The new policy sciences: combining the cognitive science of choice,multiple theories of context,and basic and applied analysis

It is time to imagine a new policy sciences. The policymaking world has moved on since its first design. So too has our understanding of it. The original policy sciences were contextualized, problem-oriented, multi-method, and focused on using scientific research towards the realization of greater human dignity. We introduce a new policy sciences that builds on such aims. We describe the need for realistic depictions of ‘rational’ and ‘irrational’ choice, multiple theories to portray the multifaceted nature of complex contexts, and the combination of applied and basic research. To set this new agenda, we build on two foundational strategies: identifying advances in the psychology of decision-making and describing how policy theories depict policymaking psychology in complex contexts.     

Efficient bilateral taxation of externalities

We consider the quadratic voting mechanism (Lalley and Weyl in Quadratic voting. Working paper, University of Chicago, 2015; Weyl in The robustness of quadratic voting. Working paper, University of Chicago, 2015) and focus on the incentives it provides individuals deciding what proposals or candidates to put up for a vote. The incentive compatibility of quadratic voting rests upon the assumption that individuals value the money used to buy votes, while the budget balance/efficiency of the mechanism requires that the money spent by one voter by redistributed among the other voters. From these assumptions, we show that it follows that strategic proposers will have an incentive to offer proposals with greater uncertainty about individual values. Similarly, we show that, in an electoral setting, quadratic voting provides an incentive to propose candidates with polarized, non-convergent platforms.     

Newspapers and political accountability: evidence from Japan

This study examines the effects of local and national newspapers on local political accountability. Local newspapers are expected to monitor local governments’ behavior. However, national newspapers could also contribute to local governments’ accountability by attracting nationwide attention to a local policy issue. Using the method developed by Snyder and Strömberg (J Polit Econ 118:355–408, 2010), I construct a variable that measures the weighted market share of locally circulated newspapers in an administrative district in Japan. I find that an increase in the market share of local newspapers is associated with a reduction in local public works spending (seen as rents for local interest groups), which indicates an improvement in political accountability. In addition, the accountability effect of local newspapers becomes greater one year after national newspapers focus readers’ attentions on the issue of unnecessary public works. This result suggests that national newspapers serve as an agenda setter and complement local newspapers for strengthening local political accountability.     

Lobbying,political connections and emergency lending by the Federal Reserve

This paper tests whether the political connections of banks were important in explaining participation in the Federal Reserve’s emergency lending programs during the recent financial crisis. Our multivariate tests show that banks that were politically connected—either through lobbying efforts or employment of politically connected individuals—were substantially more likely to participate in the Federal Reserve’s emergency loan programs. In economic terms, participation in these programs was 28–36% more likely for banks that were politically connected than for banks that were not politically connected. In our final set of tests, we attempt to identify a proper explanation for this peculiar relationship. While a broad literature speaks of the moral hazard associated with receiving bailouts, we test whether another type of moral hazard exists in the period preceding the bailout. In particular, we argue that, to the extent that political connections act as synthetic insurance, banks may have engaged in more risky behavior that lead them to the Fed’s emergency lending facilities. Tests seem to confirm this explanation.     

The political economy of churches in Denmark, 1300–2015

This paper reports new time-series for the numbers and sizes of churches in Denmark over a 715-year period. Per capita, the new series are termed church densities. A pattern emerges in the series that corresponds to the main development in the economy: until 1750, the economy was in the traditional steady state, where church densities were high and did not decline substantially. Modern development set in after 1750. Since then, church densities have declined more than five times. Moreover, capacity utilization of church rooms has declined, which means that the reduction in the demand for churches must have been even larger. We argue that this large decline is caused by a fall in religiosity that is caused by economic development as measured by the rise in incomes. In parallel with similar transitions in other sectors, e.g., the Agricultural Transition, it is termed the Religious Transition.