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    Can Workfare Programs Moderate Conflict? Evidence from India

    Thiemo Fetzer

    Can public interventions persistently reduce conflict? Adverse weather shocks, through their impact on incomes, have been identified as robust drivers of conflict in many contexts. An effective social insurance system moderates the impact of adverse shocks on household incomes, and hence, could attenuate the link between these shocks and conflict. This paper shows that a public employment program in India, by providing an alternative source of income through a guarantee of 100 days of employment at minimum wages, effectively provides insurance. This has an indirect pacifying effect. By weakening the link between productivity shocks and incomes, the program uncouples productivity shocks from conflict, leading persistently lower conflict levels.

    Date
    Wednesday, 05 February 2020
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    Political Booms, Financial Crises

    Helios Herrera, Guillermo Ordoñez, and Christoph Trebesch

    Political booms, measured by the rise in governments’ popularity, predict financial crises above and beyond better known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We argue that governments in developing countries have stronger incentives to “ride” unsound credit booms in order to boost their popularity, rather than implementing corrective policies that could prevent crises but are politically costly. We provide evidence of the relevance of this mechanism, partly by constructing a new cross-country data set on government popularity based on opinion polls.

    Date
    Saturday, 01 February 2020
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    Conversations on Social Choice and Welfare

    Peter J. Hammond.

    Following an initiative of Social Choice and Welfare, this is the result of an interview conducted by email exchange during the period from July 2017 to February 2018, with minor adjustments later in 2018. Apart from some personal history, topics discussed include: (i) social choice, especially with interpersonal comparisons of utility; (ii) utilitarianism, including Harsanyi's contributions; (iii) consequentialism in decision theory and in ethics; (iv) the independence axiom for decisions under risk; (v) welfare economics under uncertainty; (vi) incentive compatibility and strategy-proof mechanisms, especially in large economies; (vii) Pareto gains from trade, and from migration; (viii) cost benefit analysis and welfare measurement; (ix) the possible future of normative economics.

    Date
    Monday, 20 January 2020

    Fundamental utilitarianism and intergenerational equity with extinction discounting.

    Graciela Chichilnisky, Peter J. Hammond & Nicholas Stern

    Ramsey famously condemned discounting “future enjoyments” as “ethically indefensible”. Suppes enunciated an equity criterion which, when social choice is utilitarian, implies giving equal weight to all individuals’ utilities. By contrast, Arrow (Contemporary economic issues. International Economic Association Series. Palgrave Macmillan, London, 1999a; Discounting and Intergenerational Effects, Resources for the Future Press, Washington DC, 1999b) accepted, perhaps reluctantly, what he called Koopmans’ (Econometrica 28(2):287–309, 1960) “strong argument” implying that no equitable preference ordering exists for a sufficiently unrestricted domain of infinite utility streams. Here we derive an equitable utilitarian objective for a finite population based on a version of the Vickrey–Harsanyi original position, where there is an equal probability of becoming each person. For a potentially infinite population facing an exogenous stochastic process of extinction, an equitable extinction biased original position requires equal conditional probabilities, given that the individual’s generation survives the extinction process. Such a position is well-defined if and only if survival probabilities decline fast enough for the expected total number of individuals who can ever live to be finite. Then, provided that each individual’s utility is bounded both above and below, maximizing expected “extinction discounted” total utility—as advocated, inter alia, by the Stern Review on climate change—provides a coherent and dynamically consistent equitable objective, even when the population size of each generation can be chosen.

    Date
    Monday, 20 January 2020
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    The Political Economy of Liberal Democracy

    Sharun W Mukand, Dani Rodrik

    This paper develops a taxonomy of political regimes that distinguishes between three sets of rights—property rights, political rights and civil rights. The truly distinctive nature of liberal democracy is the protection of civil rights (equal treatment by the state for all groups) in addition to the other two. The paper shows how democratic transitions that are the product of a settlement between the elite (who care mostly about property rights) and the majority (who care about political rights), generically fail to produce liberal democracy. Instead, the emergence of liberal democracy requires low levels of inequality and weak identity cleavages.

    Date
    Wednesday, 15 January 2020
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    Can Terrorism Abroad Influence Migration Attitudes at Home?

    Tobias Böhmelt,Vincenzo Bove,Enzo Nussio

    This article demonstrates that public opinion on migration “at home” is systematically driven by terrorism in other countries. Although there is little substantive evidence linking refugees or migrants to most recent terror attacks in Europe, news about terrorist attacks can trigger more negative views of immigrants. However, the spatial dynamics of this process are neglected in existing research. We argue that feelings of imminent danger and a more salient perception of migration threats do not stop at national borders. The empirical results based on spatial econometrics and data on all terrorist attacks in Europe for the post-9/11 period support these claims. The effect of terrorism on migration concern is strongly present within a country but also diffuses across states in Europe. This finding improves our understanding of public opinion on migration, as well as the spillover effects of terrorism, and it highlights crucial lessons for scholars interested in the security implications of population movements.

