any non welfarist method of policy assessment violates the pareto principle reply the public at large many policymakers and a number of economists hold views of social welfare that are non welfarist that is they attach some importance to factors other than the effects of policies on individuals utilities we show however that any non welfarist method of policy assessment violates the pareto principle

predicting how people play games a simple dynamic model of choice we use the simple dynamic model developed in sarin and vahid 1999 games and economic behavior 28 294 309 to explain the experiments reported in erev and roth 1998 american economic review 88 848 881 in an earlier paper sarin and vahid 1998 mimeo texas a m university and monash university we showed that the model predicted behavior in repeated coordination games remarkably well and better than equilibrium theory or reinforcement learning models in this paper we show that the same one parameter model can also explain behavior in games with a unique mixed strategy nash equilibrium better than alternative models hence we obtain further support for the simple dynamic model journal of economic literature classification numbers c7 d8

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

the ethics of intertemporal distribution in a warming planet this paper evaluates from the ethical viewpoint current work by economists on intergenerational resource allocation in the presence of global warming we begin by attempting to elucidate the debate that has recently occurred on the appropriate choice of the discountrate weofferthreejustificationsformaximizingthediscountedsumofgenerational utilities and find only one of these to be a satisfactory justification of that practice the pos sibility that the human species may become extinct this implies that a very small discount rate large discount factor should be used we argue that the justification for discounting inherent in the approaches taken by many economists is that of the present generation of hegemon which is unacceptable the role of the ramsey equation in deducing the discount rate in these theories is explained as an alternative to discounted utilitarianism we propose a principle of sustainability we describe optimal paths that have been calculated for the sus tainabilitiarian rawlsian objectivefunction andpathsthatwillsustaingrowthinwelfare at a positive rate we report results concerning optimal paths when the uncertainty of existence of future generations is taken into account in sharp contrast to the utilitarian model it turns out that under some conditions the sustainabilitarian can ignore the uncertainty regarding thedateatwhichhumansbecomeextinct thereisastrikingdifferencebetweenthesolutions of the discounted utilitarian program and the sustainabilitarian program under uncertainty

corruption investments and contributions to public goods experimental evidence from rural liberia we analyze how corruption affects incentives to invest or contribute to public goods we obtain a proxy for corruption among liberian community leaders by keeping track of a flow of inputs associated with a development intervention measuring these inputs before and after giving them in custody to the chief we then use the gap between these measurements missing inputs to explain variation in investment behavior of villagers investment behavior is gauged with two simple artefactual field experiments our main results are that corruption i undermines incentives for voluntary contributions to local public goods and ii may reduce private investments of individuals subject to rent seeking by the chief in real life we also provide weaker evidence that the impact of corruption on investments and contributions to public goods is heterogeneous this impact may be gender specific and appears to vary with accessibility of communities

the limits of political compromise debt ceilings and political turnover we study the desirability of limits on the public debt and of political turnover in an economy where incumbents have an incentive to set public expenditures above the socially optimal level due to rent seeking motives parties alternate in office and cannot commit to future policies but they can forge a political compromise where each party curbs excessive spending when in office if it expects future governments to do the same in contrast to the received literature we find that strict limits on government borrowing can exacerbate political economy distortions by making a political compromise unsustainable this tends to happen when political turnover is limited conversely a tight limit on the public debt fosters a compromise that yields the efficient outcome if political turnover is vigorous our analysis thus suggests that to sustain good economic policies a society needs to restrict either the extent of political turnover or the ability of governments to issue debt but not both

