Arnt O. Hopland

Can game theory explain poor maintenance of regional government facilities

Purpose – The purpose of the paper is to analyze the decision to postpone maintenance expenditures in regional governments using a game-theoretical approach and investigate whether there may be rational reasons for regional governments to carry a maintenance backlog. Design/methodology/approach – A theoretical political economy model, originally used to explain fiscal deficits in regional governments, is revisited and used to explain maintenance backlogs. Findings – It can be fully rational for regional governments to carry maintenance backlogs, given that they expect the central government to “bail out” this backlog, e.g. through an extra grant earmarked for upgrading of facilities. Hence, a balanced budget regulation (BBR) demanding fiscal balance in regional governments is not sufficient to avoid bailouts. The results suggest that the central government should consider including maintenance of facilities in formal BBRs. Originality/value – The paper is relevant for policy makers, as it can give guidanc...

Optimal maintenance scheduling of local public purpose buildings

We formulate the maintenance scheduling decision as a dynamic optimization problem, subject to an accelerating decay. This approach offers a formal, yet intuitive, weighting of the trade-offs involved when deciding a maintenance schedule. The optimal maintenance schedule reflects the trade-off between the interest rate and the rate at which the decay accelerates. The prior reflects the alternative cost, since the money spent on maintenance could be saved and earn interests, while the latter reflects the cost of postponing maintenance. Importantly, it turns out that it is sub-optimal to have a cyclical maintenance schedule where the building is allowed to decay and then be intensively maintained before decaying again. Rather, local governments should focus the maintenance either early in the building’s life span and eventually let it decay towards replacement/abandonment or first let it decay to a target level and then keep it there until replacement/abandonment. Which of the two is optimal depends on the trade-off between the alternative cost and the cost of postponing maintenance.

Does student satisfaction with school facilities affect exam results

Purpose – The purpose of this paper is to investigate the relationship between student satisfaction with school facilities and exam results. Design/methodology/approach – The authors combined exam results in Norwegian lower secondary schools with results from a nationwide, mandatory and annual survey that measures student satisfaction over a five-year period. The data were analyzed using regression methods (ordinary least squares and fixed-effects estimation). Findings – The authors found a modest, yet significant, relationship between satisfaction with school facilities and exam results. This is in contrast to earlier studies using Norwegian data, which indicate no such relationship. The authors argue that the difference is probably due to the fact that they have richer data than what were available to the earlier studies of Norwegian schools, and that they used a direct measure of student satisfaction rather than formal and technical measures of facility conditions. Originality/value – This paper offers...

Learning Environment and Student Effort.

Purpose – The purpose of this paper is to explore the relationship between satisfaction with learning environment and student effort, both in class and with homework assignments. Design/methodology/approach – The authors use data from a nationwide and compulsory survey to analyze the relationship between learning environment and student effort. The survey covers all students attending the seventh (last year of primary school) and tenth (last year of lower secondary school) grades in Norwegian compulsory education. Since the survey has been conducted every year since 2006/2007, we can apply panel data methods to reduce the potential for omitted variable problems. Findings – Student satisfaction with teacher guidance, materials and social environment plays an important role in stimulating effort both in class and with homework. Satisfaction with physical work conditions is of less importance, but does stimulate in-class effort among the younger students. Heterogeneity across the genders for tenth graders is...

Gender Differences in Competitiveness: Evidence from Educational Admission Reforms

Abstract This paper studies whether increased competition has adverse consequences for students’ intrinsic motivation by studying an upper secondary admission reform in Norway. While earlier students were enrolled into their neighboring school, the new system introduces school choice, where admission is based on performance in lower secondary school. Using a difference-in-differences approach, we find that whereas the motivation for boys seems to be unaffected by the increased competition, there are adverse consequences on the motivation for girls.

Long-run relationship between investment and maintenance in local governments

Purpose The purpose of the paper is to analyze the relationship between maintenance of existent and investment in new infrastructure in Norwegian local governments. Design/methodology/approach A reduced form vector autoregressive system is estimated using a 29-year-long panel data set for the Norwegian local governments. Findings The data reveal that increased investment in new infrastructure sparks little, if any, increase in maintenance. The results also indicate that increased maintenance expenditures spark new investments. Because more investments mean more infrastructure and adequate maintenance should give that investments are not caused by maintenance, the results suggest that the local governments have not optimized their maintenance scheduling in this period. Originality/value Even though maintenance and investment are large expenditures that both serve as inputs to the stock of infrastructure, little is known about the relationship between the two. The findings in this paper suggests that Norwegian local governments have not planned their maintenance and investments well in the past, and this can be part of the explanation as to why local public infrastructure in Norway is presently in poor condition.

