pareto improving campaign finance policy this paper argues that campaign finance policy in the form of contribution limits and matching public financing can be pareto improving even under very optimistic assumptions concerning the role of campaign advertising and the rationality of voters the optimistic assumptions are that candidates use campaign contributions to convey truthful information to voters about their qualifications for office and that voters update their beliefs rationally on the basis of the information they have seen the argument also assumes that campaign contributions are provided by interest groups and that candidates can offer to provide policy favors to attract higher contributions

revealed political power this paper adopts a revealed preference approach to the question of what can be inferred about bias in a political system we examine a dynamic environment in which individuals dier by income each period long run preference profiles are unobserved to an outside observer but are known to belong to a well behaved class in which individual preferences are ordered by income in each state policy data is summarized by a markov policy rule the observer makes inferences about the underlying distribution of political power as if political power were derived from a wealth weighted voting system with weights that can vary across states the weights determine the nature and magnitude of the wealth bias positive weights on relative income in any period indicate an elitist bias in the political system whereas negative weights indicate a populist one we ask what class of weighted systems can rationalize a given policy rule as a weightedmajority outcome each period our first result shows that without further knowledge all forms of bias are possible any markov policy rule can be shown to be rationalized by any system of wealth weighted voting an additional single crossing restriction on preferences can however rule out certain weighting systems we then augment policy data with polling data and show that the set of rationalizing wealth weights are bounded above and below in some cases polls can provide information about the change in political inequality across time

some talk money in politics a partial review of the literature the financing of political campaigns is an area of active scholarly study i review some of the recent literature and discuss important methodological issues that arise in empir ical research on campaign expenditures and campaign contributions the effects of campaign expenditures and advertising on candidate and ballot measure elections are summarized as are the impacts of contributions on contributors welfare many states have changed their campaign finance laws in the past few years and i describe work that exploits variations in these laws a discussion of the strategies used by interest groups to allocate their campaign contributions provides insights into contributors motives

income taxation and the diversity of consumer goods a political economy approach after tax income inequality has risen since the mid 1990s as increases in market income inequality have not been offset by greater fiscal redistribution we argue that the substantial increase in the diversity of consumer goods has mitigated mounting political pressures for redistribution within a probabilistic voting framework we demonstrate that if the share of diversified goods in the consumption bundle increases sufficiently with income then an increase in goods diversity can reduce the political equilibrium tax rate focusing on oecd countries we find empirical support for both the model s micro political foundations and the implied relation between goods diversity and fiscal policy outcomes

incomplete information and ideological explanations of platform divergence one of the paradoxes of formal spatial voting models is the robustness of the theoretical result that candidates will converge toward centrists positions and the empirical observation of persistent policy divergence of candidates a solution is that candidates are ideological have policy preferences when candidates have policy preferences and incomplete information about voter preferences then platform divergence is theoretically predicted experimental tests of the ideological model are presented it is shown that platform divergence is significant when candidates are ideological and have incomplete information about voter preferences however candidate positions are more convergent on average than the theory predicts suggesting that subjects value winning independently of the expected payment

redistribution in a model of voting and campaign contributions abstract i propose a framework in which individual political participation can take two distinct forms voting and contributing resources to campaigns in a context in which the negligible impact of any individual s actions on aggregate outcomes is fully recognized by all agents i then use the framework to reassess the relationship between inequality and redistribution the model shows that even though each contribution has a negligible impact the interaction between contributions and voting leads to an endogenous wealth bias in the political process as the advantage of wealthier individuals in providing contributions encourages parties to move their platforms closer to those individuals preferred positions this mechanism can in turn explain why the standard median voter based prediction that more inequality produces more redistribution has received little empirical support higher inequality endogenously shifts the political system further in favor of the rich in equilibrium there is a non monotonic relationship in which redistribution is initially increasing but eventually decreasing in inequality i present some empirical evidence supporting the framework using data on campaign contributions from us presidential elections in particular inequality increases contributions to republicans but not to democrats as predicted by the model