why did the elites extend the suffrage democracy and the scope of government with an application to britain s age of reform a new rationale is presented for why an elite may want to expand the franchise even in the absence of threats to the established order expanding the franchise can turn politicians away from particularistic politics based on ad personam redistribution within the elite and foster competition based on programs with diffuse benefits if these programs are valuable a majority of the elite votes in favor of an extension of the franchise despite the absence of a threat from the disenfranchised we argue that the evolution of public spending and of political competition in nineteenth century britain is consistent with our model i introduction at the beginning of the nineteenth century in most countries narrow elites had a disproportionate influence on public affairs even in england where parliament was an influential institution suffrage was mostly the privilege of the wealthy and some members of parliament were elected in boroughs with as few as 100 voters while cities such as manchester did not have any representative a century later most western countries had universal male suffrage with female suffrage to arrive shortly thereafter what brought about this democratic revolution in many cases the elites were forced out of power after violent revolutions however there are important examples such as england where democratization took the form of gradual extensions of the suffrage and these were accompanied by little overt violence it is the peculiar pride of england that the record of social and political reform is to be found on the statute book not in the annals of revolution cheyney 1931 p vii such peaceful democratizations are difficult to rationalize within the benchmark political economic models in those models extending the franchise dilutes the elite s power to influence policy and results

decentralization and efficiency of subsidy targeting evidence from chiefs in rural malawi abstract lower income countries spend vast sums on subsidies beneficiaries are typically selected via either a proxy means test pmt or through a decentralized identification process led by local leaders a decentralized allocation may offer informational advantages but may be prone to elite capture we study this trade off in the context of two large scale subsidy programs in malawi for agricultural inputs and food decentralized to traditional leaders chiefs who are asked to target the needy using household panel data we find that nepotism exists but has only limited mistargeting consequences importantly we find that chiefs target households with higher returns to farm inputs generating an allocation that is more productively efficient than what could be achieved through strict poverty targeting this could be welfare improving since within village redistribution is common productive efficiency targeting is concentrated in villages with above median levels of redistribution

collective action in diverse sierra leone communities scholars have identified ethnic divisions as a leading cause of underdevelopment due partially to their adverse effects on public goods we investigate this issue in post war sierra leone one of the world s poorest and most ethnically diverse countries to address concerns over endogenous local ethnic composition we use an instrumental variables strategy using earlier census data on ethnicity and include several historical and geographic covariates perhaps surprisingly we find that local diversity is not associated with worse public goods provision across multiple outcomes and specifications with precisely estimated zeros we investigate the role of historical factors in generating the findings

the origins of violence in rwanda this paper shows that the intensity of violence in rwanda s recent past can be traced back to the initial establishment of its precolonial state villages that were brought under centralized rule one century earlier experience a doubling of violence during the state organized 1994 genocide instrumental variable estimates exploiting differences in proximity to nyanza an early capital suggest these effects are causal in other periods when the state faced rebel attacks with longer state presence violence is lower using data from several sources including a lab in the field experiment across an abandoned historical boundary i show that the effect of the historical state is primarily sustained by culturally transmitted norms of obedience the persistent effect of the precolonial state interacts with government policy where the state developed earlier there is more violence when the rwandan government mobilized for mass killing and less violence when the government pursued peace

the profits of power land rights and agricultural investment in ghana we examine the impact of ambiguous and contested land rights on investment and productivity in agriculture in akwapim ghana we show that individuals who hold powerful positions in a local political hierarchy have more secure tenure rights and that as a consequence they invest more in land fertility and have substantially higher output the intensity of investments on different plots cultivated by a given individual corresponds to that individual s security of tenure over those specific plots and in turn to the individual s position in the political hierarchy relevant to those specific plots

two criteria for social decisions abstract this paper studies the ethical underpinnings of two social criteria which are prominent in the literature dealing with the problem of evaluating allocations of several consumption goods in a population with heterogenous preferences the pazner schmeidler criterion pazner schmeidler egalitarian equivalent allocations a new concept of economic equity quart j econ 92 1978 671 687 and the egalitarian walras criterion fleurbaey and maniquet utilitarianism versus fairness in welfare economics in m salles j a weymark eds justice political liberalism and utilitarianism themes from harsanyi and rawls cambridge university press cambridge 1996 forthcoming are prima facie quite different but it is shown here that these criteria are related to close variants of the fairness condition that an allocation is better when every individual bundle in it dominates the average consumption in another allocation in addition the results suggest that the pazner schmeidler criterion can be viewed as the best extension of the walrasian criterion to non convex economies

