Abel François

Cash, Check or Bank Card? The Effects of Transaction Characteristics on the Use of Payment Instruments

Exploiting a unique and original dataset of 11,945 payments made from March to May 2005, the paper estimates the determinants of the probability of a transaction being paid by cash, check or bank card at the point of sale. Controlling for individual characteristics, the main results of the paper are: 1) a differentiated effect of the transaction size regarding payment instruments; 2) a specialization effect between payment instruments according to the type of good and spending place; 3) a double supply-side effect due to a restriction of the payment choice and to the organization of the payment process. For the first time ever, detailed data on consumption and payment patterns make it possible to assess the role of transaction characteristics in the use of payment instruments.

Punctuated equilibrium in French budgeting processes

Abstract We use data on French budgeting to test models of friction, incrementalism and punctuated equilibrium. Data include the overall state budget since 1820; ministerial budgets for seven ministries since 1868; and a more complete ministerial series covering ten ministries since 1947. Our results in every case are remarkably similar to the highly leptokurtic distributions that Jones and Baumgartner (2005) demonstrated in US budgeting processes. This suggests that general characteristics of administrative processes create friction, and that these general factors are more important than particular details of organizational design. The legendary centralization and administrative strength of the French state, especially when compared to the decentralized separated powers structure of the US system, where the theory was developed, is apparently not sufficient to overcome cognitive pressures causing friction. Further, our French data cover a wide range of institutional procedures and constitutional regimes. The similarity of our findings across all these settings suggests that administrative structures alone are less important than the cognitive reasons discussed in the original model.

Public Budgeting in the French Fifth Republic: The End of La République des partis?

This article reviews trends in state spending across the Fifth Republic. Considering the partisan divisions in French political life and the importance accorded to elections and partisan control of government, one might expect substantial differences in spending patterns by governments of the Left and the Right. Instead, we find only a small number of statistically significant differences and when we do find them, governments of the Right are the higher spenders. The reasons for this are the different historical periods during which the Left and Right have been in power. As the Right dominated French politics for the first half of the Fifth Republic, it oversaw a period of the most dramatic growth in the state, across virtually all sectors. Growth in state spending declined steadily over the decades but particularly after the oil crisis and other events in the 1970s. Since 1981, when governments (if not presidential control) have alternated on a relatively regular basis, austerity and limited growth in spending have been the rule, no matter which governments have been in power. The article demonstrates these facts with a comprehensive overview of public spending across 11 categories. The results are presented graphically, with statistical t-tests, and finally with regressions controlling for growth in the economy. In all cases, no linkage between left-wing control of government and higher spending is found.

The Political Entrepreneur and the Coordination of the Political Process: A Market Process Perspective of the Political Market

The aim of this article is to apply the Austrian analysis of the entrepreneur to the political process. By distinguishing the political process from the economic process, we will endeavour to show to what extent an analysis in terms of the political market process is both possible and relevant. The existence of an information conveyance which can be assimilated to a price system within the political process, with its resulting profits, are motivating elements for the political entrepreneur. The political entrepreneur is doubly specialised and possesses all the Kirznerian functions of the Austrian entrepreneur as a coordinating agent for the political process.

Individual gendered attitudes toward immigrants. Empirical evidence from French surveys

Abstract This article explores gendered attitudes towards immigrants and argues there are three gendered effects on intolerance: the gender gap that induces different levels of intolerance for men and women; gendered sensitivity, meaning men and women react differently to contact or competition with immigrants; the relative sex ratio related to the demographic gender changes in the environment due to immigrants. These hypotheses are tested using the French WVS data and three different intolerance measurements: soft and hard intolerance and relative empathy. The results highlight that the simple gender gap, already observed in the literature, can be partly accounted for by both gendered sensitivity and the relative sex ratio. More broadly, the findings confirm the hypothesis of gendered attitudes towards immigrants defined by three dimensions.

Is Baumol's 'square root law' still relevant? evidence from micro-level data

The purpose of the article is to test, from micro-level data, the complete general framework of the transaction demand for money a la Baumol. Controlling for selection bias, we distinguish two populations who exclusively withdraw cash from either ATM or bank counter, from a sample of French representative individuals. The estimation results show the existence of large economies of scale as well as a positive effect of ATM surcharge and ATM and bank counter density on cash holding. Moreover, contrary to what might be expected, we do not find evidence of the impact of risk on cash holding.

The Demand for Currency Versus Debitable Accounts: A Reconsideration

Payment choice models based on transaction sizes (TS models) induce strong predictions about the use of payment instruments. Especially, all equal-sized transactions should be paid with the same payment instrument. Then, for each individual, one should observe strict domains of transaction for every payment instruments. Using micro-level payment data from a representative sample of the French population, we show that TS models are bad at replicating individual and aggregate payment patterns. First, we show that the predictions of TS models are not empirically validated on an individual level. Second, we develop and test three models to explain the observed aggregate payment patterns. The first two models are aggregate versions of TS models and the third one is an alternative model based on a payment decision rule depending on cash holding (CH model). We find that the third model gives predictions between 2 and 6 times more precise than the first two models with notably less demanding information on individuals.

Consumer Payment Preferences, Network Externalities, and Merchant Card Acceptance: An Empirical Investigation

The two-sided market theory holds that consumer adoption and merchant acceptance of payment cards are interdependent. However, empirical evidence on such network externalities is scarce, especially for the merchant side. This paper uses a logit model to explain merchant card acceptance in France. We exploit shopping diary data to construct a novel and fine-grained measure of French consumers’ payment preferences and match these with data from a nation- wide merchant survey. Controlling for, among other factors, cost, degree of competition, and customer characteristics, we find that the higher the probability that the average basket of a merchant is paid for by card in shops in the same sector and region, the higher the probability that the merchant will accept cards. In other words, we find that consumer preferences drive merchant card acceptance, which underpins the existence of network externalities on the merchant side of the payment card market.

The Economics of Bill Payments: An Empirical Analysis

The growing economic literature dedicated to payment instruments mainly focuses on the point of sale payments. Yet, credit transfers and direct debits used in bill payments are much more used in the euro area than cheques, payment cards and other payment instruments. The main objective of this article is, therefore, to verify whether the theoretical standard framework stated for studying the choice of payment instruments at the point of sale is relevant to study bill payments. Using an original data set, we show that the main predictions of the standard model do not hold.

General Policy Speech of Prime Ministers and Fiscal Choices in France: “Preach Water and Drink Wine!”

Since the inception of the Fifth French Republic, the Prime Minister pronounces an expected inauguration address of general policy in which main public policies are announced. Usually a hierarchical priority of policies is raised from this address. As a consequence the government aims at allocating budgets in accordance with such a ranking. Nevertheless public budgeting processes are regularly faced with incrementalism, which causes huge problems when some unexpected problems arise. Furthermore, during the electoral cycle, governments face a paradoxical problem: once elected they are supposed to transform their electoral promises into public policies but at the same time they are forced to propose a new electoral platform for being re-elected.