Tagging and redistributive taxation with imperfect disability monitoring

This paper studies the optimal income redistribution and optimal monitoring when disability benefits are intended for disabled people but some of the disabled do not claim disability benefits and enter the labor force. Classification errors also occur. Some able applicants with high distaste for work are falsely granted disability benefits (type II errors) and some disabled applicants are denied disability benefits (type I errors). The accuracy of monitoring depends on the resources devoted to it. Labor supply responses are at the extensive margin. The paper derives the optimal income tax-transfer schedule that incorporates welfare and disability benefits and takes into account monitoring costs. The cost of monitoring and the co-existence of welfare and disability benefits play in favor of Earned Income Tax Credits for disabled workers who forgo disability benefits as well as for disabled workers who forgo welfare assistance.     

Majority rip-off in referendum voting

Many democracies complement a parliamentarian system with elements of direct democracy, where the electorate decides on single issues by majority voting. A well-known paradox states that in a sequence of referenda one can get from an arbitrary original income distribution to one in which one player gets almost all the cake. In this paper we design a three-player game modelling the sequential modification mechanism. The strategic analysis reveals that the paradox survives even with rational strategic voters and though the right to propose is allocated to each player once: the last player receives almost the entire cake. The result can be extended to the three-party n-voter case and is for some cases similar when we consider a random rather than fixed sequence of proposers.

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Majority voting rules and the union success rate in national labor relations board representation elections

This paper simulates how the union success rate in representation elections would be affected if the NLRB reverted from its current simple-majority voting rule to its original majority-in-unit voting rule. Such a rule change would have altered 21 percent of decertification and 16 percent of certification victories over the period 1977–81, resulting in the loss of 180,400 actual or potential bargaining unit members for the union movement. Abstentions play an important role in election outcomes. Under the present voting rule unions have no clear advantage to “get out the vote” in decertification elections, but a clear disadvantage in certification elections. Under a majority-in-unit rule unions hold an advantage when they “get out the vote” in all representation elections. I would like to thank Mike Bognanno, Jim Dworkin, Paul Schumann, two reviewers, and the editor for helpful comments and David Wilson for excellent research assistance. I would also like to thank the NLRB for providing the election data tape.     

Cyclic tournaments and cooperative majority voting: A solution

A new solution concept is axiomatically characterized for tournaments that represent cooperative majority voting. The predicted set of outcomes lies inside the top-cycle set, the uncovered set, and the Banks set.This research was supported by NSF grants SES 8612120 and SES 8896228. I thank Georges Bordes, Gary Cox, Bhaskar Dutta, Richard McKelvey, Nicholas Miller, Emerson Niou, Peter Ordeshook, and Peyton Young for helpful comments. Niou is responsible for the example in Sect. 4. Presented at the Public Choice Society Meetings, Tucson, March 1987, and at the Jacob Marschak Interdisciplinary Colloquium on Mathematics in the Behaviorial Sciences, UCLA, October 1988.     

Welfare analysis and redistributive policies

Applied welfare analyses of redistributive systems nowadays benefit from powerful tax-benefit microsimulation programs combined with administrative data. Arguably, most of the distributional studies of that kind focus on social welfare defined as a function – typically inequality or poverty indices – of household equivalized income. In parallel, economic research has made considerable progress in the measurement of welfare along several dimensions. Distinct but related branches of the literature have attempted (i) to model different behavior (in a way that matter for incidence and redistribution of tax-benefit policies), (ii) to go beyond income, (iii) to better define and estimate equivalence scales, (iv) to open the household black box and measure welfare at the individual level. I suggest a general framework to critically review these streams of literatures and to discuss whether recent advances in each of these fields have been or could be readily operationalized in welfare analyses and policy simulations.     

Fairness and voting

In this paper we present a two-period model in which we examine how concern about fairness might affect voter behavior. We show that in the first period politicians choose the median voter’s position even if this does not correspond to their bliss points and neither they nor the voters can commit to a particular action. Moreover, concern about fairness creates substantial incumbency advantages. Our results hold even if voters care very little about fairness.     

Social responsibility,individualism, and redistributive policies

Previous research supports the consensus on individualism hypothesis, which holds that most Americans value hard work and self-reliance, perceive an open opportunity structure, and as a result, oppose redistributive policies, whether targeted by race or designed to help the poor in general. In contrast, this paper shows that one form of egalitarianism, a sense of social responsibility, remains a potent American value. Factor analysis of 18 stratification belief items from the 1984 General Social Survey results in two dimensions—one involving social responsibility and the other economic individualism. Social responsibility is the more powerful predictor of redistributive policy attitudes. Individuals who place a higher priority on social responsibility than on individualism are more likely than those with the opposite priorities to support redistributive policies, but are also disproportionately low income, black, and less politically active. These results suggest that economic individualism appears a hegemonic value in the United States partly because of the lack of political influence and low socioeconomic status of those most committed to social responsibility beliefs.An earlier version of this paper was presented at the 1986 meetings of the American Sociological Association in New York.     

