can self control explain avoiding free money evidence from interest free student loans abstract this paper uses insights from behavioral economics to explain a particularly surprising borrowing phenomenon one in six undergraduate students offered interest free loans turns them down models of impulse control predict that students may optimally reject subsidized loans to avoid excessive consumption during school using the national postsecondary student aid study we investigate students take up decisions and identify a group of students for whom the loans create an especially tempting liquidity increase students who would receive the loan in cash are significantly more likely to turn it down suggesting that consumers choose to limit their liquidity in economically meaningful situations

districting and government overspending theories of government spending driven by a common pool problem in the fiscal revenues pool predict that greater districting of a political jurisdiction raises the scale of government this paper presents evidence on this and related predictions from a cross section of city governments in the united states the main finding is that when other plausible determinants of government spending are controlled for greater districting leads to a considerably greater scale of government activity the results also show that at large electoral systems do not and forms of government that concentrate powers in the office of the executive do break this relationship

equal votes equal money court ordered redistricting and the distribution ofpublic expenditures in the american states a study of the effects of legislative re districting in the states during the 1960 s also contains data file

do formulas reduce political influence on intergovernmental grants evidence from tanzania sub national governments usually depend on the central government for a large share of their revenues therefore a fair allocation of intergovernmental grants is essential for financing vital local services like education and healthcare in tanzania and many other countries regions that are better represented in the national parliament receive significantly more funds than others recently tanzania replaced the previously existing discretionary method of grant allocation by allocation formulas we study whether this has reduced the effect of malapportionment on grant allocation surprisingly we find that formula allocation does not significantly change this effect this has important policy implications

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

the perceived returns to education and the demand for schooling economists emphasize the link between market returns to education and investments in schooling though many studies estimate these returns with earnings data it is the perceived returns that affect schooling decisions and these perceptions may be inaccurate using survey data for eighth grade boys in the dominican republic we find that the perceived returns to secondary school are extremely low despite high measured returns students at randomly selected schools given information on the higher measured returns completed on average 0 20 0 35 more years of school over the next four years than those who were not

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

bargaining in bicameral legislatures when and why does malapportionment matter malapportionment of seats in bicameral legislatures it is widely argued confers disproportionate benefits to overrepresented jurisdictions ample empirical research has documented that unequal representation produces unequal distribution of government expenditures in bicameral legislatures the theoretical foundations for this empirical pattern are weak it is commonly asserted that this stems from unequal voting power per se using a noncooperative bargaining game based on the closed rule infinite horizon model of baron and ferejohn 1989 we assess the conditions under which unequal representation in a bicameral legislature may lead to unequal division of public expenditures two sets of results are derived first when bills originate in the house and the senate considers the bill under a closed rule the equilibrium expected payoffs of all house members are surprisingly equal second we show that small state biases can emerge when 1 there are supermajority rules in the malapportioned chamber 2 the senate initiates bills which produces maldistributed proposal probabilities and 3 the distributive goods are lumpy we thank seminar participants at new york university the university of pennsylvania and the 2002 annual meeting of the american political science association for helpful comments james snyder and michael ting gratefully acknowledge the financial support of national science foundation grant ses 0079035 stephen ansolabehere gratefully acknowledges the support of the carnegie corporation under the carnegie scholars program this paper was written while michael ting was at the university of north carolina at chapel hill and he thanks the department of political science there for their support

choosing the field of study in postsecondary education do expected earnings matter abstract this paper examines the determinants of the choice of the college major when the length of studies and future earnings are uncertain we estimate a three stage schooling decision model focusing on the effect of expected earnings on major choice we control for dynamic selection through the use of mixture distributions exploiting variations across the french business cycle in the relative returns to the majors our results yield a very low though significant elasticity of major choice to expected earnings this suggests that at least for the french university context nonpecuniary factors are a key determinant of schooling choices

collective bargaining awareness of general equilibrium effects and unemployment we explore the significance of general equilibrium feedback effects for wage bargaining we examine a two sector economy and show that if agents only consider labor demand effects low real wages and low unemployment are the consequences with an intermediate view i e when partial equilibrium effects within a sector are taken into account high real wages and unemployment result if all general equilibrium effects are perceived simultaneously we once again obtain a situation with low wages and unemployment the results may explain why unemployment is high in some european countries

