, a more nuanced account of larger patterns of behavior can be constructed. The findings highlight the potential of text as priming stimuli within institutionally complex work settings such as those in the public sector, an important yet underexamined issue.     

WOLF'S MODEL: Government Failure and Public Sector Reform in Advanced Industrial Democracies

Many developed nations have embarked on public sector reform programs based on the New Public Management (NPM) paradigm. This article seeks to evaluate the efficacy of NPM reform strategies as a means of dealing with the problem of “government failure” in public sector hierarchies by examining these strategies through the analytical prism provided by Wolf's theory of nonmarket failure. Drawing on the New Zealand experience, we explore the potential for NPM reform initiatives to mitigate the problems of nonmarket supply. Moreover, we examine how “autonomous policy leadership” and “advocacy coalition networks” can overcome the various obstacles to the successful implementation of reform strategies delineated by Wolf under his “conditions of nonmarket demand”. The article then focusses on the efficacy of NPM in removing, or at least reducing, the various forms of government failure identified in Wolf's taxonomic catalogue of nonmarket failure. We conclude by assessing some of the likely tradeoffs involved in the application of NPM reform programs.     

Public Choice Failure and Voter Incompetence in France

This article explains failures of politics and government through the incompetence of voters and their perception biases. It illustrates this argument using the French case. If voters lack knowledge and develop irrational beliefs, then voting is probably not effective as a mechanism for sanctioning public policy. The incompetence of French voters and their anti‐capitalist bias is well documented. This incompetence can be partly explained by the low cost of holding irrational beliefs in politics. Voters’ anti‐capitalist attitudes are explained by the utility they obtain from expressing themselves in favour of state intervention, and by France's prohibitive level of justification costs of holding pro‐capitalist views. The resulting biases contribute to the failure of public choice.     

The application of venture analysis to public policy decisions: A case study of photovoltaics

Venture analysis is a group of analytical techniques normally used by the private sector to assist in major capital decisions. The approach can be applied to public policy decisions in those cases where changing private sector investment decisions are the central focus. A case study concerning a temporary subsidy to an emerging energy technology is reviewed. Major strengths of the approach are its use of numerous data- and opinion-gathering techniques and its explicit treatment of market and supply uncertainties. The major weakness is its lack of ability to handle those social costs and benefits for which no market exists. Implications for other policy studies are also presented.     

Collaborative Innovation: A Viable Alternative to Market Competition and Organizational Entrepreneurship

There are growing pressures for the public sector to be more innovative but considerable disagreement about how to achieve it. This article uses institutional and organizational analysis to compare three major public innovation strategies. The article confronts the myth that the market‐driven private sector is more innovative than the public sector by showing that both sectors have a number of drivers of as well as barriers to innovation, some of which are similar, while others are sector specific. The article then systematically analyzes three strategies for innovation: New Public Management, which emphasizes market competition; the neo‐Weberian state, which emphasizes organizational entrepreneurship; and collaborative governance, which emphasizes multiactor engagement across organizations in the private, public, and nonprofit sectors. The authors conclude that the choice of strategies for enhancing public innovation is contingent rather than absolute. Some contingencies for each strategy are outlined.     

Goats or wolves? Private sector managers in the public sector

Public administration reforms have propagated the use of private sector management skills in the public sector, and an increased openness to managers with a private sector background. This has created a debate between those who think private sector experience improves public institutions by bringing core managerial values such as results orientation, efficiency, or openness to innovation, and those who argue that private sector experience can damage core public sector values, such as impartiality and equity. Despite the abundant anecdotal evidence, broad empirical evidence on the effects of private sector experience on public managers' values remains limited. Using data from a survey among central government top managers in 18 European countries, we show that public managers with private sector experience have, as expected, more core managerial values. Yet, unlike the conventional view, core public values do not suffer.     

