Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction
Why is there significant variation in rent extraction among high-income democracies? A large number of political economy investigations into this research question have found that a long period of democratic rule and high per capita income are asso...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17151026/small-beautiful-least-high-income-democracies-distribution-policy-making-responsibility-electoral-accountability-incentives-rent-extraction http://hdl.handle.net/10986/12197 |
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okr-10986-121972021-04-23T14:03:06Z Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction Hamilton, Alexander ABUSE ACCOUNTABILITY AFFILIATED ORGANIZATIONS BRIBERY BUREAUCRACY CAPITALISM CETERIS PARIBUS CIVIL LIBERTIES CIVIL SOCIETY CONFIDENCE CONSTITUENTS CORRUPTION CORRUPTION PERCEPTION CORRUPTION PERCEPTION INDEX CORRUPTION PERCEPTIONS CORRUPTION PERCEPTIONS INDEX CPI CPI SCORE CPI SCORES DECISION TREE DEMOCRACIES DEMOCRACY DEVELOPMENT POLICY DISCRETION ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ELECTION ELECTIONS ELECTORAL PROCESS ELECTORATES EQUILIBRIUM EXPECTED VALUE EXPENDITURES EXPORTS FREE MEDIA FREE PRESS FUTURE RESEARCH GDP GOOD GOVERNANCE GRAFT INCOME INCUMBENT INFLATION INVESTIGATIONS LAWS LOBBYING LOBBYISTS MARGINAL UTILITY MEDIA MORAL HAZARD OFFICE HOLDERS OPTIMIZATION PER CAPITA INCOME POLITICAL CONTROL POLITICAL CORRUPTION POLITICAL ECONOMY POLITICAL LIFE POLITICIAN POLITICIANS POSITIVE EFFECTS PRICE CONTROLS PRIVATE GAIN PRIVATE SECTOR PUBLIC GOODS PUBLIC OFFICIALS PUBLIC POLICY PUBLIC SECTOR PUBLIC SERVICES REGRESSION ANALYSES REGRESSION ANALYSIS REGULATORY BURDEN RENT SEEKING RENTS TARIFF BARRIERS TAX TAX REVENUE TAXATION TRADE-OFF TRANSACTION COSTS TRANSPARENCY UNEMPLOYMENT UTILITY FUNCTION VOTERS WAGES WTO Why is there significant variation in rent extraction among high-income democracies? A large number of political economy investigations into this research question have found that a long period of democratic rule and high per capita income are associated with less rent extraction among public policy-makers. However, attempts to explain the residual, yet significant, variation in rent extraction among countries that possess both these characteristics have been significantly more circumspect and disputed. This paper explores how the distribution of policy-making responsibilities between electorally accountable decision-makers and their electorally unaccountable public policy-making counterparts determines the optimal level of rents extracted in any given high-income democracy context. Specifically, the paper formally models how: (1) variation in the ratio of electorally accountable decision-makers to electorally unaccountable decision-makers, by altering (2) voters' evaluation of incumbent competency, changes (3) the incentives that policy-makers, wishing to remain in office, have to minimize their short-term level of rent extraction in order to signal their competency and hopefully retain office. Given these "career concerns," the theoretical model predicts that an increase or decrease in the ratio will be associated with more or less rent extraction. This hypothesis is then tested empirically. Establishing that the ratio does robustly predict variation in rent extraction is a significant finding, as it can enable analysts to predict how changes in policy-making contexts may affect the incentives for good governance in this sub-set of countries. 2013-01-29T17:44:31Z 2013-01-29T17:44:31Z 2013-01 http://documents.worldbank.org/curated/en/2013/01/17151026/small-beautiful-least-high-income-democracies-distribution-policy-making-responsibility-electoral-accountability-incentives-rent-extraction http://hdl.handle.net/10986/12197 English en_US Policy Research Working Paper; No. 6305 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ABUSE ACCOUNTABILITY AFFILIATED ORGANIZATIONS BRIBERY BUREAUCRACY CAPITALISM CETERIS PARIBUS CIVIL LIBERTIES CIVIL SOCIETY CONFIDENCE CONSTITUENTS CORRUPTION CORRUPTION PERCEPTION CORRUPTION PERCEPTION INDEX CORRUPTION PERCEPTIONS CORRUPTION PERCEPTIONS INDEX CPI CPI SCORE CPI SCORES DECISION TREE DEMOCRACIES DEMOCRACY DEVELOPMENT POLICY DISCRETION ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ELECTION ELECTIONS ELECTORAL PROCESS ELECTORATES EQUILIBRIUM EXPECTED VALUE EXPENDITURES EXPORTS FREE MEDIA FREE PRESS FUTURE RESEARCH GDP GOOD GOVERNANCE GRAFT INCOME INCUMBENT INFLATION INVESTIGATIONS LAWS LOBBYING LOBBYISTS MARGINAL UTILITY MEDIA MORAL HAZARD OFFICE HOLDERS OPTIMIZATION PER CAPITA INCOME POLITICAL CONTROL POLITICAL CORRUPTION POLITICAL ECONOMY POLITICAL LIFE POLITICIAN POLITICIANS POSITIVE EFFECTS PRICE CONTROLS PRIVATE GAIN PRIVATE SECTOR PUBLIC GOODS PUBLIC OFFICIALS PUBLIC POLICY PUBLIC SECTOR PUBLIC SERVICES REGRESSION ANALYSES REGRESSION ANALYSIS REGULATORY BURDEN RENT SEEKING RENTS TARIFF BARRIERS TAX TAX REVENUE TAXATION TRADE-OFF TRANSACTION COSTS TRANSPARENCY UNEMPLOYMENT UTILITY FUNCTION VOTERS WAGES WTO |
