Targeting public goods to the poor in a segregated economy: An empirical analysis of central mandates in rural India

While local governments are increasingly being vested with control over funds for public goods, concern over the capture of decentralized funds by local elites has led decentralization to be combined with central mandates which require a certain proportion of funds to directly benefit the poor. If local capture is pervasive, however, central mandates may not be effective. Despite the popularity of this combination of decentralization and centralized control, there is little empirical evidence which separately identifies their effect on investment in public goods, and hence assesses the effectiveness of central mandates. This paper provides such evidence, using data collected by the authors for the North Indian state of Punjab, an economy where economic conditions facilitate such an analysis. We find that central mandates are effective, enhancing intra-village equality in expenditure on public goods. This finding informs the debate on the equity effects of centralized versus decentralized programs.     

Environmental regulation and trade openness in the presence of private mitigation

Acknowledging the differential ability of individuals to privately mitigate the consequences of domestic pollution for their health is essential for an understanding of their demands for regulation of the environment and of trade in dirty goods, and for analysis of the implications of these demands for equilibrium policy choices. In a small open economy with exogenous policy, we first explain how private mitigation at a cost results in an unequal distribution of the health consequences of pollution in a manner consistent with epidemiologic studies, and consequently how the benefits and costs of trade in dirty goods interact with choices concerning private mitigation to further polarize the interests of citizens concerning environmental stringency. The economy is then embedded in a broader political economy setting, and simulated to investigate the role of private mitigation in shaping political equilibria. We show that when citizens can choose between mitigating the health consequences of domestic pollution privately and reducing pollution through public policy, the same polarization of interests underlies equilibrium policy choices in both democratic and autocratic regimes.     

Centralized versus decentralized provision of local public goods: a political economy approach

This paper takes a fresh look at the trade-off between centralized and decentralized provision of local public goods. It argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions. When spending decisions are made by a legislature of locally elected representatives, this conflict of interest will play out in the legislature. Depending on precisely how the legislature behaves, the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts. The extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending. Thus, the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending, but for different reasons than suggested in the existing literature.     

Uniformity Requirement and Political Accountability

This paper discusses the fundamental hypothesis of policy uniformity under centralized decision making, which underlies Oates' famous decentralization theorem. The theorem has, in more recent times, come under pressure owing to the prediction that local public goods are provided to minimum winning coalitions rather than uniformly. The focus of this paper is on the impact of uniformity rules on political accountability. Using the concept of minimum winning coalitions, it is shown that the power of voters over politicians vanishes if election districts receive different levels of local public goods. However, the setting up of sufficiently strong uniformity rules means that voters regain power. According to Oates' theorem, uniformity is the main disadvantage of centralization but, according to the analysis undertaken in this paper, centralization without uniformity would be even worse.     

The political economy of public goods: Some evidence from India

We are interested in how public goods get allocated by a centralized state. We use data on public goods and social structure from parliamentary constituencies in rural India to understand the allocation of these goods over the 1970s and 1980s. National policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure. We find evidence of considerable equalization in many of these facilities, reflecting perhaps the importance of these commitments. Among the historically disadvantaged social groups, those that mobilized themselves politically gained relative to the others. Measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance.     

POLITICAL INEQUALITY,CENTRALIZED SANCTIONING INSTITUTIONS,AND THE MAINTENANCE OF PUBLIC GOODS

Centralized sanctioning institutions cultivate cooperation by eradicating the gains from free‐riding. Studies show that electing a community member to operate a centralized sanctioning institution further increases support for the public good. These studies have overlooked an all‐too‐common attribute of non‐laboratory elections: political inequality. In this paper, we replicate those studies and, then, introduce novel experimental treatments that examine how political inequality influences the cooperation‐enhancing effect of a democratic election to centralized sanctioning institutions. In our novel treatment conditions, participants receive either a random allotment of votes that they can use to elect a centralized sanctioning authority or an allocation of votes proportional to their earnings in a previously‐executed public goods game. We find that political inequalities created via the random allocation of votes do not hinder cooperation, whereas political inequalities created via past game play undermine elected authorities and diminish contributions to the public good from individuals advantaged by political inequality.     

Downward accountability in response to collective actions

Will autocratic governments implement policies to satisfy the people's demands in order to prevent large scale social unrest? This article explores this question through quantitative analysis of the political economy of public goods provision in Chinese provinces. Data were collected on the number of labour disputes to measure collective actions. My sample includes provincial leaders whose incentives to deliver public goods can either be explained as a result of upward accountability towards the Centre or downward accountability towards the citizens. The confounding factor of upward accountability is ruled out by using two‐step estimation, and the reverse causality between public goods provision and collective actions is controlled by using instrumental variables. This result suggests that provincial leaders will implement policies more in favour of the citizens in response to intensified labour disputes.     

