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Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats

Author

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  • Thomas, Tobias

    (Düsseldorf Institute for Competition Economics (DICE))

  • Heß, Moritz

    (TU Dortmund)

  • Wagner, Gert G.

    (Max Planck Institute for Human Development)

Abstract

As from a political economy perspective, politicians often fail to implement structural reforms, we investigate if the resistance to reform is based on the differences in the risk preferences of voters, politicians, and bureaucrats. Based on the empirical results of a survey of the population in Germany, 175 members of the Federal German Parliament (Bundestag), and 106 officials ("bureaucrats") from German ministries, this is not the case. Since both politicians and bureaucrats have a higher risk appetite than the general population, their risk preferences cannot be seen as an explanation for the resistance to structural reform. Hence, it must be caused by other reasons. These can be for instance - as public choice scholars argue - interventions by veto players, wars of attrition by powerful interest groups, or reform logjams initiated. However, another point of view could be that modern democracies are doing better than many believe. During times of populist campaigns, the election process can put forth candidates with very high risk appetites, but the constitutions of democracies turn out to be rather smart if hazardous actions and measures by political rookies and gamblers are inhibited by checks and balances.

Suggested Citation

  • Thomas, Tobias & Heß, Moritz & Wagner, Gert G., 2017. "Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats," IZA Discussion Papers 11096, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11096
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    Cited by:

    1. Heß, Moritz & Scheve, Christian von & Schupp, Jürgen & Wagner, Aiko & Wagner, Gert G., 2018. "Are political representatives more risk-loving than the electorate? Evidence from German federal and state parliaments," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 4, pages 1-7.
    2. Strohner Ludwig & Berger Johannes & Thomas Tobias, 2019. "Sekt oder Selters? – Ökonomische Folgen der Reformzurückhaltung bei der Beendigung des Solidaritätszuschlags," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 19(4), pages 313-330, February.
    3. Gert G. Wagner & Ruben C. Arslan & Florian Dorn & Stefanie Gäbler & Florian Griese & Ralph Hertwig & Björn Kauder & Manuela Krause & Luisa Lorenz & Martin Mosler & Niklas Potrafke & Luisa Dörr, 2018. "Economists’ Risk Assessment," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(07), pages 61-64, April.

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    More about this item

    Keywords

    principal agent-theory; political reforms; SOEP; risk aversion; political decision-making; German;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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