political competition policy and growth theory and evidence from the us this paper develops a simple model to analyse how a lack of political competition may lead to policies that hinder economic growth we test the predictions of the model on panel data for the us states in these data we find robust evidence that lack of political competition in a state is associated with anti growth policies higher taxes lower capital spending and a reduced likelihood of using right to work laws we also document a strong link between low political competition and low income growth

aggregating infinite utility streams with intergenerational equity the impossibility of being paretian it has been known that in aggregating infinite utility streams there does not exist any social welfare function which satisfies the axioms of pareto intergenerational equity and continuity we show that the impossibility result persists even without imposing the continuity axiom and in frameworks allowing for more general domains of utilities than those used in the existing literature

anarchy self governance and legal titling scholars and policymakers prescribe legal titling to improve prospects for economic development and political order however a public choice literature exists that has long recognized that self governance often works well and that the state may not be able to improve upon local economic institutions at reasonable cost although the implication that legal titling should proceed with caution is seemingly straightforward the literature on legal titling does not take anarchy seriously as a policy option in addition there is a public choice literature that presumes the state is the most important source of property rights this essay fills this gap in the property rights literature by applying the concept of efficient anarchy to legal titling in afghanistan original fieldwork evidence from rural afghanistan suggests that anarchy of land governance is a better option than legal titling the essay concludes by opening up the black box of state building by explaining why it often makes sense to sequence improvements in political capacity and political constraints prior to investing in legal titling

reshaping institutions evidence on aid impacts using a pre analysis plan this brief summarizes the results of a gender impact evaluation study entitled reshaping institutions evidence on aid impacts using a pre analysis plan conducted between 2005 and 2009 in sierra leone the study observed the impact of pre analysis plan pap on local institutions by imposing participation requirements for marginalized groups including women and test for learning by doing effects in sierra leone on the individual and village level requiring women and young adults to take on leadership positions participate in project meetings and sign off on project finances does not have any persistent effect on their participation in local decision making or attitudes regarding leadership ability the project successfully established village organizations and tools to manage the project the distributions of the project s benefits were equitable and leakage was minimal there was a significant positive impact on the stock and quality of local public infrastructure however there are no detectible changes in the ability to raise funds for local public goods decision making process or social norms and attitudes funding for the study derived from the gobifo project the institutional reform and capacity building project ircbp the world bank development impact evaluation dime the horace w goldsmith foundation the international growth center 3ie and the national bureau of economic research nber african successes project

participation inertia in r d tax incentive and subsidy programs we examine how persistent firms participation is in rd the use of tax credits in contrast is unrelated to a firm s productivity our results suggest that r d tax incentives and r d subsidies are not substitutes and that any unintended misallocation of support is likely to persist

party control of state government and the distribution of public expenditures this paper examines the effects of party control of state governments on the distribution of intergovernmental transfers across counties from 1957 to 1997 we find that the governing parties skew the distribution of funds in favor of areas that provide them with the strongest electoral support this is borne out in two ways i counties that traditionally give the highest vote share to the governing party receive larger shares of state transfers to local governments ii when control of the state government changes the distribution of funds shifts in the direction of the new governing party we find only weak evidence that parties reward electorally pivotal counties or counties in electorally pivotal legislative districts finally we find that increased spending in a county increases voter turnout in subsequent elections this suggests that parties have an electoral incentive to skew the distribution of funds to influence future election results and the mechanism through which this works is mobilization rather than conversion of voters in a fixed electorate