Visible Minorities and Majority Giving

We examine if the presence of minority individuals in the community affects the decision to give to charities by majority individuals. We focus on two giving decisions by the majority population. The first is giving to any charitable organization; the second is giving to organizations geared to international causes. We also examine these two decisions when the sample is split into religious and non-religious individuals. We find that the larger the proportion of minorities in a given community, the less likely that members of the majority group give to charity in general—supporting the idea that heterogeneous communities deter outreach—but the more likely they are to give to international causes, giving credence to Allport’s ‘contact’ hypothesis.     

Strategic voting and nomination

Using computer simulations based on three separate data generating processes, I estimate the fraction of elections in which sincere voting is a core equilibrium given each of eight single-winner voting rules. Additionally, I determine how often each rule is vulnerable to simple voting strategies such as ‘burying’ and ‘compromising’, and how often each rule gives an incentive for non-winning candidates to enter or leave races. I find that Hare is least vulnerable to strategic voting in general, whereas Borda, Coombs, approval, and range are most vulnerable. I find that plurality is most vulnerable to compromising and strategic exit (causing an unusually strong tendency toward two-party systems), and that Borda is most vulnerable to strategic entry. I use analytical proofs to provide further intuition for some of my key results.     

Approval voting and positional voting methods: Inference,relationship, examples

Approval voting is the voting method recently adopted by the Society for Social Choice and Welfare. Positional voting methods include the famous plurality, antiplurality, and Borda methods. We extend the inference framework of Tsetlin and Regenwetter (2003) from majority rule to approval voting and all positional voting methods. We also establish a link between approval voting and positional voting methods whenever Falmagne et al.s (1996) size-independent model of approval voting holds: In all such cases, approval voting mimics some positional voting method. We illustrate our inference framework by analyzing approval voting and ranking data, with and without the assumption of the size-independent model. For many of the existing data, including the Society for Social Choice and Welfare election analyzed by Brams and Fishburn (2001) and Saari (2001), low turnout implies that inferences drawn from such elections carry low (statistical) confidence. Whenever solid inferences are possible, we find that, under certain statistical assumptions, approval voting tends to agree with positional voting methods, and with Borda, in particular.Michel Regenwetter thanks the National Science Foundation for funding this research through NSF grant SBR 97-30076. Both authors thank the Fuqua School of Business for financially supporting their collaboration. Most of this research was done while Regenwetter was a faculty member at Fuqua. We thank Prof. Steven Brams for his valuable comments as a discussant of a previous version of this paper, given at the 2002 Public Choice meeting, and Prof. Donald Saari for his helpful comments in conversations and on another draft. We also thank the editor in charge and a referee for their valuable comments. Tsetlin acknowledges the support of the Centre for Decision Making and Risk Analysis at INSEAD.     

Production efficiency and constraints on profit taxation and profit distribution in economies with Ramsey taxation

In economies with Ramsey taxation, decreasing returns to scale, and private ownership, we show that second-best production efficiency is desirable when the grouping of private firms induced by the profit taxation power of the government is at least as fine as the grouping of firms induced by the institutional rules of profit distribution in the economy. The classic results of Dasgupta and Stiglitz (Rev Econ Stud 39:87–103, 1972) (of firm-specific profit taxation) and Diamond and Mirrlees (Am Econ Rev 61:8–27, 1971a; Am Econ Rev 61:261–278, 1971b) and Guesnerie (A contribution to the pure theory of taxation, 1995) (of uniform 100 % profit taxation) follow as special cases of our model. Moreover, second-best analysis shows that optimal profit taxation is a substitute for optimal intermediate input taxation. In smooth economies, proportional, lump-sum, and affine modes of profit taxation are equivalent. We rework Mirrlees (Rev Econ Stud 39:105–111, 1972) counterexample, which is posed in the context of a non-smooth economy, to show that second-best production efficiency continues to remain desirable under an affine structure of profit taxation.     

Sophisticated voting outcomes and agenda control

Necessary and sufficient conditions for an alternative to be a sophisticated voting outcome under an amendment procedure are derived. The uncovered set, as first defined by Miller (1980), is shown to be potentially reducible, and conditions are determined for which this reduction equals the set of sophisticated voting outcomes. In addition, simple methods are given for calculating both the uncovered set and its reduction.Presented at the 1984 Annual Meeting of the Public Choice Society, Phoenix AZ, March 1984. I would like to thank Gerald Kramer, Nicholas Miller, Norman Schofield, two anonymous referees, and especially Richard McKelvey for helpful suggestions and comments.     

Union PAC contributions and legislative voting

Are union PACs able to affect legislative voting patterns with campaign contributions? Unlike previous studies addressing this question, this work measures the likelihood of a legislator supporting union (AFL-CIO) issues instead of isolating specific bills for study. Furthermore, the influence of union PAC money in both congressional chambers is examined. The results are mixed: apparently, organized labor has been able to influence labor legislation with campaign money in some election cycles, but in others, they are less effective.     

