Martin Paldam

Economic voting: an introduction

The group does not include everybody active in the field,but they are the lion’s share of the leaders. Still, we are sure that there are newresearchers in the field, whom we will soon learn about, hopefully as a result of thisscholarly exchange. Our volume is a sequel to Norpoth et al. (1991), based upon asimilar conference roughly 10 years before ours.Economic voting is a field that mixes economics and political science and doesso by means of econometrics. Political scientists analyze elections, and economistsroutinely use macro welfare functions, with little empirical basis. Further, for thepolitical scientist it is wonderful to have explanatory variables that are well known,carefully collected and quantitative. For the economist, voting forms an importantlimiting case where people decide while having only a small and “intangible” interestin the outcome. Hence, it is no surprise that the subject has attracted many researchersfrom both disciplines. Indeed, more than 200 relevant books and papers have beenpublished. The main findings from this literature are summarized in Table 1.The last item on the list reveals the main reason why this research has shown notendency to die. Many nice VP-functions have been found over the years, only tosuddenly disappear. Several such relations exist in the social sciences (the Phillips

The cross-country pattern of corruption Economics, culture and the seesaw dynamics

Abstract This paper investigates and explains the cross-country pattern in the 1999 corruption index from Transparency International. The economic part of the model has four variables: the level and growth of real income per capita, the inflation rate, and the economic freedom index. The economic transition from poor to rich strongly reduces corruption, while periods of high inflation increase corruption. The cultural part of the model uses a set of dummies for “cultural areas”, and the Gastil index for democracy. Both parts offer satisfactory explanations and interact. However, the (relative) difference between GDP levels within the same cultural area is smaller than the (relative) difference between levels of corruption. The interaction therefore points to something different from culture: the inherent seesaw dynamics of corruption.

THE AID EFFECTIVENESS LITERATURE: THE SAD RESULTS OF 40 YEARS OF RESEARCH

The aid effectiveness literature (AEL) consists of empirical macroeconomic estimates of the effects of development aid. By the end of 2004, it comprised 97 econometric studies of three families of related effects. Each family has been analyzed in a separate meta-analysis. The AEL is an ideal subject for meta-analysis as it uses only a few formally similar models to estimate the same underlying effects. It is also an area with strong beliefs, often generated by altruism. When this whole literature is examined, a clear pattern emerges. After 40 years of development aid, the preponderance of the evidence indicates that aid has not been effective. We show that the distribution of results is significantly asymmetric reflecting the reluctance of the research community to publish negative results. The Dutch disease effect on exchange rates provides a plausible explanation for the observed aid ineffectiveness.

An essay on social capital: looking for the fire behind the smoke

Abstract Social capital is defined as the density of trust. It is related to production by a key hypothesis: social capital determines how easily people work together. An easy-to-use proxy (Putnams Instrument) is the density of voluntary organizations. Social capital might be a new production factor to be added to human and physical capital, or it might enter as a reduction in transaction or monitoring costs. Direct and indirect ways to measure social capital are discussed. The critical question is what outsiders can do to change social capital. That is, can self-enforcement replace third party-enforcement? We consider how much harm totalitarian regimes do to social capital when they expand their scope of area of control.

Corruption and Religion Adding to the Economic Model

The cross-country pattern of corruption in the 100 countries covered by the index of corruption perceptions from Transparency International is explained by a mixed economic-cultural model:The economic model uses the level of real income per capita and the rate of inflation. The cultural model uses a set of 11 variables for the shares of religions in each country, and the Herfindahl index for religious diversity. The economic model accounts for the larger part of the variance, but religions prove to have some additional explanatory power. However, it is concentrated in the divide within Christianity. The least corrupt are Protestants and Anglicans, while Catholics, and other »PreReform« Christians, deviate to the other side much like all other religions do.

Meta-Analysis Of Economics Research Reporting Guidelines

Meta‐regression analysis (MRA) can provide objective and comprehensive summaries of economics research. Their use has grown rapidly over the last few decades. To improve transparency and to raise the quality of MRA, the meta‐analysis of economics research‐network (MAER‐Net) has created the below reporting guidelines. Future meta‐analyses in economics will be expected to follow these guidelines or give valid reasons why a meta‐analysis must deviate from them.

Aid Effectiveness on Accumulation. A Meta Study

The AEL (aid effectiveness literature) studies the macroeconomic effects of development aid using cross-country or panel data econometrics. It contains 97 papers of which 43 study whether development aid leads to increasing accumulation. The aggregate results of the 43 studies are that aid increases investment with about 25% of the aid, while most of the remaining 75% of the effect is crowded out by a fall in savings. However, these aggregate results are so variable that it is dubious if accumulation rises.

The grievance asymmetry revisited: A micro study of economic voting in Denmark,1986–1992

From an analysis of the economic voting of 17,100 Danes, it is demonstrated that the reaction is about three times larger to a deterioration in the economy than to an improvement. The results point to the importance of economic stability in the welfare function. It provides an explanation of the costs of ruling. It thus explains why governments change.

What do voters know about the economy?: A study of Danish data, 1990-1993

Abstract Eight questions asked in eight polls analyse what Danes know and expect about the (macro) economy. As people have little interest in being well informed, it would be irrational if they were. However, half the voters know the number of unemployed. Their micro perceptions correspond to the macro figures. Few people have realistic perceptions of inflation. They form largely static inflationary expectations, but guess the direction of change with a prediction bias. People know little about the balance-of-payments and the budget balance. The pattern of knowledge is much as expected, except for a strong gender factor. The poll made just after an election shows an increase in economic knowledge. The increase disappears within a year. The findings correspond to basic facts found about economic voting: voters are myopic. As their expectations are static, voting is retrospective, but knowledge grows at election time. We should hence expect vote and popularity functions to differ.

The distribution of election results and the two explanations of the cost of ruling

Summary A total of 175 elections for 17 democracies are considered. For each, the result is given as the change in support for the government in percent of all votes cast. It is demonstrated that these election results follow the very same distribution: it is normal over most of its range, but quadratic at the tails, Given this distribution, it is shown that the average cost of ruling is 1.65 percent. Within the spatial model of party-structures two explanations of the cost of ruling are contrasted: (i) A structural theory of parties, where the loss is explained as a return to a natural level; (ii) An accidental theory of parties, where the movements of party sizes are independent of previous movement in the party sizes. It is demonstrated that (i) explains a minor part of election results only.