incumbency advantage and political campaign spending limits abstract this paper presents a model which captures the three main arguments for and against campaign spending limits campaign spending limits are purported to restrict the incumbent s ability to exploit his fundraising advantage in contrast to conventional wisdom a ceiling increases the incumbent s probability of victory regardless of the candidates relative fundraising abilities as long as the challenger is not more effective in campaign spending if the challenger is more effective in campaign spending ceilings have a non monotonic effect when the incumbent enjoys a mild initial voter disposition advantage a moderate ceiling decreases the incumbent s probability of victory but further restricting the limit favors the incumbent irrespective of incumbency status the marginal benefit to quality decreases with a more restrictive cap in an open seat contest a more restrictive limit improves the electoral prospects of the superior quality candidate stricter ceilings may lead to the unintended consequence of increased expected spending

an experimental study of alternative campaign finance systems transparency donations and policy choices we experimentally study the transparency effect of alternative campaign finance systems on donations election outcomes policy choices and welfare three alternatives are considered one where donors preferences and donations are unobserved by the candidate and public one where they are observed by the candidate but not the public and one where they are observed by all we label them full anonymity fa partial anonymity pa and no anonymity na respectively we find that in na and pa candidates consistently respond to donations by choosing policies favoring the donors fa in contrast is the most successful in limiting the influence of donations on policy choices donors benefit greatly from the possibility of donations whereas social welfare may be harmed in some treatments to our knowledge this article is the first to investigate the effect of different campaign finance systems distinguished by their transparency level jel d72

ideological conviction and persuasion in the rent seeking society abstract the paper develops a model of rent seeking in a democratic political context where voting as well as rent seeking matters in this context the paper demonstrates that voter ideology is a constraint on the rent seeking game as well as a possible avenue of rent seeking in a setting where there are both rent seeking and ideological interest groups rent seekers can free ride on the efforts of ideologues which tends to reduce rent seeking effort in a setting where complementary economic and ideological interest groups coordinate their efforts both rent seeking and ideological conflict tend to increase

does france have a fuel poverty trap abstract in this article we focus on fuel poverty dynamics by answering two questions does france have a fuel poverty trap and what are the determinants of staying in or moving out of fuel poverty first we define three states into which individuals may be placed which are as follows the non fuel poverty state the fuel poverty state and the severe fuel poverty state second we use a mover stayer model that divides the population into the following two types of individuals those who remain in the same state during the observation period the stayers and those who move across states the movers this model applies to longitudinal data from mainland france showing that fuel poverty is not an absorbing state indeed a majority of the fuel poor and the severely fuel poor move to another better state therefore we can argue that france has no fuel poverty trap using two econometric models logit and multinomial logit we identify the stability and mobility determinants in different states as expected there is a relationship between income and the likelihood of an individual remaining in a particular state furthermore poor housing implies a greater likelihood of stability in fuel poverty or severe fuel poverty another result is that deterioration in fuel poverty status seems to stem more from difficult financial situations than from bad dwelling conditions

pareto optimality of policy proposals with probabilistic voting this paper studies the pareto optimality properties of policy proposals and electoral outcomes when there is probabilistic voting theorem 1 proves that when the position of one candidate is taken as fixed the other candidate will propose a pareto optimal alternative this implies that whenever there is an electoral equilibrium in pure strategies the electoral outcome is pareto optimal it also implies that even if there is no such equilibrium the electoral outcomes from a sequence of elections will be pareto optimal except possibly for an initial status quo

how does public assistance affect family expenditures the case of urban china summary using recent national household survey data and a propensity score matching method this study examines the effects of urban china s primary public assistance program minimum living standard assistance mlsa on family expenditures an important yet understudied indicator of family material well being we find that families receiving mlsa prioritized human capital investment i e paying for education and health rather than making the ends meet e g paying for food clothing rent and utilities the policy implications of these findings are discussed

interest groups and the electoral control of politicians abstract we develop a model of interest group influence in the presence of repeated electoral competition in each period of the game an interest group attempts to buy an incumbent s policy choice and a voter chooses whether to replace the incumbent with an unknown challenger the voter faces a tension between retaining good politician types and rewarding past performance the model predicts that above average incumbents face little discipline but others are disciplined increasingly and re elected at a higher rate as the interest group becomes more extreme extensions of the model consider term limits long lived groups and multiple groups