    Date
    Monday, 02 December 2019
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    Did Austerity Cause Brexit

    Thiemo Fetzer

    This paper documents a significant association between the exposure of an individual or area to the UK government's austerity-induced welfare reforms begun in 2010, and the following: the subsequent rise in support for the UK Independence Party, an important correlate of Leave support in the 2016 UK referendum on European Union membership; broader individual-level measures of political dissatisfaction; and direct measures of support for Leave. Leveraging data from all UK electoral contests since 2000, along with detailed, individual-level panel data, the findings suggest that the EU referendum could have resulted in a Remain victory had it not been for austerity.

    Date
    Monday, 11 November 2019
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    Positive and negative campaigning in primary and general elections

    Dan Bernhard and Meenakshi Ghosh

    We analyze primary and general election campaigning. Positive campaigning builds a candidate's reputation; negative campaigning damages a rival's. Each primary candidate hopes to win the general election; but failing that, he wants his primary rival to win. We establish that general elections always feature more negative campaigning than positive, as long as reputations are easier to tear down than build up. In contrast, if the effects of primary campaigns strongly persist, primary elections always feature more positive campaigning than negative. This reflects that a primary winner benefits only from his positive primary campaigning in general elections, and negative campaigning by a rival hurts.

    Date
    Monday, 28 October 2019
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    Information Aggregation and Turnout in Proportional Representation: A Laboratory Experiment

    Helios Herrera, Aniol Llorente-Saguer and Joseph C McMurray

    The swing voter’s curse is useful for explaining patterns of voter participation, but arises because voters restrict attention to the rare event of a pivotal vote. Recent empirical evidence suggests that electoral margins influence policy outcomes, even away from the 50% threshold. If so, voters should also pay attention to the marginal impact of a vote. Adopting this assumption, we find that a marginal voter’s curse gives voters a new reason to abstain: to avoid diluting the pool of information. The two curses have similar origins and exhibit similar patterns, but the marginal voter’s curse is both stronger and more robust. In fact, the swing voter’s curse turns out to be on a knife edge: in large elections, a model with both pivotal and marginal considerations and a model with marginal considerations alone generate identical equilibrium behaviour.

    Date
    Saturday, 19 October 2019
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    The Marginal Voter’s Curse

    Helios Herrera, Aniol Llorente-Saguer and Joseph C McMurray

    The swing voter’s curse is useful for explaining patterns of voter participation, but arises because voters restrict attention to the rare event of a pivotal vote. Recent empirical evidence suggests that electoral margins influence policy outcomes, even away from the 50% threshold. If so, voters should also pay attention to the marginal impact of a vote. Adopting this assumption, we find that a marginal voter’s curse gives voters a new reason to abstain: to avoid diluting the pool of information. The two curses have similar origins and exhibit similar patterns, but the marginal voter’s curse is both stronger and more robust. In fact, the swing voter’s curse turns out to be on a knife edge: in large elections, a model with both pivotal and marginal considerations and a model with marginal considerations alone generate identical equilibrium behaviour.

    Date
    Friday, 19 July 2019
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    Erasing ethnicity? Propaganda, nation building, and identity in Rwanda.

    Arthur Blouin and Sharun W. Mukand

    This paper examines whether propaganda broadcast over radio helped to change interethnic attitudes in postgenocide Rwanda. We exploit variation in exposure to the government’s radio propaganda due to the mountainous topography of Rwanda. Results of lab-in-the-field experiments show that individuals exposed to government propaganda have lower salience of ethnicity, have increased interethnic trust, and show more willingness to interact face-to-face with members of another ethnic group. Our results suggest that the observed improvement in interethnic behavior is not cosmetic and reflects a deeper change in interethnic attitudes. The findings provide some of the first quantitative evidence that the salience of ethnic identity can be manipulated by governments.

    Date
    Wednesday, 19 June 2019
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    Was Brexit Triggered by the Old and Unhappy? Or by Financial Feelings?

    Federica Liberini , Andrew J.Oswald, Eugenio Proto & Michela Redoano

    On 23 June 2016, the United Kingdom voted in favour of ‘Brexit’. This paper is an attempt to understand why. It examines the micro-econometric predictors of anti-EU sentiment. The paper provides the first evidence for the idea that a key channel of influence was through a person’s feelings about his or her own financial situation. By contrast, the paper finds relatively little regression-equation evidence for the widely discussed idea that Brexit was favoured by the old and the unhappy. The analysis shows that UK citizens’ feelings about their incomes were a substantially better predictor of pro-Brexit views than their actual incomes. This seems an important message for economists, because the subject of economics has typically avoided the study of human feelings in favour of ‘objective’ data.

