David Stadelmann

Capitalisation of Fiscal Variables and Land Scarcity

Fiscal packages usually capitalise into house prices. Yet if enough land for construction is available, housing developers could supply new houses and capitalisation may disappear. This paper provides a theoretical model in which income taxes and public services capitalise at lower rates when housing supply elasticity increases. Using an empirical linear interaction model, we estimate the impact of available land for construction on capitalisation rates with a panel of Swiss communities. Results indicate that fiscal variables do not capitalise differently in communities where housing supply is constrained by land availability. Thus, land availability is a necessary but not sufficient condition for capitalisation to disappear.

Bounded rationality and voting decisions over 160 years : voter behavior and increasing complexity in decision-making

Using a quasi-natural voting experiment encompassing a 160-year period (1848–2009) in Switzerland, we investigate whether a higher level of complexity leads to increased reliance on trusted parliamentary representatives. We find that when more referenda are held on the same day, constituents are more likely to refer to parliamentary recommendations when making their decisions. This finding holds true even when we narrow our focus to referenda with a relatively lower voter turnout on days on which more than one referendum is held. We also demonstrate that when constituents face a higher level of complexity, they follow the parliamentary recommendations rather than those of interest groups. “Viewed as a geometric figure, the ant’s path is irregular, complex, hard to describe. But its complexity is really a complexity in the surface of the beach, not a complexity in the ant.” ( [1] p. 51)

Does High‐Skilled Migration Affect Publicly Financed Investments?

This paper analyzes the interaction between migration of high-skilled labor and publicly financed investment. We develop a theoretical model with multiple, ex ante identical jurisdictions where individuals decide on education and subsequent emigration. Migration decisions are based on differences in net income across jurisdictions which may occur endogenously. The interaction between income differences and migration flows gives rise to the potential of multiple equilibria: a symmetric equilibrium without migration and an asymmetric equilibrium in which net income levels differ among jurisdictions and trigger migration flows. In the former equilibrium, all jurisdictions have the same public investment level. In the latter one, public investment is high in host economies of skilled expatriates and low in source economies. We empirically test the hypothesis that emigration rates are negatively associated with publicly financed investment levels for OECD countries.

Consequences of Debt Capitalization: Property Ownership and Debt versus Tax Choice

Public debts capitalize into property prices. Thus, they are a burden to the present generation who owns the devalued property. This largely neglected fact has important consequences for the tax versus debt choice. Property owners suffer more from the debt burden and, thus, have a stronger preference for tax financing of government spending than tenants. As a consequence of the resulting democratic struggle between property owners and tenants, higher property ownership rates in a jurisdiction lead to less debt financing. We provide empirical support for this hypothesis by analyzing a cross section of the 171 communities in the Swiss Canton of Zurich in the year 2000.

How Federalism Protects Future Generations from Today's Public Debts

From the politico-economic perspective, federalism is a protector of the present generation. But what about future generations? In federal states, Ricardian equivalence cannot be assumed to work properly, as migration between local jurisdictions undermines intergenerational redistribution based on parental altruism. However, we argue that there exists another equivalence mechanism which also works with purely selfish individuals: Public debts capitalize into property values. Jurisdictions with larger net debts exhibit, ceteris paribus, lower property prices. Debt capitalization in property values is the more pronounced the less elastic land supply is and the more mobile the other factors of production are. Therefore, capitalization is more relevant for local than for national debts, i.e. it is more pronounced in a federal than in a centralized state. Thus, federalism also becomes a protector of future generations.

Who Is The Best Formula 1 Driver? An Economic Approach to Evaluating Talent

Who is the best formula 1 driver? Until today it was impossible to answer this question because the observable performance of a driver depends both on his talent and the quality of his cars. In this paper, we for the first time separate driver talent from car quality by econometrically analyzing data covering 57 years of Formula 1 racing. Our estimates also control for the number of drivers finishing, technical breakdowns and many other variables that influence race results. While Michael Schumacher is often believed to be the best driver, he is overtaken by Juan Manuel Fangio and Jim Clark.

Bounded Rationality and Voting Decisions Exploring a 160-Year Period

Using a natural voting experiment in Switzerland that encompasses a 160-year period (1848-2009), we investigate whether a higher level of complexity leads to increased reliance on expert knowledge. We find that when more referenda are held on the same day, constituents are more likely to refer to parliamentary recommendations in making their decisions. This finding holds true even when we narrow our focus to referenda with a relatively lower voter turnout on days on which more than one referendum was held. We also show that when constituents face a higher level of complexity, they listen to parliament rather than interest groups.

Do Female Representatives Adhere More Closely to Voters’ Preferences than Male Representatives?

We analyze whether female or male members of parliament adhere more closely to citizens’ revealed preferences with quasi-experimental data. By matching individual representatives’ voting behavior on legislative proposals with real referenda outcomes on the same issues, we identify the effect of gender on representatives’ responsiveness to revealed preferences of the majority of voters. Overall, female members of parliament tend to adhere less to citizens’ preferences than male parliamentarians. However, when party affiliation is controlled for, the effect of gender vanishes. These results are consistent with other evidence showing that women are more socially minded and tend to affiliate themselves more with left parties.

Voting on Embryonic Stem Cell Research: Citizens More Supportive than Politicians

As the public debate over stem cell research continues, the observable voting behaviour in Switzerland offers a unique opportunity to compare the voting behaviour of politicians with that of voters. By analysing the outcomes of a referendum on a liberal new bill regulating such research, we reveal an about 10 percentage point lower conditional probability of the bill being accepted by politicians than by voters. Whereas the behaviour of politicians is driven almost entirely by party affiliation, citizen votes are driven not only by party attachment but also by church attendance. Seldom or never attending church increases the probability of bill acceptance by over 15 percentage points, while supporting the Liberal Party and the Social Democratic Party instead of the Christian Democratic Party makes supporting the bill more likely for voters, suggesting that religious observance is important. The observance of these tendencies in Switzerland—an environment that promotes discussion through direct democratic rights—strongly suggests that citizens see the benefits of stem cell research.

No Place like Home: Opinion Formation with Homophily and Implications for Policy Decisions

ABSTRACT We set up an opinion diffusion model with a local opinion leader, and using simulations we show the possibility of driving a significant wedge between the opinions of two groups that exhibit homophily although individuals are highly conformist. There exists an opinion gap between the group to which the opinion leader belongs and the other group. This opinion gap increases according to the relative size of the residence community. We show empirical traits related to our simulation: Employing Swiss national referenda data from 2008 to 2012, we show that members of parliament match referenda outcomes in their residence communities closer than they do in neighboring communities and that this wedge interacts significantly with the relative size of the residence community.