Obedience to the symbol of authority: Experimental evidence on the symbolic source of legitimate authority

The performance of government activities, including law enforcement and regulation, depends on whether citizens perceive them as legitimate. Although substantial studies have explored the institutional sources of legitimacy, how non-institutional factors affect perceived legitimacy remains unclear. Human societies have a long history of employing symbolic icons to enhance the legitimacy of a given authority. This study reports a laboratory experiment of public goods that investigates whether (and to what extent) symbolic factors enhance perceived legitimacy. In the contexts of various incentive schemes and transparency levels, an “authority” in each group decides whether to target a “citizen” for punishment after observing the contributions of “citizens,” and untargeted citizens then choose to support or hinder the authority. A symbolic scepter is issued to the authority in the treated group, whereas this symbol is absent in the control group. The experimental results suggest that the political symbol significantly enhances the authority's legitimacy regardless of the payment scheme and information transparency. A further analysis shows that the political symbol is not associated with the authority's choices regarding enforcement. Rather, the symbol's effect on perceived legitimacy is primarily driven by the citizens' side—that is, the increasing intrinsic tendency to support authority.     

TOWARDS A PARADIGM OF DEMOCRATIC PARTICIPATION: CITIZEN PARTICIPATION AND CO-PRODUCTION OF PERSONAL SOCIAL SERVICES IN SWEDEN

ABSTRACT:  Many countries in Europe are now searching for new ways to engage citizens and involve the third sector in the provision and governance of social services in order to meet major demographical, political and economic challenges facing the welfare state in the 21st Century. Co-production provides a model for the mix of both public service agents and citizens who contribute to the provision of a public service. Citizen participation involves several different dimensions: economic, social, political and service specific. The extent of citizen participation varies between different providers of welfare services, as too does user and staff influence. Empirical materials from a recent study of childcare in Sweden will be used to illustrate these points. However, the role of citizens and the third sector also varies between countries and social sectors. Third sector providers facilitate citizen participation, while a glass ceiling for participation exists in municipal and for-profit providers. Moreover, co-production takes place in a political context, and can be crowded-in or crowded-out by public policy. These findings can contribute to the development of a new paradigm of participative democracy.     

WHEN IS A SERVICE AN ESSENTIAL PUBLIC SERVICE?

ABSTRACT ** :  Citizens consider certain public (and private) services as essential services and therefore to be shielded from the full extent of market forces. Little is known about why some services are considered essential public services while other sometimes very similar services are not. In this article, we analyze public opinion using Eurobarometer data to test models exploring what factors determine whether citizens in 15 EU countries consider certain services as essential services and therefore to be provided to all. Despite the variety in public opinion, political orientations and geographic factors do little to explain why citizens have different opinions about the provision of public services. The article ends by outlining a research agenda for the further analysis of this underexplored research topic.     

Relative consumption and majority voting: supplementing Oates’ “Decentralization Theorem”

This paper reconsiders the question of whether centralized or decentralized provision of local public goods is preferable, taking into account two new elements: the appearance of relative consumption effects and the possibility of an inefficient election outcome due to a right-skewed income distribution. Surprisingly, our results indicate that (1) decentralization may lead to a strictly higher welfare level than centralization, even if regions are homogeneous, and (2) under certain circumstances centralization may be welfare superior, even though traditional public good spillovers are not considered in our framework. Whether centralization or decentralization is preferable crucially depends on the extent to which social interaction takes place between regions.     

WHAT DO CITIZENS THINK ABOUT PUBLIC ENTERPRISES? SUBJECTIVE SURVEY DATA ON THE LEGITIMACY OF THE ECONOMIC ACTIVITIES OF THE GERMAN PUBLIC SECTOR

We analyse the legitimacy of public enterprises that perform economic activities by focusing on the citizens’ subjective preferences, i.e. determining their political legitimacy. Using data from a representative survey conducted among 318 citizens of the German state of Rhineland‐Palatine, we explore determinants for the support of either privatisation efforts or the instrumental thesis, a widespread principle in German‐speaking countries, which considers public enterprises solely as instruments to fulfil economic policy objectives. Our results indicate that the respondents’ perception of the efficiency of public enterprises as well as their personal economic situation are important factors for the support of privatisation. The influential factors for the use of public enterprises as policy instruments are political ideology, the perception of a higher security of supplying goods and services as well as opinions regarding corporate social responsibility. The subjective preferences of a (democratic) country's citizens are thus an important reason why the public sector should or should not play an active part in providing goods and services. This can play an important role when decision makers from the public sector are keen to take into account the citizens’ approval or disapproval of privatisation measures.     

农村公共产品供给效率问题研究——基于西藏德吉新村朗赛林提灌站的调查分析

本文以西藏扎囊县德吉新村朗赛林提灌站的建设与维修为例,以公共产品理论为指导,运用公共产品有效供给的局部均衡分析方法,考察了西藏农村公共产品供给效率问题。研究结果表明,政府在有限的财政投入下,在增加农村公共产品供给数量的同时,更应注重提高农村公共产品供给效率。也就是说,政府要提高西藏农村公共产品供给效率,除了自身有增加农村公共产品供给的热情与意愿之外,还必须建立在广大农牧民群众的实际需求这一根本前提条件之上。本文最后提出了提高西藏农村公共产品供给效率的几点政策建议。     

The modern impact of precolonial centralization in Africa

We empirically assess the possibility, stressed by African scholars, that stronger precolonial political institutions allowed colonial and postcolonial African governments to better implement modernization programs in rural areas. Using anthropological data, we document a strong positive association between the provision of public goods such as education, health, and infrastructure in African countries and the centralization of their ethnic groups’ precolonial institutions. We develop an empirical test to distinguish among alternative explanations for this finding. The evidence supports the view that precolonial centralization improved public goods provision by increasing the accountability of local chiefs. Our results stress the importance for developing countries to create mechanisms to monitor local administrators of public projects. These mechanisms should be consistent with these countries’ preexisting and informal arrangements.     

