Off-the-peak preferences over government size
AbstractWe study the political consequences of policy preferences which are non-symmetric around the peak. While the usual assumption of symmetric preferences is innocuous in political equilibria with plat-forms convergence, it is not neutral when candidates are differentiated. We show that a larger government size emerges when preferences of the median voter off-the-peak are more intense towards overprovision (what we call wasteful preferences), whereas a smaller government results when her preferences are more intense towards underprovision (scrooge preferences). We then analyze the determinants of preferences off-the-peak and find that: (i) The sign of the third derivative of the policy-induced utility function indicates whether preferences are wasteful (positive) or scrooge (negative). (ii) The analog of Kimball's coefficient of prudence can be used to measure degrees of wastefulness and scroogeness. (iii) Consumers' risk aversion and government decreasing effectiveness in producing the public good generate scrooge.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 10/04.
Date of creation: Jan 2010
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Other versions of this item:
- Francisco Martínez-Mora & M. Socorro Puy, 2009. "Off-the-peak preferences over government size," Working Papers 2009-9, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
- Francisco Martínez Mora & M. Socorro Puy, 2010. "Off-the-peak preferences over government size," Working Papers 2010-05, FEDEA.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H5 - Public Economics - - National Government Expenditures and Related Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-17 (All new papers)
- NEP-CDM-2010-04-17 (Collective Decision-Making)
- NEP-POL-2010-04-17 (Positive Political Economics)
- NEP-UPT-2010-04-17 (Utility Models & Prospect Theory)
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