measuring subjective expectations in developing countries a critical review and new evidence the majority of economic decisions taken by individuals are forward looking and thus involve their expectations of future outcomes understanding the expectations that individuals have is thus of crucial importance to designing and evaluating policies in health education finance migration social protection and many other areas however the majority of developing country surveys are static in nature and do not contain information on the subjective expectations of individuals possible reasons given for not collecting this information include fears that poor illiterate individuals do not understand probability concepts that it takes far too much time to ask such questions or that the answers add little value this paper provides a critical review and new analysis of subjective expectations data from developing countries and refutes each of these concerns the authors find that people in developing countries can generally understand and answer probabilistic questions such questions are not prohibitive in time to ask and the expectations are useful predictors of future behavior and economic decisions the paper discusses the different methods being tried for eliciting such information the key methodological issues involved and the open research questions the available evidence suggests that collecting expectations data is both feasible and valuable suggesting that it should be incorporated into more developing country surveys

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

preferences and prices in choice of career the switch to business 1972 1987 abstract in the last two decades the largest single change in career plans of college students is the more than doubling from 1972 to 1987 of the proportion opting for business the evidence suggests that a shift in preferences a marked upsurge among the young in money making as a life goal was responsible for this as well as movements in prices the relative returns from different occupations the rise in interest in money making is not due to greater insecurity among the young about their economic future or worsened job expectations rather it reflects greater concern about money among older adults which influenced the young with a lag by re shaping their life goals as they grew up empirical study of occupational choice would benefit from more attention to such non market influences

unsticking the flypaper effect in an uncertain world abstract we provide a novel explanation for the flypaper effect based on insurance arguments in our model the flypaper effect arises due to the differential response of precautionary savings to private income or fiscal transfers shocks in an uncertain world with incomplete markets the model generates two testable implications i the flypaper effect is a decreasing function of the correlation between fiscal transfers and private income and ii such relationship is stronger the higher is the volatility of fiscal transfers and or private income an empirical analysis of argentinean provinces for the period 1963 2006 finds strong support for the model s implications

comparing tax expenditures and direct subsidies the role of legislative committee structure abstract this paper analyzes the impact of legislative committee structure on policy outcomes comparing a tax committee enacting tax expenditures and a decentralized system of specialized committees undertaking direct spending an endogenous commodity taxation framework is combined with models of legislative bargaining and committee voting the main conclusion is that the tax committee structure gives rise to lower subsidy levels under a wide range of circumstances however it is only under a more restrictive set of assumptions that social welfare is higher in the tax committee regime this theoretical analysis is illustrated by two examples of institutional change in congress

parochial interests and the centralized provision of local public goods evidence from congressional voting on transportation projects abstract local public goods financed from a national tax base provide concentrated benefits to recipient jurisdictions but disperse costs creating incentives for legislators to increase own district spending but to restrain aggregate spending due to the associated tax costs while these common pool incentives underpin a variety of theoretical analyses which tend to predict inefficiencies in the allocation of public goods there is little direct evidence that individual legislators respond to such incentives to test for reactions to such incentives this paper analyzes 1998 congressional votes over transportation project funding the empirical results provide evidence that legislators respond to common pool incentives the probability of supporting the projects is increasing in own district spending and decreasing in the tax burden associated with aggregate spending having found that legislators do respond to such incentives i use the parameter estimates to calculate the efficient level of public goods which suggest over spending in aggregate especially in politically powerful districts and large associated deadweight loss

sending the pork home birth town bias in transfers to italian municipalities we ask whether the birthplaces of italian members of parliament are favoured in the allocation of central government transfers using a panel of municipalities for the years between 1994 and 2006 we find that municipal governments of legislators birth towns receive larger transfers per capita exploiting variation in birthplaces induced by parliamentary turnover for estimation we find that this effect is driven by legislators who were born in a town outside their district of election as a result we argue that our findings cannot be a consequence of re election incentives the usual motivation for pork barrel policies in the literature rather politicians may be pursuing other personal motives in line with this hypothesis we find that the birth town bias essentially disappears when legislative elections are near we explore several possible mechanisms behind our results by matching parliamentarians to a detailed dataset on local level administrators