转型期中国县级政府的客观治理绩效与政治信任——从“经济增长合法性”到“公共产品合法性”

善治是中国政府的执政要务,政治信任反映着公民对政府治理的认可和支持。文章利用2008年中国公民意识调查及政府统计数据,实证分析了政府治理绩效的主观和客观维度对政治信任的影响。研究发现,公民对政府在经济增长、民生福利、纯公共产品领域治理绩效的回顾性和前瞻性积极评价都正相关于政治信任;纯公共产品提供的主观评价对政治信任的影响大于经济增长和民生福利。县级政府的客观治理绩效对政治信任有重要影响,在高人均福利支出、低基尼系数和低失业率的县级单位,政治信任更高,而人均GDP反而微弱地负作用于政治信任。因此,尽管经济增长仍然是政治信任的重要来源,但民生福利和纯公共产品正赶上并超越经济增长,成为公民提供政治信任的新源泉。     

A comparison of citizen and “expert” preferences using an attribute-based approach to choice

This paper explores whether expert judgements can be taken as a proxy for citizen preferences for determining investment strategies for public goods. As an illustration, we focus on the provision of Public Rights Of Way (PROW) by Local Government Authorities in England. These provide rights of passage over property to those other than the owners, and little information is available on the welfare effects of changes in the provision and use of PROW. Given limited funds, reliance on expert judgement could be a cost effective alternative for decision-making compared with stated preference surveys of citizens. Two methods are compared. The Analytic Hierarchy Process (AHP) is used to elicit expert judgement to proxy citizen preferences for different attributes of PROW. The Choice Experiment (CE) technique is then used to derive preferences directly through personal interviews with citizens. Overall it was found that judicious use of AHP by experts can, in this instance, be used to represent citizen views. However, this result may not be easily generalisable to other settings.     

Mind the gap: Disparity in redistributive preference between political elites and the public in China

In this research, we emphasize the importance of studying the gap in redistributive preference between political elites and the public because of the strategic roles played by the former in policy processes. We use China as a case study, wherein the fulfillment of surging demands for redistribution is largely dependent on whether or not the political elites will advocate for redistribution. Using data from the Chinese General Social Survey, we find that the political elites prefer significantly less progressive taxation and less redistributive expenditure than the public. The gap in redistributive preference is larger on the expenditure side than on the taxation side. Moreover, the causes of the gap appear to vary by the measures for redistribution. Accounting for covariate differences fully explains the gap in preference for progressive taxation, but not the gap in preference for redistributive expenditure.     

Distributive politics of public goods networks through multistage voting

Public goods networks create conflict between districts needing the network and districts that pay the costs. Thus, it is difficult for pork barrel politicians to achieve logrolling with other districts. I show that logrolling is possible for such politicians if they set their agenda properly. To show this, I model the centralized decision‐making process as a multistage vote among representatives from different districts. I assume the districts are better off if and only if the public good “connects” them to the network. Public goods can be provided universally by setting the agenda properly, even when costs exceed the benefits.     

Centralization and the size of government in Canada

The determinants of the growth of government in Canada over the period 1926–90 are examined. Of particular interest is whether changes in the degree of centralization have affected the public sector's share of GDP. Unlike other studies using time-series data, the effect of decentralization toward the provincial/state and toward the local levels of government are measured separately. Empirical estimates provide strong support for the conclusion that citizen mobility acts as an important constraint on the growth of government.     

On the optimal social contract: Agency costs of self-government

In a typical study of political economy, citizens are regarded as the principals, and government as the agent. In contrast, classical theorists of democracy such as Jean-Jacques Rousseau and James Madison were deeply interested in the dual nature of people; they are the principals (citizens sharing the sovereign power) and, at the same time, the agents (subjects under the laws). Government, in their framework, is an intermediate body which helps people solve their self-control problem. Equipped with tools of modern economics, this paper explores the classical problem to see how economic development and political institutionalization relate to the structure of government and the quality of public sector. In particular, I consider repeated games with a large population and incomplete information, in which players decide whether to sacrifice private consumption to provide public goods. Because both people and the executive of the public projects are subject to moral hazard, the people spend resources to monitor the executive and the people themselves. The optimal self-enforcing contract, which can be interpreted as an efficiency upper bound of political systems, is characterized. An analysis of the contract shows that as a country gets more economically developed and politically institutionalized, the agency problem on the people’s side becomes negligible and that poor economic performance of a country might prevent the citizens from establishing a more efficient public sector.