Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad

Support for economic reforms has often shown puzzling dynamics: many reforms that began successfully lost public support. This paper shows that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an ex...

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Main Authors:	van Wijnbergen, Sweder, Willems, Tim
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	AGRICULTURE ANALOGY ASYMMETRIC INFORMATION BANKS BELIEFS CENTRAL PLANNING COLLAPSE COLLAPSES COMPARATIVE ECONOMICS DEMOCRACIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCUSSION DISCUSSIONS ECONOMIC EXPANSION ECONOMIC PERFORMANCE ECONOMIC REFORMS ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC SYSTEMS ECONOMIC THEORIES ENTERPRISE REFORM EXPECTED VALUE EXPERIMENTATION FINANCIAL CRISIS FORMAL ANALYSIS FUTURE RESEARCH GDP GOVERNMENT OFFICIALS GROWTH RATE IDEA IDEAS IDENTITY INTEGRATION INTUITION LEARNING LEARNING DYNAMICS MACROECONOMICS MINISTER ORGANIZATION THEORY POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM PRACTITIONERS PRIVATIZATION PROBABILITY PROFESSIONS PUBLIC FUNDS REFORM PROCESS REFORM STRATEGIES REFORMS TAXATION TEAM LEARNING THINKING TRADE BARRIERS UNEMPLOYMENT UNEMPLOYMENT RATE VOTERS WAGES WISDOM
Online Access:	http://documents.worldbank.org/curated/en/2014/07/19877963/learning-dynamics-support-economic-reforms-good-news-can-bad http://hdl.handle.net/10986/19351

id	okr-10986-19351
recordtype	oai_dc
spelling	okr-10986-193512021-04-23T14:03:51Z Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad van Wijnbergen, Sweder Willems, Tim AGRICULTURE ANALOGY ASYMMETRIC INFORMATION BANKS BELIEFS CENTRAL PLANNING COLLAPSE COLLAPSES COMPARATIVE ECONOMICS DEMOCRACIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCUSSION DISCUSSIONS ECONOMIC EXPANSION ECONOMIC PERFORMANCE ECONOMIC REFORMS ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC SYSTEMS ECONOMIC THEORIES ENTERPRISE REFORM EXPECTED VALUE EXPERIMENTATION FINANCIAL CRISIS FORMAL ANALYSIS FUTURE RESEARCH GDP GOVERNMENT OFFICIALS GROWTH RATE IDEA IDEAS IDENTITY INTEGRATION INTUITION LEARNING LEARNING DYNAMICS MACROECONOMICS MINISTER ORGANIZATION THEORY POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM PRACTITIONERS PRIVATIZATION PROBABILITY PROFESSIONS PUBLIC FUNDS REFORM PROCESS REFORM STRATEGIES REFORMS TAXATION TEAM LEARNING THINKING TRADE BARRIERS UNEMPLOYMENT UNEMPLOYMENT RATE VOTERS WAGES WISDOM Support for economic reforms has often shown puzzling dynamics: many reforms that began successfully lost public support. This paper shows that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an example of sampling without replacement. This concept challenges the conventional wisdom that one should begin by revealing reform winners. It may also lead to situations in which reforms that enjoy both ex ante and ex post majority support will still not come to completion. The framework can be used to explain why gradual reforms worked well in China (where successes in Special Economic Zones facilitated further reform), whereas this was much less the case for Latin American and Central and Eastern European countries. 2014-08-15T14:47:05Z 2014-08-15T14:47:05Z 2014-07 http://documents.worldbank.org/curated/en/2014/07/19877963/learning-dynamics-support-economic-reforms-good-news-can-bad http://hdl.handle.net/10986/19351 English en_US Policy Research Working Paper;No. 6973 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Europe and Central Asia Latin America & Caribbean Europe Eastern Europe Latin America China
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	AGRICULTURE ANALOGY ASYMMETRIC INFORMATION BANKS BELIEFS CENTRAL PLANNING COLLAPSE COLLAPSES COMPARATIVE ECONOMICS DEMOCRACIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCUSSION DISCUSSIONS ECONOMIC EXPANSION ECONOMIC PERFORMANCE ECONOMIC REFORMS ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC SYSTEMS ECONOMIC THEORIES ENTERPRISE REFORM EXPECTED VALUE EXPERIMENTATION FINANCIAL CRISIS FORMAL ANALYSIS FUTURE RESEARCH GDP GOVERNMENT OFFICIALS GROWTH RATE IDEA IDEAS IDENTITY INTEGRATION INTUITION LEARNING LEARNING DYNAMICS MACROECONOMICS MINISTER ORGANIZATION THEORY POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM PRACTITIONERS PRIVATIZATION PROBABILITY PROFESSIONS PUBLIC FUNDS REFORM PROCESS REFORM STRATEGIES REFORMS TAXATION TEAM LEARNING THINKING TRADE BARRIERS UNEMPLOYMENT UNEMPLOYMENT RATE VOTERS WAGES WISDOM
spellingShingle	AGRICULTURE ANALOGY ASYMMETRIC INFORMATION BANKS BELIEFS CENTRAL PLANNING COLLAPSE COLLAPSES COMPARATIVE ECONOMICS DEMOCRACIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCUSSION DISCUSSIONS ECONOMIC EXPANSION ECONOMIC PERFORMANCE ECONOMIC REFORMS ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC SYSTEMS ECONOMIC THEORIES ENTERPRISE REFORM EXPECTED VALUE EXPERIMENTATION FINANCIAL CRISIS FORMAL ANALYSIS FUTURE RESEARCH GDP GOVERNMENT OFFICIALS GROWTH RATE IDEA IDEAS IDENTITY INTEGRATION INTUITION LEARNING LEARNING DYNAMICS MACROECONOMICS MINISTER ORGANIZATION THEORY POLITICAL ECONOMY POLITICAL ECONOMY OF REFORM PRACTITIONERS PRIVATIZATION PROBABILITY PROFESSIONS PUBLIC FUNDS REFORM PROCESS REFORM STRATEGIES REFORMS TAXATION TEAM LEARNING THINKING TRADE BARRIERS UNEMPLOYMENT UNEMPLOYMENT RATE VOTERS WAGES WISDOM van Wijnbergen, Sweder Willems, Tim Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
geographic_facet	East Asia and Pacific Europe and Central Asia Latin America & Caribbean Europe Eastern Europe Latin America China
relation	Policy Research Working Paper;No. 6973
description	Support for economic reforms has often shown puzzling dynamics: many reforms that began successfully lost public support. This paper shows that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an example of sampling without replacement. This concept challenges the conventional wisdom that one should begin by revealing reform winners. It may also lead to situations in which reforms that enjoy both ex ante and ex post majority support will still not come to completion. The framework can be used to explain why gradual reforms worked well in China (where successes in Special Economic Zones facilitated further reform), whereas this was much less the case for Latin American and Central and Eastern European countries.
format	Publications & Research :: Policy Research Working Paper
author	van Wijnbergen, Sweder Willems, Tim
author_facet	van Wijnbergen, Sweder Willems, Tim
author_sort	van Wijnbergen, Sweder
title	Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
title_short	Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
title_full	Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
title_fullStr	Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
title_full_unstemmed	Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad
title_sort	learning dynamics and support for economic reforms : why good news can be bad
publisher	World Bank Group, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/07/19877963/learning-dynamics-support-economic-reforms-good-news-can-bad http://hdl.handle.net/10986/19351
_version_	1764443803062632448

Learning Dynamics and Support for Economic Reforms : Why Good News Can Be Bad

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