a bargaining model of collective choice we present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space in contrast to other bargaining models the status quo is not assumed to be bad and delay may be pareto efficient we prove existence of stationary equilibria the possibility of equilibrium delay depends on four factors risk aversion of the legislators the dimensionality of the policy space the voting rule and the possibility of transfers across districts if legislators are risk averse if there is more than one policy dimension and if voting is by majority rule for example then delay will almost never occur in one dimension delay is possible if and only if the status quo lies in the core of the voting rule and then it is the only possible outcome this core selection result yields a game theoretic foundation for the well known median voter theorem our comparative statics analysis yield two noteworthy insights i if the status quo is close to the core t hen equilibrium policy outcomes will also be close to the core a moderate status quo produces moderate policy outcomes and ii if legislators are patient then equilibrium proposals will be close to the core legislative patience leads to policy moderation

the effect of liquid housing wealth on college enrollment this article uses short run housing wealth changes to identify the effect of housing wealth on college attendance i find that households used their housing wealth to finance postsecondary enrollment in the 2000s when housing wealth was most liquid each 10 000 in home equity raises college enrollment by 0 7 of a percentage point on average the effect is localized to lower resource families for whom a 10 000 increase in housing wealth increases enrollment by 5 7 percentage points these estimates imply that the recent housing bust could significantly negatively affect college enrollment through reduction in the housing wealth of families with college age children

universalism and the value of political power although legislatures typically use majority rule to allocate a budget in distributive legislation unanimous consent over the broad allocation of benefits is pervasive i develop a game theoretic model where members strategically interact in a universal coalition to determine allocations with noncooperative bargaining as a threat point for the breakdown of cooperation to quantify the effects of political power on the agreed upon allocation i structurally estimate the model using the bridge bill capital budget in 1992 i find that 16 73 of the budget would be allocated differently if allocations were determined only based on actual needs

the influence of higher moments of earnings distributions on career decisions a model where choice of occupation is sequential is applied to college graduates from the national longitudinal study of the high school class of 1972 to investigate how higher moments of occupational earnings distributions influence initial field of work individual specific life cycle earnings projections that incorporate option values of occupational mobility are generated and the relationship between these pay measures and choice of initial occupation is explored within a multinomial logit framework the findings indicate a strong positive relationship between these earnings predictions and the likelihood that college graduates enter an occupation

changing the price of pork the impact of local cost sharing on legislators demands for distributive public goods abstract the provision of public services through national legislatures gives legislators the chance to fund locally beneficial public projects using a shared national tax base nationally financed and provided local congestible public goods will be purchased at a subsidized price below marginal cost and may be inefficiently too large as a consequence an important assumption behind this inefficiency is that national legislators in fact demand more of the locally beneficial project as the local price for projects declines this paper provides the first direct test of this important assumption using legislators project choices following the passage of the water resources development act of 1986 wrda 86 we find legislators chosen water project sizes do fall as the local cost share rises with a price elasticity of demand ranging from 0 81 for flood control and shoreline protection projects to 2 55 for large navigation projects the requirement of wrda 86 that local taxpayers contribute a greater share to the funding of local water projects reduced overall proposed project spending in our sample by 35 and the federal outlay for proposed project spending by 48

why should majority voting be unfair the common use of majority rule in group decision making is puzzling in theory it inequitably favors the proposer and paradoxically it disadvantages voters further if they are inequity averse in practice however outcomes are equitable the present paper analyzes data from a novel experimental design to identify the underlying social preferences our experiment compares one shot and indefinite horizon versions of random proposer majority bargaining the baron ferejohn game which allow us to disentangle behaviors compatible with altruism inequity aversion and reference dependent altruism most subjects are classified as reference dependent altruists around 10 are inequity averse subjects are egoistic when their payoff is below their reference point they become efficiency concerned when satisfied and the reference point is either the ex ante expectation or the opponent s payoff finally we successfully test rda out of sample on a number of distribution and bargaining games from three seminal social preference experiments

the economics of split ticket voting in representative democracies in u s elections voters often vote for candidates from different parties for president and congress voters also express dissatisfaction with the performance of congress as a whole and satisfaction with their own representative the authors develop a model of split ticket voting in which government spending is financed by uniform taxes the benefits from this spending are concentrated while the model generates split ticket voting overall spending is too high only if the president s powers are limited overall spending is too high in a parliamentary system the authors model can be used as the basis of an argument for term limits copyright 1997 by american economic association