Concerns among local government facility managers: a Norwegian survey

Purpose To investigate which concerns are most important for local government facility managers in Norway. Design/methodology/approach We analyze a survey dataset covering about 2/3 of all Norwegian local governments and 80 percent of the Norwegian population. We consider both descriptive statistics and results from an ordered probit regression analysis. Findings Facility managers are most concerned about weak fiscal conditions and lack of political priority of facility management, and local governments reporting public buildings in good condition generally have fewer and less serious concerns. Further, managers in municipalities with a solid fiscal balance are less concerned both about how tight fiscal conditions and lack of political prioritization affect facility management. Managers in municipalities with a centralized facility management structure are less concerned that the organizational structure of the facility management is sub-optimal. Finally, managers in populous municipalities have less conc...

Using game theory to stimulate provision of local public facilities

Purpose The purpose of this paper is to study how the central government can use well-known game-theoretical concepts in order to stimulate provision of local public facilities. Design/methodology/approach The authors use the classical adverse selection framework to discuss how the central government can use investment transfers as efficiently as possible to stimulate increased provision of local public facilities. Findings The benefits of local public facilities, such as kindergartens, schools, and primary healthcare institutions are greater than what each local government takes into account. Consequently, the central government, which maximizes social welfare in total, wants more local public facilities than the individual local government find optimal to supply. The central government thus would want to stimulate additional provision of local public facilities using contracts where local governments receive a transfer as compensation for increasing their supply. Since local governments differ regarding their efficiency in supplying facilities, the required amount of facilities and the corresponding transfer size should be allowed to vary across local governments. Originality/value Almost all countries are organized with multiple tiers of government, and local governments are important providers of many important welfare services. After labor, facilities are probably the second most important input in production of local public services. This paper offers insights into how the central government can efficiently stimulate the production of local public facilities.

On the ranking of critical success factors: The role of cost efficiency and score uncertainty for public facilities management

Purpose The purpose of this paper is to discuss rankings of critical success factors (CSFs) from survey data, both with respect to what information such rankings should be based on and how to evaluate and interpret uncertainty from sampling errors. Design/methodology/approach The authors conducted a survey on CSFs in public facilities management. The survey data set covers two-thirds of all Norwegian local governments and 80 per cent of the Norwegian population. The authors analyze the data using basic statistics and bootstrap sampling techniques. Findings Rankings of CSFs are sensitive to the information one chooses to collect in the survey. With the survey data, the authors show that the typical approach of inquiring about importance of various factors leads to a different ranking of factors than if one inquires about cost efficiency. The authors further consider a ranking that reflects all information in the data; the authors look in particular at a ranking with equal weights to importance and cost efficiency. The authors also find that many factors, when controlling for sampling error, should be ranked equally, and that further considerations need to be consulted when priorities are decided. Originality/value The authors demonstrate the effect of cost efficiency and uncertainty considerations on rankings of CSFs for facilities management. The study paves the way for a broader and more comprehensive perspective on CSFs and what these factors should and could reflect.

How to Use One Instrument to Identify Two Elasticities

We show that an insight from taxation theory allows identification of both the supply and demand elasticities with only one instrument. Ramsey (1928) and subsequent models of taxation assume that a tax levied on the demand side only affects demand through the price after taxation. Econometrically, we show that this assumption functions as an additional exclusion restriction. Under the Ramsey Exclusion Restriction (RER) a tax reform can serve to simultaneously identify elasticities of supply and demand. We develop a TSLS estimator for both elasticities, a test to assess instrument strength and a test for the RER. Our result extends to a supply-demand system with J goods, and a setting with supply-side or non-linear taxes. Further, we show that key results in the sufficient statistics literature rely on the RER. One example is Harberger’s formula for the excess burden of a tax. We apply our method to the Norwegian labor market.