TY - GEN A1 - Schnellenbach, Jan T1 - Rational Ignorance Is Not Bliss: When Do Lazy Voters Learn from Decentralised Political Experiments? T2 - Journal of Economics and Statistics N2 - A popular argument about economic policy under uncertainty states that decentralisation offers the possibility to learn from local or regional policy experiments. Often, an analogy between market competition as a discovery procedure and political competition is used to corroborate this argument. We argue that political learning processes are not trivial and do not occur frictionlessly: Voters have an inherent tendency to retain a given stock of policy-related knowledge which was costly to accumulate, so that yardstick competition is improbable to function well particularly for complex issues, if representatives' actions are tightly controlled by the electorate. We show that factor mobility does have the potential to endogenously disturb equilibria on regional markets for political theories, and therefore does provide for improved political learning processes compared to unitary systems. But the results we can expect are far from the ideal mechanisms of producing and utilising knowledge often described in the literature. In particular, collective learning may occur in the relatively efficient region, while the status quo may be fortified in the relatively inefficient region. KW - Policy decentralisation KW - fiscal competition KW - model uncertainty KW - collective learning Y1 - 2008 U6 - https://doi.org/10.2139/ssrn.990268 SN - 0021-4027 VL - 228 IS - 4 SP - 372 EP - 393 ER - TY - GEN A1 - Feld, Lars P. A1 - Schaltegger, Christoph A. A1 - Schnellenbach, Jan T1 - On Government Centralisation and Budget Referendums: Evidence from Switzerland T2 - European Economic Review N2 - Several authors have argued that a centralization of fiscal powers in a federation is less likely to occur if citizens have to approve a change in the assignments of responsibilities by a popular referendum. This outcome may be due to the fact that logrolling is more difficult under direct than under representative democracy. It may also be caused by citizens’ fear that a centralization of fiscal authority facilitates the extraction of rents by the government or the legislature. In this paper, we test the hypothesis that centralization is less likely under referendum decision-making in the unique institutional setting of Switzerland. Using a panel of Swiss cantons from 1980 to 1998, the empirical analysis provides evidence that referendums induce less centralization of fiscal activities. KW - Centralization KW - Fiscal federalism KW - Fiscal referendums Y1 - 2008 U6 - https://doi.org/10.1016/j.euroecorev.2007.05.005 SN - 1873-572X VL - 52 IS - 4 SP - 611 EP - 645 ER - TY - GEN A1 - Schnellenbach, Jan A1 - Feld, Lars P. A1 - Schaltegger, Christoph A. T1 - The Impact of Referendums on the Centralization of Public Goods Provision: A Political Economy Approach T2 - Economics of Governance N2 - The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true preferences of candidates makes strategic delegation impossible. Instead, it is shown that the existence of rent extraction by delegates alone suffices to make cooperative centralisation more likely through representative democracy. In the non-cooperative case, the more extensive possibilities for institutional design under representative democracy increase the likelihood of centralisation. Direct democracy may thus be interpreted as a federalism-preserving institution. KW - Centralisation KW - Direct democracy KW - Representative democracy KW - Public good provision Y1 - 2010 U6 - https://doi.org/10.1007/s10101-009-0063-1 SN - 1435-8131 VL - 11 IS - 1 SP - 3 EP - 26 ER - TY - GEN A1 - Pitsoulis, Athanassios A1 - Schnellenbach, Jan T1 - On Property Rights and Incentives in Academic Publishing T2 - Research Policy N2 - The peer review system in academic publishing performs two important functions by screening a manuscript for its quality, and by helping to further improve an author's work. However, it often fails to perform these functions in a satisfactory manner. We argue that property rights theory can be fruitfully applied to understand these shortcomings, and to develop reform proposals. The present paper discusses the incentive-problems in journal peer review from an institutional economics perspective, arguing that the incentives of both authors and reviewers to fully exploit a manuscript's potential depend on their property rights. Based on this theory of peer review, we