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

electoral vulnerability and size of local governments evidence from voting on municipal mergers abstract we analyze how anticipated changes in the electoral vulnerability of municipal councilors affect their voting behavior over municipal mergers the electoral vulnerability changes due to a merger because it changes the composition of political competitors and the number of available seats in the next election we use this variation for identification and find that the smaller the increase in the electoral vulnerability of a councilor the more likely he is to vote for the merger the documented effect is not driven by the behavioral response of the voters or by party line considerations the councilors desire to avoid personal electoral competition may lead to sub optimally small municipalities from the local citizens point of view

economic policy and special interest politics a great deal of research has been done on the boundary between economics and political science in the last five to ten years this research in political economics spans many subfields such as macroeconomics trade public finance regulation rational choice politics and game theory a common denominator has been to study structural models of the political process agents behave rationally within well specified economic and political institutions where the policymaking process is formulated as an extensive form game methodologically much progress has been made relative to traditional approaches which were often based on inconsistent or irrational political and economic behaviour relying on non derived influence functions political support functions or vote functions yet the modem work has largely developed separately in each subfield without much contact with other subfields and each of the resulting literatures tends to focus on a distinct but partial aspect of the political process in this lecture i shall argue that even though the progress to date has been substantial we can gain a better understanding of policymaking in democracies by combining the insights from different strands of thinking on some economic policy issues the conflicting views both among citizens and politicians basically reduce to a single left to right dimension examples may include the politics of inflation vs unemployment capital taxation or the size of government we can think about policy issues within this domain of general interest politics as being resolved via traditional downsian electoral competition at least to a first approximation but the economic policy process also allows narrow interest groups ample opportunities to concentrate benefits to their own group at the expense of the population as a whole the resulting policy conflict is generically multi dimensional resolving it by voting alone would thus result in condorcet cycles we therefore need to go beyond the simplest electoral models to understand policy determination within this domain of special interest politics this lecture deals with special interest politics to make my point about fruitful analytical arbitrage i will stick to the same underlying policy example throughout this will be a simple model of a society where the government uses

earnings expectations revisions and realizations during the spring and the fall of 1993 respondents to a national household survey were asked to report expectations of spring 1994 weekly earnings elicited in the form of subjective probabilities these data are potentially much more informative than are typical reports of economic expectations subjective probability distributions of future weekly earnings are estimated for each respondent based on his or her reports of a series of subjective probabilities this paper analyzes the cross sectional variation in expectations revisions of expectations between the spring and the fall of 1993 and the relationship between 1993 expectations and the distribution of spring 1994 earnings realizations generally positive findings on the validity of the data bode well for the prospects of eliciting expectations in future surveys

comparative politics and public finance we propose a model with micropolitical foundations to contrast different political regimes compared to a parliamentary regime the institutions of a presidential congressional regime produce fewer incentives for legislative cohesion but more separation of powers these differences are reflected in the size and composition of government spending a parliamentary regime has redistribution toward a majority less underprovision of public goods and more rents to politicians a presidential congressional regime has redistribution toward powerful minorities more underprovision of public goods but less rents to politicians the size of government is smaller under a presidential regime this last prediction is consistent with cross country data

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

deviations from constituent interests the role of legislative structure and political parties in the states this paper investigates the determinants of state spending over 1960 1990 recent empirical studies suggest that state government expenditure is greater than the electorate desires our main finding is that expenditure was positively related to the number of seats in a state s legislature this is consistent with the hypothesis that logrolling leads representatives to spend more than their constituents would like we also find that political parties do not have a pronounced effect on overall levels of expenditure but do influence the composition of spending in particular democratic control of state government is associated with higher levels of welfare spending