    Date
    Thursday, 18 April 2019
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    Dispute Resolution Institutions and Strategic Militarization

    Adam Meirowitz, Massimo Morelli, Kris Ramsay & Francesco Squintani

    Engagement in a destructive war can be understood as the “punishment” for entering into a dispute. Institutions that reduce the chance that disputes lead to war make this punishment less severe. This may incentivize hawkish policies like militarization and potentially offset the benefits of peace brokering. We study a model in which unmediated peace talks are effective at improving the peace chance for given militarization but lead to more militarization and ultimately to a higher incidence of war. Instead, a form of third-party mediation inspired by work of Myerson effectively brokers peace in emerged disputes and also minimizes equilibrium militarization.

    Date
    Friday, 01 February 2019

    Vanguards in Revolution 

    Mehdi Shadmehr & Dan Bernhardt

    Revolutionary vanguards, their radicalism and coercive actions, and their interactions with ordinary citizens and the state are common threads in narratives of revolutionary movements. But what are the defining features of revolutionary vanguards? The literature is replete with terms that allude to some notion of a revolutionary vanguard (e.g., revolutionary entrepreneurs, entrepreneurs of violence, early-risers), but the essence of these conceptions and their implications for revolutionary process remain obscure. We identify and differentiate the two main notions of vanguards, the Leninist and “early-riser” notions, and develop a formal framework that captures their distinguishing features, deriving their implications for the likelihood of revolution. We then use this framework to study three related and overlooked topics: (a) state strategies in mitigating the vanguard's influence on citizens; (b) citizens' preferences for the degree of vanguard radicalism; and (c) the vanguards' use of coercion against citizens.

    Date
    Wednesday, 30 January 2019
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    An Experimental Study of the Investment Implications of Bankruptcy Rules

    Mürüvvet Büyükboyacı, Mehmet Yiğit Gürdal, and Özgür Kibris

    In bankruptcy laws, proportionality is the universal norm when allocating the liquidation value of a bankrupt firm among creditors. The theoretical literature on bankruptcy proposes two prominent alternatives to proportionality: the equal awards and the equal losses principles. We use an experiment to analyze and compare actual creditor behavior under these three principles. More specifically, we test the following hypotheses: replacing proportionality with equal losses increases total investment while replacing proportionality with equal awards decreases total investment; under all three principles individual investment choices decrease in response to an increase in the probability of bankruptcy or an increase in risk aversion; total investment difference between proportionality and either of the other two principles is independent of the probability of bankruptcy as long as both induce an interior equilibrium. The results of the nonparametric tests and random effects Tobit regression analyses we conduct on our experimental data offer support for all hypotheses.

    Date
    Monday, 14 January 2019
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    Global crises and populism: the role of Eurozone institutions

    Luigi Guiso, Helios Herrera, Massimo Morelli, Tommaso Sonno

    Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. We rely on this logic to explain the different support of populist parties among European countries in response to the globalization shock and to the 2008–11 financial and sovereign debt crisis. We predict a greater success of populist parties in response to these shocks in Eurozone (EZ) countries, and our empirical analysis confirms this prediction. This is consistent with voters’ frustration for the greater inability of the EZ governments to react to difficult-to-manage globalization shocks and financial crises. Our evidence has implications for the speed of construction of political unions. A slow, staged process of political unification can expose the European Union to a risk of political backlash if hard to manage shocks hit the economies during the integration process.

    Date
    Thursday, 03 January 2019
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    Political Competition, Tax Salience and Accountability. Theory and some evidence from Italy

    Emanuele Bracco and Francesco Porcelli

    This paper argues that electoral competition may hinder rather than foster political accountability, especially when elected officers can choose among a number of tax instruments. We develop a political agency model showing that politicians in more competitive jurisdictions use less salient tax instruments more intensely. Defining salience as visibility or, analogously, as voters' awareness of the costs associated with specific government revenue sources, we argue that voters are less likely to hold politicians to account for the associated tax burden of a less salient instrument. This in turn implies that strategic politicians will more heavily rely on less salient revenue sources when electoral competition is stronger. Using data on Italian municipal elections and taxes over a 10-year period, we determine the degree of salience of various tax instruments, including property taxes (high salience) and government fees for official documents (low salience). We then show that mayors facing stronger competition for re-election use less salient tax instruments more intensely.

    Date
    Monday, 19 November 2018
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