Transaction Costs and Coalition Stability under Majority Rule

Government program allocations are more stable and more equally shared than theory predicts. Although various explanations have been offered, we emphasize the high transaction costs of political negotiations and coalition enforcement. Cycling predictions ignore the cost to politicians of repeatedly forming coalitions and neglect the opportunity costs of failed coalitions and the loss of related government programs that bring valuable constituent benefits. Because of these costs, Congress relies on coalitions larger than the minimum necessary to enact a program, adopts relatively egalitarian programmatic sharing rules, and resists efforts to change those allocations. To illustrate we analyze the Federal Highway Trust Fund.     

Value added taxation and the third sector

During the last decades, value added taxation (VAT) has become widely used. Introducing or widening VAT may have important consequences for third sector organisations. There is no consistent, widely-accepted theory regarding the treatment of non-governmental organisations (NGOs) under VAT. International comparisons are difficult to make. The general scope of VAT, what goods and especially what services are included in the tax base, may be more important to NGOs than the direct concessions granted them. To comprehend how VAT may affect NGOs, it is necessary to understand the general mechanism and some of the technical details of VAT, such as registration thresholds and accounting requirements. There is a tendency for the legislature to widen the tax base and make VAT as general as possible. Tax administrative considerations may acquire the character of absolute principles. When VAT is introduced or widened, it may be important for NGOs to demonstrate how their tax bill has been changed as a possible unintended side-effect due to the administrative need to make VAT as comprehensive as possible.I have received valuable comments from Myles McGregor-Lowndes and two anonymous reviewers ofVoluntas.     

Impartiality,friendship-networks and voting behavior: Evidence from voting patterns in the Eurovision Song Contest

What is the extent to which a country's political institutions impact aggregate voting behavior in a comparative perspective? More specifically, are citizens in some countries more inclined vote on the basis of ‘quality’ or ‘merit’ over ‘friendship’ or ‘loyalty’, and if so, why? This paper seeks to address how the extent to which a country's political institutions are impartial (treats all citizens equally, free from corruption, strong rule of law) impact aggregate citizen behavior. When political institutions are more (less) impartial, success in society is more often on the basis of merit (patrimonial ties). This test cases is voting in the Eurovision Song Contest (ESC) from 1975 to 2012 among pairs and blocs of ‘voting friends’. The theory elucidates that given that certain pairs or blocs exhibit systematic voting bias for one another over time, the bias will be considerably less among impartial states than those with highly partial institutions. Using several measures of ‘friendship’, I find strong empirical evidence for this claim, even when controlling for myriad alternative factors and taking into account various voting regimes. The analysis gives us new insights on how political institutions condition aggregate citizen behavior in general and that although there is much bias in ESC voting, not all bias is equal among friend-countries.     

Pivotal voting and the emperor's new clothes

A leading recent line of work in game theory applied to politics exploits the “pivotal voting” insight introduced by Austen-Smith and Banks [1]. The most prominent follow-on papers have been by Feddersen and Pesendorfer [2, 3, 4, 5], where a particularly striking result is that in a large election, the winner with many poorly-informed voters will be identical to the winner under full information. But of course any result whatever can be proven if sufficiently implausible assumptions are allowed. This review provides simple derivations of the elections result for both the FP 1996 model [2] and then for the (generalized) FP 1999 model [4]. The resulting transparency makes it easy to see the relation between the models, but also why neither result is relevant to actual elections. Received: 6 December 1999/Accepted: 28 August 2000     

Relationships between Borda voting and Zermelo ranking

There are many situations wherein a group of individuals (e.g., voters, experts, sports writers) must produce an ordered list of ‘best’ alternatives selected from a given group of alternatives (e.g., candidates, proposals, sports teams). Two long established mechanisms that have been used for this task are ‘Zermelo’s Ranking Method’ (1929) and ‘Borda’s Voting Scheme’ (1781). The main purpose of this paper is to point out that they are, under certain common circumstances, identical. We then show that Zermelo’s Method can be used in situations that Borda’s Method is not designed to handle.     

Class voting and class consciousness in Canada

Plusieurs hypotheses existent, qui tentent d'expliquer la faiblesse du vote de classe au Canada. Je tente ici de reformuler certaines de ces hypothPses, i partir de leurs postulats i1'6gard de la conscience de classe et de la formation de classe. Deux types d'explications sont identifies: celles, d'abord, qui soutiennent que le bas niveau de conscience de classe au Canada est la cause de I'absence de formation de classe; et celles pour qui l'inverse est vrai. Toutes les hypotheses considerees trouvent des donnees qui les supportent dans la ricente Etude electorale nationale. I1 est actuellement impossible de choisir entre elles, alors que les donnees disponibles ont une valeur limitee et que des problemes de niveaux d'analyse restent i resoudre. On devrait considerer les deux modes d'explication comme interactifs, et aussi vraisemblables l'un que l'autre.
Many hypotheses have been advanced to explain the low levels of class voting in Canada. This article reformulates a number of these in terms of their assumptions about class consciousness and class formation. Explanations are divided into those which hold the society's low level of class consciousness responsible for the lack of class formation, and those which propose the reverse. Evidence from recent National Elections Study data contains support for all of the hypotheses, and it is concluded that choosing between them is currently impossible because of data limitations and level-of-analysis problems. The two lines of argument should be regarded as interactive and equally plausible.