legislative representation bargaining power and the distribution of federal funds evidence from the us congress this article investigates the relationship between representation in legislatures and the geographic distribution of federal funds in a legislative bargaining model we demonstrate that funds are concentrated in high representation areas and two channels underlie this result the proposal power channel reflects the role of representation in committee assignments and the vote cost channel reflects the role of representation in coalition formation in our empirical analysis we find that small states relative to large states receive more funding in the us senate relative to the house we also find empirical support for the two channels underlying this relationship throughout the history of federations and international organisations a key consti tutional design question involves how jurisdictions of different sizes are represented in legislative bodies and how their votes will ultimately be weighted large jurisdictions typically argue for delegation sizes or voting weights that are roughly proportional to population whereas small jurisdictions typically argue for an equal number of delegates or votes for each jurisdiction this conflict over representation is presumably driven at least in part by a belief that increased representation strengthens bargaining power in the battle over the geographic distribution of funds authorised by these legislative bodies in this article i analyse the relationship between legislative representation bar gaining power and the geographic distribution of federal funds from both a theoretical and empirical perspective in addition to investigating the existence of a relationship between representation and federal funds i also explore the underlying mechanisms that is i ask which political institutions such as agenda control provided to commit tees and the formation of coalitions under majority rule shape the bargaining power of jurisdictions in central legislatures and thus facilitate the relationship between repre sentation and the distribution of federal spending to provide a framework for analysing these issues i begin by developing a simple theoretical model of a central legislature that determines the crossjurisdiction distri bution of local public goods which are financed by a national tax base both delegation sizes and population are variable allowing me to consider a variety of institutional arrangements for jurisdictional representation legislators represent local interests and given the common pool problem associated with concentrated benefits and dis persed tax costs attempt to increase ownjurisdiction spending but to restrain spending elsewhere the model follows a recent literature on legislative bargaining in which a proposer must secure a majority of votes in order to pass legislation and due to the

university choice the role of expected earnings nonpecuniary outcomes and financial constraints we investigate the determinants of students university choice in pakistan with a focus on monetary returns nonpecuniary factors enjoyed at school and financial constraints to mitigate the iden

majority rule bargaining and the under provision of public investment goods abstract despite evidence that modern democracies systematically shortchange public investment goods relatively little theoretical work exists to explain this phenomenon we build on baron and ferejohn s american political science review 83 4 1989 1181 1206 bargaining model to describe public investments in a setting of budgetary politics specifically we show that underinvestment inherently arises from distributive politics within a majoritarian institution the inability of current majorities to contract with future ones drives a wedge between spending on consumption today and investing for future consumption extensions to the model demonstrate that earmarking future returns to specific players and or detaching consumption from investment decisions yields more efficient levels of public investment

local favoritism in at large proportional representation systems abstract pork barrel spending is typically attributed to the strategic behavior of political elites hoping to be electorally rewarded by voters residing in their districts such behavior is expected to depend on the incentives imposed by the electoral system we estimate the causal effect of local representation in a closed list proportional representation system where individual candidates have no clear electoral incentive to favor their hometown using data from norwegian regional governments we still find a hometown bias we document that municipalities with a representative on the regional council from the same party as the regional governor tend to obtain more funding for local investments citizens also tend to vote more often for parties whose gubernatorial candidate is from their own hometown consistent with expectations of particularistic benefits a possible explanation is that regional council members are often recruited from local politics and remain loyal to their roots we find no evidence that regional council experience affects politicians future career prospects at the local level

legislative organization and government spending cross country evidence abstract the law of 1 n posits that an increase in the number of elected representatives fuels excessive government spending despite its wide acceptance as a stylized fact the law of 1 n has received only limited empirical scrutiny and the existing evidence for the american states provides mixed support for the thesis this paper examines the law of 1 n in bicameral and unicameral legislative structures using a cross section of democratic countries the results indicate that legislative size matters under both legislature structures but bicameralism dampens the 1 n effect relative to unicameralism

estimating the value of proposal power this paper investigates the role of proposal power in the allocation of transportation projects across u s congressional districts in 1991 and 1998 the evidence supports the key qualitative prediction of legislative bargaining models members with proposal power those sitting on the transportation authorization committee secure more project spending for their districts than do other representatives support for the quantitative restrictions on the value of proposal power is more mixed i then empirically address several alternative models of legislative behavior including partisan models informational roles for committees models with appropriations committees and theories of committees as preference outliers

supermajority rule and bicameral bargaining this paper revisits the claim that supermajority rules and bicameral legislative structures restrain excessive government spending and taxation our analysis suggests that the extension effect of a supermajority rule that requires logrolling across additional members increases with the ratio of seats in the house relative to seats in the senate using a panel of us states 1970 2008 we find that the ratio of house to senate seats has a robust positive impact on the tendency of a supermajority rule to inflate the budget our finding implies that a supermajority rule can have a perverse effect on budget outcomes in bicameral legislatures owing to two factors the geographic overlap between chambers and the low price elasticity of demand for public goods