what do campaign contributions buy deciphering causal effects of money and votes in the 1987 1988 election cycle political action committees pacs spent 176 6 million on candidates who competed for a seat in the house of representatives what do pacs buy when contributing this money if campaign contributions are rational allocations of a contributor s income campaign expenditures could increase both the probability that the contributor s preferred candidate is elected and the likelihood that if elected the candidate will vote in the interest of the contributor most studies do not find that incumbents expenditures have a significant positive effect on the number of votes incumbents receive 11 14 15 17 29 the evidence that contributions influence congressional votes is mixed most studies find weak or no support for this hypothesis for example kau rubin and keenan 17 find that contributions from businesses mattered in only two of the eight votes they analyzed others argue that campaign expenditures play no important role in the voting decision of congressmen 5 9 12 31 the lack of finding of significant effects of money on votes has been explained with the need for better models to explain campaign contributions 5 however the theoretical developments of for example ben zion and eyton 4 bental and ben zion 3 and baron 2 have not been incorporated in the empirical analysis of the effect of campaign contributions on the voting behavior of legislators empirical models that test this relationship must allow for the endogeneity of campaign contributions for the dichotomous nature of the dependent vote variable and the nonnegativity constraint of campaign contributions most empirical work in this area utilize models that do not incorporate these restrictions in this study i plan to incorporate these aspects of the data generating process into a more detailed model of the effects of campaign contributions on congressional votes of all the reported empirical studies on this issue only chappell 5 uses a model which can properly assess the impact of money on votes chappell finds that campaign contributions do not affect votes in congress when his more detailed econometric technique is used the best test of the theory results if votes have a clear economic payoff to contributors benefits of the votes are concentrated and costs are

random errors dirty information and politics rational voters assessments of candidates and policy proposals are unbiased but affected by random errors clean information decreases these errors while dirty information increases them in politics most voting procedures weigh random individual errors asymmetrically thus such errors do not counterbalance one another in the aggregate they systematically affect politics this illuminates the roles of political propaganda and interest groups it helps to explain various puzzles in public choice e g the frequent use of inefficient policy instruments institutional conditions are identified that shape the aggregate impact of individual errors and the politicians incentives to produce dirty information

persistence of power elites and institutions we construct a model to study the implications of changes in political insti tutions for economic institutions a change in political institutions alters the distribution of de jure political power but creates incentives for investments in de facto political power to partially or even fully offset change in de jure power the model can imply a pattern of captured democracy whereby a democratic regime may survive but choose economic institutions favoring an elite the model provides conditions under which economic or policy outcomes will be invariant to changes in political institutions and economic institutions them selves will persist over time jel d02 d72 the domination of an organized minority over the unor ganized majority is inevitable the power of any minority is irresistible as against each single individual in the majority who stands alone before the totality of the organized minor ity at the same time the minority is organized for the very reason that it is a minority

mafia elections and violence against politicians organized crime uses political violence to influence politics in a wide set of countries this paper exploits a novel dataset of attacks directed towards italian local politicians to study how and why criminal organizations use violence against them we test two complementary theories to predict the use of violence i before elections to affect the electoral outcome and ii after elections to influence politicians from the beginning of their term we provide causal evidence in favor of the latter hypothesis the probability of being a target of violence increases in the weeks right after an election in areas with a high presence of organized crime especially when elections result in a change of local government

campaign finance and voter welfare with entrenched incumbents two candidates compete for elective office each candidate has information she would like to reveal to the voters but this requires costly advertising the candidates can solicit contributions from interest groups to finance such advertising these contributions are secured by promises to perform favors for the contributors should the candidate win the election voters understand this and elect the candidate they like best taking into account their expectations about promises to special interests there is an incumbency advantage in fundraising which is sometimes so great that the incumbent faces no serious opposition at all introducing partial public financing through matching funds improves voter welfare in districts that have advertising under the decentralized system while it can reduce welfare in other districts the optimal policy must strike a balance between these two effects

