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Are We Better Off if Our Politicians Have More Information?

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  • Johan Lagerlöf

Abstract

The model of public policy studied in this paper has heterogeneous citizens/voters and two public goods: one (roads) chosen directly by an elected policy‐maker, and the other (pollution) stochastically dependent on the amount of roads. Both a one‐country and a two‐country version of the model are analyzed; the latter displays externalities across the countries which create incentives for free riding and strategic delegation. The welfare effects of providing the policy‐maker with information about the relationship between roads and pollution are investigated, and it is shown that more information hurts some—sometimes even all—citizens. In particular, the opportunity not to create an institution for information gathering can serve as a commitment device for a country, although with the unfortunate effect of making the overall outcome even worse. Implications for the welfare effects of “informational lobbying” are also discussed.

Suggested Citation

  • Johan Lagerlöf, 2004. "Are We Better Off if Our Politicians Have More Information?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 123-142, March.
    • Handle: RePEc:bla:scandj:v:106:y:2004:i:1:p:123-142
    DOI: 10.1111/j.0347-0520.2004.t01-1-00351.x
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    Cited by:

    1. Catherine C. Eckel & Ragan Petrie, 2011. "Face Value," American Economic Review, American Economic Association, vol. 101(4), pages 1497-1513, June.

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    More about this item

    JEL classification:

    • D69 - Microeconomics - - Welfare Economics - - - Other
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other

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