distributional consequences of political representation abstract we investigate both theoretically and empirically the effect of the geographic concentration of representatives on the geographic distribution of fiscal transfers our theoretical model predicts that more representatives residing in a geographic area leads to higher government funds to that area our empirical analysis uses the fact that in germany due to germany s electoral rules in state elections the number of representatives varies across electoral districts controlling for various socio economic demographic and political variables and using a variety of estimation methods we find that districts with a greater number of representatives receive more government funds

malapportionment and multilateral bargaining an experiment abstract members of collective decision making bodies often represent communities that differ in population sizes malapportionment results when decision making power is not allocated evenly across the population two well known institutions with malapportionment have emerged bicameralism and weighted voting this paper studies experimentally how agenda setting power affects the distribution of resources comparing across those two institutions conventional wisdom suggests that malapportionment favors scarcely populated states i find that this is the case under weighted voting but not necessarily in a bicameral system in the later case the allocation of agenda setting power can be used to eliminate distortions stemming from malapportionment

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

predicted future earnings and choice of college major using data from the national longitudinal survey of young men the author of this paper examines the relationship between predicted future earnings for five broad fields of study and college students choice of major conditional logit models of major choice that incorporate alternative predicted earnings variables are specified and estimated the results indicate that holding family background characteristics constant individuals are likely to choose majors offering greater streams of future earnings rather than as some have argued majors with higher beginning earnings at the time of the choice it is also found that earnings profiles corrected for self selection bias have flattened for more recent graduates in business liberal arts and education the life cycle earnings in these disciplines appear to be more severely depressed than those in science and engineering

the effect of credit constraints on the college drop out decision a direct approach using a new panel study a serious difficulty in determining the importance of credit constraints in education arises because standard data sources do not provide a direct way of identifying which students are credit constrained this paper differentiates itself from previous work by taking a direct approach made possible by unique longitudinal data from the berea panel study the results from our study of berea college students suggest that while credit constraints likely play an important role in the drop out decisions of some students the large majority of attrition of students from low income families should be primarily attributed to reasons other than credit constraints jel i21 i22

distributive politics and the costs of centralization this paper studies the choice between centralization and decentralization of fiscal policy in a political economy setting with centralization regional delegates vote over agendas comprising sets of region specific projects the outcome is inefficient because the choice of projects is insufficiently sensitive to within region benefits the number of projects funded may be non monotonic in the strength of project externalities the efficiency gains from decentralization and the performance of constitutional rules such as majority voting which may be used to choose between decentralization and centralization are then discussed in this framework weaker externalities and more heterogeneity between regions need not increase the efficiency gain from decentralization

the impact of federal spending on house election outcomes while it is widely believed by academics politicians and the popular press that incumbent members of congress are rewarded by the electorate for bringing federal dollars to their district the empirical evidence supporting that claim is extremely weak one explanation for the failure to uncover the expected relationship between federal spending and election outcomes is that incumbents who expect to have difficulty being reelected are likely to exert greater effort in obtaining federal outlays since it is generally impossible to adequately measure this effort the estimated impact of spending is biased downward because of an omitted variable bias we address this estimation problem using instrumental variables for each house district we use spending outside the district but inside the state containing the district as an instrument for spending in the district federal spending is affected by a large number of actors e g governors senators mayors and other house members in the state delegation

seniority in legislatures we construct a stochastic game model of a legislature with an endogenously determined seniority system we model the behavior of the legislators as well as their constituents in an infinitely repeated divide the dollar game each legislative session must make a decision on redistributional issues modeled as a divide the dollar game however each session begins with a vote in which the legislators decide by majority rule whether or not to impose on themselves a seniority system legislative decisions on the redistributional issues are made by the baron ferejohn rule an agenda setter is selected by a random recognition rule which in our model is a function of the seniority system selected the agenda setter makes a proposal on redistributional issues and the legislature then votes whether to accept or reject the agenda setters proposal if the legislature rejects the proposal another agenda setter is randomly selected and the process is repeated if the legislature accepts the proposal the legislative session ends and the voters in each legislative district vote whether to retain their legislator or throw it out of office the voters verdict determines the seniority structure of the next period legislature we find a stationary equilibrium to the game having the property that the legislature imposes on itself a non trivial seniority system and that legislators are always reelected