_Table 1.06: The Determinants of Voters’ Perception of Rent Extraction_

||**Corruption is a Pro**|**blem in Political Life**|**Corruption is a Probl**|**em in Personal/Family**|
|---|---|---|---|---|
||<br>**(Prop**<br>|<br>**ortion)**<br>|<br>**Li**<br>**(Propo**<br>|<br>**fe**<br>**rtion)**<br>|
||**(1)**<br>**(GLM)**|**(2)**<br>**(GLM)**|**(3)**<br>**(GLM)**|**(4)**<br>**(GLM)**|
||**Additive**|**Factor**|**Additive**|**Factor**|
|**Higher EDD/NEDD Ratio**|-0.16**<br>(0.067)|-0.36**<br>(0.16)|0.0083<br>(0.092)|0.026<br>(0.21)|
|**Varieties of Capitalism**|0.53*<br>(0.28)|0.58**<br>(0.28)|-1.32***<br>(0.41)|-1.31***<br>(0.42)|
|**Economic Openness**<br>**(Long-Term)**|-4.51***<br>(1.33)|-5.04**<br>(1.99)|5.17***<br>(1.76)|5.17***<br>(1.60)|
|**Latitude**|-5.06***<br>(1.82)|-5.68***<br>(1.91)|1.30<br>(2.18)|1.37<br>(0.69)|
|**(log) Per capita income**|-0.77*<br>(0.40)|-0.95<br>(0.87)|-0.11<br>(0.65)|-0.12<br>(0.64)|
|**School Enrolment**|-0.017<br>(0.18)|-0.021<br>(0.017)|0.031<br>(0.023)|0.030<br>(0.022)|
|**Sample**|High-Income OECD|High-Income OECD|High-Income OECD|High-Income OECD|
|**Number of Observations**|17|17|17|17|
|**(Pseudo Log)-Likelihood**|-7.18|-7.23|-4.40|-4.42|

Robust standard errors in parentheses. * Denotes significant at the 10% level, ** significant at the 5% level, ***significant at the 1% level. See Appendix A for details of variable descriptions. _Source: The Author_

# **Conclusion**

The aim of this paper was to contribute to understanding the determinants of rent extraction, especially in high-income democracies in which variations in rent extraction persist but cannot be explained by the lack of either long-established democratic institutions or socio-economic development. Utilizing the insights of recent developments in the economic voting literature, specifically the substantive DuchStevenson model, in conjunction with a game-theoretic, career concerned modeling framework, it was possible to derive new hypotheses regarding the determinants of rent extraction. Specifically, the model anticipated that a higher EDD/NEDD ratio in democratic contexts would be associated with less rent extraction as electorally accountable and career-concerned office holders would be incentivized to minimize their short-term rent extraction and voters would be able to re-elect only high competency incumbents.

Consistent with these theoretical expectations the EDD/NEDD ratio was associated with: (1) lower levels of rent extraction in the sub-sample of countries identified as high-income democracies; and (2) in the pooled dataset, only associated with lower levels of rent extraction as part of an interaction effect with high-income democracies. Thus, the EDD/NEDD ratio is robustly associated with variations in rent extraction for the sub-sample of countries that are considered high-income democracies. While future research needs to focus on examining the micro-level empirical implications of the model in more detail, the fact that the macro-level results obtained above are consistent with the insights of both: (1) the economic voting literature; and (2) the empirical finding that a high-income democratic context is associated with less rent-extraction; provides a critical first step in justifying future research along this line of inquiry.

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