argue that the recent proposal of an “as is” review policy combined with increased accountability of referees can be expected to result in a higher efficiency of peer review. KW - Academic journals KW - Scientific publishing KW - Peer review policy KW - Property rights Y1 - 2012 U6 - https://doi.org/10.1016/j.respol.2012.03.005 SN - 0048-7333 VL - 41 IS - 8 SP - 1440 EP - 1447 ER - TY - GEN A1 - Schnellenbach, Jan T1 - The Economics of Taxing Net Wealth: A Survey of the Issues T2 - Public Finance and Management N2 - This paper surveys possible motivations for having a net wealth tax. After giving a short overview over the state of wealth taxation in OECD countries, we discuss both popular arguments for such a tax, as well as economic arguments. It is argued that classical normative principles of taxation known from public economics cannot give a sound justification for a net wealth tax. The efficiency-related effects are also discussed and shown to be theoretically ambiguous, while empirical evidence hints at a negative effect on GDP growth. Finally, it is argued that despite of widespread and persistent lobbying for a revitalization of the net wealth tax, this is unlikely to happen due to political economy constraints. KW - net wealth tax KW - wealth KW - inequality KW - redistribution Y1 - 2012 SN - 1523-9721 VL - 12 IS - 4 SP - 368 EP - 400 ER - TY - GEN A1 - Bjørnskov, Christian A1 - Dreher, Axel A1 - Fischer, Justina A1 - Schnellenbach, Jan A1 - Gehring, Kai T1 - Inequality and Happiness: When Perceived Social Mobility and Economic Reality Do Not Match T2 - Journal of Economic Behavior & Organization N2 - We argue that perceived fairness of the income generation process affects the association between income inequality and subjective well-being, and that there are systematic differences in this regard between countries that are characterized by a high or, respectively, low level of actual fairness. Using a simple model of individual labor market participation under uncertainty, we predict that high levels of perceived fairness cause higher levels of individual welfare, and lower support for income redistribution. Income inequality is predicted to have a more favorable impact on subjective well-being for individuals with high fairness perceptions. This relationship is predicted to be stronger in societies that are characterized by low actual fairness. Using data on subjective well-being and a broad set of fairness measures from a pseudo micro-panel from the WVS over the 1990–2008 period, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the predicted differences in individual tolerance for income inequality, and the predicted influence of actual fairness. KW - Happiness KW - Life satisfaction KW - Subjective well-being KW - Inequality KW - Income distribution KW - Redistribution KW - Political ideology KW - Justice KW - Fairness KW - World Values Survey Y1 - 2013 U6 - https://doi.org/10.1016/j.jebo.2013.03.017 SN - 0167-2681 VL - 91 SP - 75 EP - 92 ER - TY - GEN A1 - Feld, Lars P. A1 - Schnellenbach, Jan T1 - Political Institutions and Income (Re-)Distribution: Evidence from Developed Economies T2 - Public Choice N2 - We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-)distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort. KW - Redistribution KW - Formal institutions KW - Fiscal decentralization KW - Presidential and parliamentary regimes KW - Electoral systems Y1 - 2014 U6 - https://doi.org/10.1007/s11127-013-0116-4 SN - 1573-7101 VL - 159 IS - 3 SP - 435 EP - 455 ER - TY - GEN A1 - Feld, Lars P. A1 - Schnellenbach, Jan T1 - Fiscal Federalism and Macroeconomic Performance: A Survey of Recent Research T2 - Environment and Planning – Government and Policy N2 - In this paper, we offer both a broad survey of the literature on fiscal federalism and long-run economic performance, and a detailed report of some of our own recent studies in this field. We look at the difference between study types (cross-country versus single-country studies), and at the relevance of the broader institutional framework into which fiscal decentralization is embedded. We also look into structural change and intergovernmental transfers as a detailed mechanism through which federalism may have an impact on aggregate economic performance.It turns out that fiscal decentralization has no robust effect on growth, but the evidence hints at a positive effect on overall productivity, conditional on the broader institutional framework. KW - fiscal federalism KW - fiscal decentralization KW - growth KW - economic performance Y1 - 2011 U6 - https://doi.org/10.1068/c1054r SN - 1472-3425 VL - 29 IS - 2 SP - 224 EP - 243 ER - TY - GEN A1 - Döring, Thomas A1 - Schnellenbach, Jan T1 - A Tale of Two Federalisms: Long-Term Institutional Change in the United States and in Germany T2 - Constitutional Political Economy N2 - This paper offers a comparison of government centralization in the United States and in Germany. After briefly laying out the history of federalism in both countries, we identify the instruments of centralization at work. It is argued that an initial constitutional framework of competitive federalism does not prevent the long-term centralization of competencies. Against a background of historical evidence, we discuss the political economics of government centralization. It is argued that formal institutions clearly have an effect on the pathways of government centralization, but not necessarily on the broader trend of centralization. The conclusion is reached that preservation of state and local autonomy may eventually hinge on informal political institutions. KW - Federalism KW - Government Centralization KW - State and Local Autonomy KW - Bryce Law KW - Popitz Law KW - Institutional Evolution KW - Constitutional economics KW - Formal institutions Y1 - 2011 SN - 1043-4062 VL - 22 IS - 1 SP - 83 EP - 102 ER - TY - GEN A1 - Schnellenbach, Jan T1 - Wohlwollendes Anschubsen? Liberaler Paternalismus und seine Nebenwirkungen T2 - Perspektiven der Wirtschaftspolitik N2 - In diesem Papier wird das Konzept des liberalen Paternalismus diskutiert, dessen Vertreter überzeugt sind, die Qualität der Entscheidungen von Individuen durch ein effizientes Design der Randbedingungen dieser Entscheidungen verbessern zu können. Nach einem Überblick über die verhaltensökonomischen Grundlagen des liberalen Paternalismus werden insbesondere seine normativen Grundlagen und politisch-ökonomischen Implikationen diskutiert. Es zeigt sich, dass paternalistische Ansätze selbst Entscheidungen häufig verzerren werden und dass eine Verbesserung der Qualität individueller Entscheidungen höchst zweifelhaft ist. KW - Paternalismus KW - inkonsistente Präferenzen KW - expressives Verhalten Y1 - 2011 SN - 1465-6493 VL - 12 IS - 4 SP - 445 EP - 459 ER - TY - GEN A1 - Feld, Lars P. A1 - Schnellenbach, Jan A1 - Baskaran, Thushyanthan T1 - Creative Destruction and Fiscal Institutions: A Long-Run Case Study of Three Regions T2 - Journal of Evolutionary Economics N2 - We analyze the rise and decline of the steel and mining industries in the regions of Saarland, Lorraine and Luxembourg. Our main focus is on the period of structural decline in these industries after the second world war. Differences in the institutional framework of these regions are exploited to analyze the way in which the broader fiscal constitution sets incentives for governments either to obstruct or to encourage structural change in the private sector. Our main result is that fiscal autonomy of a region subjected to structural change in its private sector is associated with a relatively faster decline of employment in the sectors affected. Contrary to the political lore, fiscal transfers appear not to be used to speed up the destruction of old sectors, but rather to stabilize them. KW - Structural change KW - Fiscal federalism KW - Grants in aid KW - Creative destruction Y1 - 2012 SN - 0936-9937 VL - 22 IS - 3 SP - 563 EP - 583 ER - TY - GEN A1 - Schnellenbach, Jan T1 - Nudges and Norms: On the Political Economy of Soft Paternalism T2 - European Journal of Political Economy N2 - This paper discusses soft (or libertarian) paternalism, as proposed among others by Thaler and Sunstein (2008). It is argued that soft paternalism should not be understood as an efficiency-enhancing, but as a redistributive concept. The relationship between soft paternalism and social norms is discussed in detail. In particular, it is argued that soft paternalism increases the stability of given social norms, which in turn need not be efficient, nor in the material self-interest of a majority of individuals. Soft paternalism is argued to be an essentially conservative concept of policy-making in the sense that it tends to increase the longevity of status quo social norms. KW - Libertarian paternalism KW - Soft paternalism KW - Social norms KW - Informal institutions KW - Behavioral political economics KW - Sour grapes KW - Expressive behavior Y1 - 2012 U6 - https://doi.org/10.1016/j.ejpoleco.2011.12.001 SN - 0176-2680 VL - 28 IS - 2 SP - 266 EP - 277 ER -