Innovation in the Public Sector

Why does the public sector innovate, how should the public sector innovate, and, even more basically, should the public sector innovate? These are some of the questions that these contributions explore and to which they provide some salutary answers. Martin Stewart‐Weeks, an independent consultant working at the intersection of government, innovation, and technology, draws some lessons from his direct experience and advisory work about how the public sector catches the innovation ‘bug’ and turns it into in‐ spired action. From infection to inspiration to implementation, the public sector needs to lower its defences and put itself ‘in harm's way’ to engage with innovators and new ideas. Tim Kastelle, one of Australia's leading innovation scholars and practitioners, sets out some practical ways that the public sector can extend and entrench its innovation practice. These include managing innovation as a process, shifting the risk equation, and experimenting.     

The Marketization of the Nonprofit Sector: Civil Society at Risk?

The public sector has increasingly adopted the methods and values of the market to guide policy creation and management. Several public administration scholars in the United States have pointed out the problems with this, especially in relation to the impact on democracy and citizenship. Similarly, nonprofit organizations are adopting the approaches and values of the private market, which may harm democracy and citizenship because of its impact on nonprofit organizations' ability to create and maintain a strong civil society. This article reviews the major marketization trends occurring within the nonprofit sector—commercial revenue generation, contract competition, the influence of new and emerging donors, and social entrepreneurship—and surveys research on their potential impact on nonprofit organizations' contributions to civil society. The article ends with a discussion of the significance of marketization in the nonprofit sector for public administration scholars and public managers.     

Leviathan in the Crosshairs

Following in the spirit of the Leviathan hypothesis, this paper empirically examines how the degree of local government market power influences efficiency in the local public sector. Market power is measured by the number and relative size distribution of similar government units in the same market area. To avoid confusing market power with the comparative efficiency or superiority of larger sized organizations, the relative size distribution of the individual government unit is held constant in the empirical analysis. In the empirical test, aggregate property values serve as the measure of efficiency. The empirical results suggest that aggregate property values are lower and thus efficiency suffers, in more concentrated municipal market areas, ceteris paribus, thus providing some evidence for Leviathan-type governments in Connecticut.     

For Those Who Care: The Effect of Public Service Motivation on Sector Selection

Public service motivation (PSM) theory suggests that the alignment of values may explain sorting into public service work. Evidence suggests that people with high PSM cluster in government and nonprofit organizations. However, reliance on cross‐sectional data leaves open the question of whether observed patterns are the result of public and nonprofit organizations attracting and selecting high‐PSM people or cultivating PSM through socialization within the sector. Using longitudinal data, this article analyzes the relationship between motivational bases, such as PSM, and sorting into the public, for‐profit, and nonprofit sectors. The results indicate that PSM‐related values, measured before labor market entry, predict the sector a person will select for employment. Moreover, the effect on sector selection does not operate through some commonly cited alternative predictor of sector employment, such as college completion. Rather, PSM predicts sorting into college majors in a manner consistent with sector sorting in the labor market.     

Globalisation, Marketisation and Power: The Swedish Case of Institutional Change

Globalisation is often thought to threaten the autonomy of national policymaking and generous welfare policies. This article examines two decades of policy change in Sweden, often viewed as a prime example of a fully fledged welfare state. The analysis is focused on reforms within the welfare sector, which is compared with three other important areas – credit markets, the labour market, and infrastructure policy. These areas can all be seen as crucial aspects of the Swedish social democratic model.  The findings can be summarised in three parts. First, seeing the credit–market deregulation as the first phase of the internationalisation of capital in Sweden lends some support to the idea of globalisation as the result of political decisions rather than a structural change caused by technical change. Second, during the last two decades, there have been signs of marketisation of the Swedish public sector. However, this analysis does not give support to the simple hypothesis of globalisation. There are quite large variations both between and within policy areas, variations that are not easily related to international integration. Third, marketisation involves a shift in political power. An overall effect is that the government has lost some of its former direct influence. However, behind the façade of the invisible market we find the same actors as before influencing policy. Globalisation can have tremendous effects on power. Whether or not this will be the case is first and foremost the result of political decisions and individual desires.