title: From Public Goods to Public Choice
Creators: name: Schlieszus, Felix
Publisher: name: University of Bayreuth
Year: 2022
Subjects: subject: willingness to pay
subject: public goods
subject: median voter
subject: social incentives
subject: public choice
subject: eggs
subject: voting
subject: U.S. presidential elections
subject: 330

description: In recent years public goods received more attention, especially the public good climate. Many people claim that there is an urgent need for regulations to reduce global warming. Besides new policy regulations, many actors also demand an individual behavior change in line with less environmental pollution. From a theoretical perspective, this change is unlikely to happen. A high preference for the environment should not result in a revealed willingness to pay for this good, as one's contribution is only marginal. This explains why demanding stricter environmental regulations and individual extensive environmental pollution are not contradicting. In contrast to this explanation, a growing number of people individually contribute to the provision of public goods, e.g., by compensating for their flight emissions. At first glance, this behavior seems to contradict the standard economic theory. However, an explanation that is in line with economic theory can be found focusing on different preferences linked to public goods. Social incentives like gaining reputation and silencing one's conscience can explain the observed behavior. Thus, we can interpret the revealed willingness to pay as a willingness to pay for social incentives apart from the public good. Based on this idea, in the first paper of this thesis, we try to develop a simple microeconomic calculus to distinguish the willingness to pay for public goods and social incentives. We implement a so-called Quasi-Monarch setting to measure the willingness to pay for public goods. In the second paper, we try to apply the idea of this model to reality. For this, we measure the willingness to pay for eggs using different scenarios. By separating different preferences from the stated willingness to pay for different varieties of eggs, we try to identify the willingness to pay for social incentives and the public good production animal welfare. Determining the real willingness to pay for the public good is crucial for politicians to establish welfare-increasing standards. However, in the light of public choice, we consider politicians as self-interested utility maximizes. This raises the question of whether politicians provide the level of the public good that is in line with the individual's willingness to pay for the public good. The median voter model shows that politicians are forced to provide the preferred amount of public goods of the median voter to win an election. However, this standard model only shows the demand side and does not consider the supply side. In my third paper, I develop a simple microeconomic calculus that includes the demand and supply side and provides an easy way to analyze changes in preferences and budgets and different market forms in the price-quantity scheme. But do politicians align their positions to the one of the median voter as theory predicts? In reality, the precise theoretical predictions of the median voter model are difficult to measure. Since the median voter is a static model, it just states an equilibrium but does not make any predictions how this equilibrium is reached. In the fourth paper of this thesis, we develop a model to measure the median voter in a framework that is in line with economic theory. We use the 2016 U.S. presidential election to evaluate the median voter model. The key feature of this analysis is the shift of the median voter in the transition from primary elections (where each party designates its candidate) to the presidential election.We expect candidates to align their positions to the median voter of the party in the primaries and the median voter of all citizens in the presidential elections. Using this shift, we try to analyze the median voter theorem in line with theory.