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

the ideological component of senate voting different principles or different principals evidence exists on both sides of the question of whether or not legislator specific ideologically driven shirking of constituent interest occurs in this paper we use a well known model of such shirking by senators as our point of departure and add measures of inter state constituent interests the role of campaign contributions and hence the importance of whether or not senators are up for reelection we find some evidence that the model provides a stronger explanation for senators up for reelection than for those who are not and that campaign contributions help determine voting decisions by these legislators finally accounting for inter state constituent interests shirking is not a significant variable in the voting decisions of senators facing reelection thus it appears that the reelection interests of some senators have been mistaken for ideologically driven shirking

interest groups campaign contributions and probabilistic voting this essay develops a simple model to analyze the impact of campaign contributions on electoral policy decisions of candidates for office interest groups here are firms that select contributions under the assumption that candidates policies and opposing groups donations remain unaltered candidates however recognize that their policy choices affect contributions campaign contributions are used by candidates to affect policy oriented voters perceptions of candidates positions in this framework the introduction of campaign contributions may affect candidates electoral policies and if they do then they benefit surely exactly one of the two interest groups

if you cannot get your friends elected lobby your enemies we incorporate campaign contributions in the citizen candidate model of representative democracy with endogenous lobbying of felli and merlo 2006 in equilibrium lobbies contribute to the electoral campaign of candidates whose policy preferences are aligned with their own in the event that their preferred candidate does not win the election lobbies also transfer resources to elected politicians with opposed preferences to induce policy compromise on the other hand lobbies never make post electoral transfers to winning candidates whose electoral campaign they supported

campaign contributions as a commitment device we explore the idea that the influence of interest groups in elections may have positive economic effects since the investment decisions of firms determine economic growth and employment voters have a common interest in making their governments commit to policies that encourage private investments however governments may renege on promises for economic stability and choose excessively leftist policies campaign contributions by firms tend to restrain the scope for such opportunism and provide a commitment device this is achieved if firms after the policy is chosen contribute to the governing party or to its rivals

informational lobbying and political contributions abstract interest groups can potentially influence political decision makers by offering contributions and by providing relevant information that sways the decision in the group s favor what mix of these two instruments should an interest group choose and how does the use of one instrument affect the effectiveness of the other in this paper we identify an information externality that raises the cost of offering contributions and show that this indirect search cost reduces the group s incentive to gather information when contributions are allowed furthermore we analyze how competition among lobby groups as providers of information and contributions affect the choice and effectiveness of the instruments we show that the information externality rewards the group that can abstain from information search and focus its influence on contributions

party policy and campaign costs in a multi constituency model of electoral competition in this essay a multi constituency model of electoral competition was developed under the assumption that party candidates possessed no effective autonomy such a model describes the polar extreme opposite that of the more common single constituency framework in which candidates have complete autonomy the existence of a nash equilibrium to the multi constituency election game was established under the assumption that parties maximize the expected number of winning seats or behaved as pure independents under any other reasonable election goal e g maximize probability of winning a majority of constituencies this existence breaks down the nature of any equilibrium was investigated in some detail and the influence of campaign costs both statutory and non statutory on party behaviour analysed this was found to be qualitatively important in particular differingeconomic resources between parties is sufficient to prevent convergence inpolicy space

is it whom you know or what you know an empirical assessment of the lobbying process abstract do lobbyists provide issue specific information to members of congress or do they provide special interests access to politicians we present evidence to assess the role of issue expertis

political competition with campaign contributions and informative advertising this paper presents a theory of political competition with campaign contributions and informative political advertising policy motivated parties compete by selecting candidates and interest groups provide contributions to enhance the electoral prospects of like minded candidates contributions are used to finance advertising campaigns that provide voters with information about candidates ideologies voters update their beliefs rationally given the information they have received the paper uses the theory to analyze the welfare economics of contribution limits such limits are shown to redistribute welfare from ordinary citizens to members of interest groups jel d72 h40