| spellingShingle |
ABUSE ACCOUNTABILITY AFFILIATED ORGANIZATIONS BRIBERY BUREAUCRACY CAPITALISM CETERIS PARIBUS CIVIL LIBERTIES CIVIL SOCIETY CONFIDENCE CONSTITUENTS CORRUPTION CORRUPTION PERCEPTION CORRUPTION PERCEPTION INDEX CORRUPTION PERCEPTIONS CORRUPTION PERCEPTIONS INDEX CPI CPI SCORE CPI SCORES DECISION TREE DEMOCRACIES DEMOCRACY DEVELOPMENT POLICY DISCRETION ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMICS ELECTION ELECTIONS ELECTORAL PROCESS ELECTORATES EQUILIBRIUM EXPECTED VALUE EXPENDITURES EXPORTS FREE MEDIA FREE PRESS FUTURE RESEARCH GDP GOOD GOVERNANCE GRAFT INCOME INCUMBENT INFLATION INVESTIGATIONS LAWS LOBBYING LOBBYISTS MARGINAL UTILITY MEDIA MORAL HAZARD OFFICE HOLDERS OPTIMIZATION PER CAPITA INCOME POLITICAL CONTROL POLITICAL CORRUPTION POLITICAL ECONOMY POLITICAL LIFE POLITICIAN POLITICIANS POSITIVE EFFECTS PRICE CONTROLS PRIVATE GAIN PRIVATE SECTOR PUBLIC GOODS PUBLIC OFFICIALS PUBLIC POLICY PUBLIC SECTOR PUBLIC SERVICES REGRESSION ANALYSES REGRESSION ANALYSIS REGULATORY BURDEN RENT SEEKING RENTS TARIFF BARRIERS TAX TAX REVENUE TAXATION TRADE-OFF TRANSACTION COSTS TRANSPARENCY UNEMPLOYMENT UTILITY FUNCTION VOTERS WAGES WTO Hamilton, Alexander Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| relation |
Policy Research Working Paper; No. 6305 |
| description |
Why is there significant variation in
rent extraction among high-income democracies? A large
number of political economy investigations into this
research question have found that a long period of
democratic rule and high per capita income are associated
with less rent extraction among public policy-makers.
However, attempts to explain the residual, yet significant,
variation in rent extraction among countries that possess
both these characteristics have been significantly more
circumspect and disputed. This paper explores how the
distribution of policy-making responsibilities between
electorally accountable decision-makers and their
electorally unaccountable public policy-making counterparts
determines the optimal level of rents extracted in any given
high-income democracy context. Specifically, the paper
formally models how: (1) variation in the ratio of
electorally accountable decision-makers to electorally
unaccountable decision-makers, by altering (2) voters'
evaluation of incumbent competency, changes (3) the
incentives that policy-makers, wishing to remain in office,
have to minimize their short-term level of rent extraction
in order to signal their competency and hopefully retain
office. Given these "career concerns," the
theoretical model predicts that an increase or decrease in
the ratio will be associated with more or less rent
extraction. This hypothesis is then tested empirically.
Establishing that the ratio does robustly predict variation
in rent extraction is a significant finding, as it can
enable analysts to predict how changes in policy-making
contexts may affect the incentives for good governance in
this sub-set of countries. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hamilton, Alexander |
| author_facet |
Hamilton, Alexander |
| author_sort |
Hamilton, Alexander |
| title |
Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| title_short |
Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| title_full |
Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| title_fullStr |
Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| title_full_unstemmed |
Small Is Beautiful, at Least in High-Income Democracies : The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |
| title_sort |
small is beautiful, at least in high-income democracies : the distribution of policy-making responsibility, electoral accountability, and incentives for rent extraction |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/01/17151026/small-beautiful-least-high-income-democracies-distribution-policy-making-responsibility-electoral-accountability-incentives-rent-extraction http://hdl.handle.net/10986/12197 |
| _version_ |
1764422201352650752 |