a dynamic analysis of human welfare in a warming planet anthropogenic greenhouse gas ghg emissions have caused atmospheric concentrations with no precedents in the last half a million years inducing serious uncertainties about future climates and their effects on human welfare recent climate science supports the view that the climate stabilization will require very low ghg emissions in the future we ask is a path of low emissions compatible with sustainable levels of human welfare with steady growth in human quality of life addressing these questions requires both defining welfare criteria and empirically estimating the possible paths of the economy we specify and calibrate a dynamic model with four intertemporal links education physical capital knowledge and the environment in line with nordhaus 2008a and with the stern review 2007 we assume that ghg emissions allow increased production while a higher stock of atmospheric carbon decreases production our index of human welfare which we call quality of life quol emphasizes education knowledge and the environment affected by greenhouse gas emissions in addition to consumption and leisure thus we avoid a consumptionist fallacy that welfare depends only on commodity consumption and perhaps leisure we reject discounted utilitarianism as a normative criterion and consider two alternatives the first is an intergenerational maximin criterion which maximizes the quality of life of the first generation subject to maintaining at least that level for all successive generations the second is human development optimization that seeks the maximization of the quol of the first generation subject to achieving a given constant rate of growth in all subsequent generations hence our analysis focuses on a human notion of sustainability as opposed to the conventional green sustainability limited to keeping the quality of the environment constant because our dynamic optimization programs defy explicit analytical solutions our approach has been computational as a benchmark we consider a simple model with physical and human capital for which we prove a turnpike theorem we then devise a computational algorithm inspired by the turnpike property to construct feasible although not necessarily optimal paths in the more complex and realistic model our analysis indicates that with ghg emission paths entailing very low emissions in the future positive rates of growth in quol are possible while the first generation experiences a quol higher than the historical reference level we also observe a tradeoff between the quality of life of the first generation and the rate of growth in the quality of life yet generation 1 s sacrifice for the sake of a higher growth rate appears to be small the paths that we compute involve investments in knowledge at noticeably higher levels than in the past

liberal egalitarianism and the harm principle this paper analyses the implications of classical liberal and libertarian approaches for distributive justice in the context of social welfare orderings an axiom capturing a liberal non interfering view of society named the weak harm principle is studied whose roots can be traced back to john stuart mill s essay on liberty it is shown that liberal views of individual autonomy and freedom can provide consistent foundations for social welfare judgements in both the finite and the infinite context in particular a liberal non interfering approach can help to adjudicate some fundamental distributive issues relative to intergenerational justice however a surprisingly strong and general relation is established between liberal views of individual autonomy and non interference and egalitarian principles in the rawlsian tradition

clientelism in indian villages abstract we study the operation of local governments panchayats in rural maharashtra india using a survey that we designed for this end elections are freely contested fairly tallied highly p

electoral bias and policy choice theory and evidence this paper develops an approach to studying how bias in favor of one party due to the pattern of electoral districting affects policy choice we tie a commonly used measure of electoral bias to the theory of party competition and show how this affects party strategy in theory the usefulness of the approach is illustrated using data on local government in england the results suggest that reducing electoral bias leads parties to moderate their policies

can development aid contribute to social cohesion after civil war evidence from a field experiment in post conflict liberia civil war is very common in the develop ing world with harmful welfare effects when it occurs many fear that the devastation wrought by violent conflict destroys social capital impedes economic development and leads to the recur rence of violence paul collier et al 2003 in response donors are injecting large amounts of aid into post conflict countries a significant share of this assistance is spent on community driven reconstruction cdr programs which support the establishment of new local institu tions in order to promote social reconciliation whether this assistance has this effect is how ever largely unknown can brief foreign funded efforts to build local institutions in fact have posi tive effects on local patterns of cooperation we address this question using a randomized field experiment to evaluate the impact of a cdr project in northern liberia the project was funded by the united kingdom s department for international development dfid and imple mented by the international rescue committee irc the project attempted to build demo cratic community level institutions for making and implementing decisions about local public goods this model of support for participatory processes to enhance local public goods provi

chiefs economic development and elite control of civil society in sierra leone we study the effect of constraints on chiefs power on economic outcomes citizens attitudes and social capital a paramount chief in sierra leone must come from a ruling family originally recognized by british colonial authorities in chiefdoms with fewer ruling families chiefs face less political competition and development outcomes are significantly worse today variation in the security of property rights over land is a potential mechanism paradoxically with fewer ruling families the institutions of chiefs authority are more highly respected and measured social capital is higher we argue that these results reflect the capture of civil society organizations by chiefs

on the impossibility of complete non interference in paretian social judgements abstract we study a principle of non interference in social welfare judgements non interference captures aspects of liberal approaches particularly a millian approach to social decision making in its full generality non interference produces an impossibility result together with weak pareto optimality it implies that a social welfare ordering must be dictatorial however interesting restricted versions of non interference are compatible with standard social welfare orderings