emergence and persistence of inefficient states we present a theory of the emergence and persistence of inefficient states based on patronage politics the society consists of rich and poor the rich are initially in power but expect to transition to democracy which will choose redistributive policies taxation requires the employment of bureaucrats by choosing an inefficient state structure the rich may be able to use patronage and capture democratic politics so reducing the amount of redistribution in democracy moreover the inefficient state creates its own constituency and tends to persist over time intuitively an inefficient state structure creates more rents for bureaucrats than would an efficient one when the poor come to power in democracy they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats anticipating this when the society starts out with an inefficient organization of the state bureaucrats support the rich who set lower taxes but also provide rents to bureaucrats we obtain that the rich bureaucrats coalition may also expand the size of bureaucracy excessively so as to generate enough political support the model shows that an equilibrium with an inefficient state is more likely to arise when there is greater income inequality when bureaucratic rents take intermediate values and when individuals are sufficiently forward looking jel p16 h11 h26 h41

are we witnessing a paradigm shift in the analysis of political competition this presidential address assesses the crisis of the downsian model of political competition in light of the mounting evidence on policy divergence and evaluates the possibility that the new theories of politicians quality and political selection provide an alternative theoretical conceptualization of political competition based on a critical review of the literature and on the author s works on content analysis of policy speeches income redistribution politicians quality and political legislation cycles this address concludes that multidimensional downsian models of political competition are adequate to explain policy divergence and points out the serious theoretical and empirical problems that models of political selection have to solve

evidence on electoral accountability in the u s senate are unfaithful agents really punished many have questioned whether voters are able to hold incumbent officials electorally accountable through a retrospective voting strategy we examine u s senate elections from 1962 to 1990 in forty one states explaining which incumbents ran for reelection and their success in seeking reelection we find that an incumbent s deviation from her state party platform decreases the probability that she will run for reelection and win if she runs furthermore the electoral mechanism is found to be more efficient when voters are better informed finally we find that our divergent party platform model provides a better fit than the median voter model

contribution limits and transparency in a campaign finance experiment we experimentally compare electoral outcomes when donor contribution limits are varied the effect of contribution limits is studied under three levels of transparency one where donors preferences and donations are unobserved by the candidate and public one where they are observed by the candidate but not the public and one where they are observed by all we find that a combination of stricter contribution limits and full transparency is most successful at limiting donors influence on policy choice we also find that stricter contribution limits improve social welfare in some treatments we further find that the partial and no anonymity settings lead to centrist bias whereby implemented policies on average are more centrist than the candidate s preferences in most treatments

campaign spending with office seeking politicians rational voters and multiple lobbies abstract i introduce a microfounded model of campaign finance with office seeking politicians a continuum of voters and a large number of heterogeneous lobbies lobbies make contributions to politicians according to a common agency framework politicians use contributions to finance their electoral expenditures voters are not fooled by electoral expenditures they are influenced in a way that is consistent with the equilibrium behavior of lobbies and politicians the model is used to i determine the relation between campaign spending and the deviation from the median voter s preferred policy ii show the informational value of lobbies contributions iii evaluate the welfare implications of restricting campaign spending and iv interpret the empirical finding that campaign expenditures have a very low effect on election outcome although in equilibrium advertising provides voters with useful information under reasonable parameter values a ban on campaign contributions makes the median voter better off journal of economic literature classification numbers d72 d82 m37

private polling in elections and voter welfare we study elections in which two candidates poll voters about their preferred policies before taking policy positions in the essentially unique equilibrium candidates who receive moderate signals adopt more extreme platforms than their information suggests but candidates with more extreme signals may moderate their platforms policy convergence does not maximize voters welfare although candidates platforms diverge in equilibrium they do not do so as much as voters would like we find that the electorate always prefers less correlation in candidate signals and thus private over public polling some noise in the polling technology raises voters welfare

bailout for sale the vote to save wall street this paper provides a public choice analysis of the 2008 banking bailout in the united states the paper introduces heterogeneity of congressional districts into the common agency problem in special interest politics district heterogeneity implies district specific electoral constraints on legislators ability to collect rents from and cast dissonant votes in support of special interests an empirical analysis examines legislative voting on the initial bailout proposal using campaign contributions to legislators from special interest groups and the importance of financial services for employment within congressional districts as the main explanatory variables the empirical analysis corrects for possible endogeneity bias using valid instruments and considers several intuitive sub sample estimations as alternative methods for addressing the endogeneity issue the paper provides empirical evidence that campaign contributions from the financial services sector influenced legislative voting on the banking bailout