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Misconceptions and Political Outcomes


  • David Romer


A large recent literature shows that strategic interactions among actors with conflicting objectives can produce inefficient political decisions. This paper investigates an alternative explanation of such decisions: if individuals' errors in assessing the likely effects of proposed policies are correlated, democratic decision-making can produce inefficient outcomes even in the absence of distributional conflicts or heterogeneous preferences. Choosing candidates from among the best informed members of the population does not remedy the problems created by such errors, but subsidizing information and exposing representatives to information after their election do. Concentration of power has ambiguous effects. Finally, the presence of correlated errors tends to create multiple equilibria in political institutions.

Suggested Citation

  • David Romer, 1997. "Misconceptions and Political Outcomes," NBER Working Papers 6117, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6117
    Note: EFG ME PE

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    References listed on IDEAS

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    Cited by:

    1. Börner, Kira, 2004. "Political Economy Reasons for Government Inertia: The Role of Interest Groups in the Case of Access to Medicines," Discussion Papers in Economics 313, University of Munich, Department of Economics.
    2. repec:zbw:rwidps:0035 is not listed on IDEAS
    3. Author-Name: Alan S. Blinder & Alan B. Krueger, 2004. "What Does the Public Know about Economic Policy, and How Does It Know It?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 327-397.
    4. Gennady Bilych, 2013. "What Is There in Common between Arab Revolutions and the Coase Theorem?," Business and Economic Research, Macrothink Institute, vol. 3(1), pages 126-152, June.
    5. Jennings, Colin, 2011. "The good, the bad and the populist: A model of political agency with emotional voters," European Journal of Political Economy, Elsevier, vol. 27(4), pages 611-624.
    6. repec:ksp:journ3:v:4:y:2017:i:2:p:232-246 is not listed on IDEAS
    7. Romer, David, 2012. "What Have We Learned about Fiscal Policy from the Crisis?," MIT Press Book Chapters,in: In the Wake of the Crisis: Leading Economists Reassess Economic Policy, edition 1, volume 1, chapter 6, pages 57-66 The MIT Press.
    8. Fic, Tatiana & Ghate, Chetan, 2005. "The welfare state, thresholds, and economic growth," Economic Modelling, Elsevier, vol. 22(3), pages 571-598, May.
    9. Daron Acemoglu & Simon Johnson & James Robinson, 2004. "Institutions as the Fundamental Cause of Long-Run Growth," NBER Working Papers 10481, National Bureau of Economic Research, Inc.
    10. Boerner, Kira, 2005. "Having Everyone in the Boat May Sink it - Interest Group Involvement and Policy Reforms," Discussion Papers in Economics 730, University of Munich, Department of Economics.
    11. Letiche, John M., 2006. "Positive economic incentives: New behavioral economics and successful economic transitions," Journal of Asian Economics, Elsevier, vol. 17(5), pages 775-796, November.
    12. Axel Dreher & Lars-H.R. Siemers, 2003. "The Intriguing Nexus Between Corruption and Capital Account Restrictions," Development and Comp Systems 0306004, EconWPA, revised 07 Jul 2005.
    13. Lars Siemers & Axel Dreher, 2005. "The Intriguing Nexus between Corruption and Capital Account Restrictions," RWI Discussion Papers 0035, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    14. Philipp Lergetporer & Guido Schwerdt & Katharina Werner & Ludger Wößmann, 2016. "Information and Preferences for Public Spending: Evidence from Representative Survey Experiments," CESifo Working Paper Series 5938, CESifo Group Munich.
    15. Gersbach, Hans & Müller, Markus, 2006. "Elections, Contracts and Markets," CEPR Discussion Papers 5717, C.E.P.R. Discussion Papers.
    16. Nathaniel Wilcox, 2004. "Believing in Economic Theory: Sex, Lies, Evidence, Trust and Ideology," Working Papers 2004-06 Classification-, Department of Economics, University of Houston.
    17. D. Andrew Austin & Nathaniel T. Wilcox, 2007. "Believing In Economic Theories: Sex, Lies, Evidence, Trust, And Ideology," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 502-518, July.
    18. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    19. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
    20. Bischoff, Ivo, 2008. "Conditional Grants, Grant-Seeking and Welfare when there is Government Failure on the Subordinate Level," ZEW Discussion Papers 08-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    21. Germán Reyes & Leonardo Gasparini, 2017. "Perceptions of Distributive Justice in Latin America During a Period of Falling Inequality," CEDLAS, Working Papers 0209, CEDLAS, Universidad Nacional de La Plata.
    22. Ivo Bischoff & Lars-H. Siemers, 2013. "Biased beliefs and retrospective voting: why democracies choose mediocre policies," Public Choice, Springer, vol. 156(1), pages 163-180, July.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior


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