Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Public Choice
Published in: Public Choice 3-4/2021

07-01-2020

Elections, the curse of competence and credence policies

Author: Hans Gersbach

Published in: Public Choice | Issue 3-4/2021

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

A returning political phenomenon is the impact of “office seekers” in democracies. We examine the consequences when the public faces a new type of two-dimensional uncertainty: whether a politician is competent, and whether a politician is concerned about the consequences of public utility decisions (statesman) or about public opinion (office seeker). We identify new timing distortions, as both competent and incompetent office seekers may take hasty or excessively delayed decisions in order to imitate statesmen or competent office holders. Thus, the public may benefit by disregarding the candidates’ competence and by reelecting candidates based solely on its belief as to whether a politician is a statesman. This “curse of competence” may explain why politicians are so concerned about being perceived as statesmen and why we may expect the largest distortions for credence policies.
previous article The scope of political jurisdictions and violence: theory and evidence from Africa
next article Partisan bias in inflation expectations

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
Appendix
Available only for authorised users
Footnotes
1
On the role of economic policy competence in US presidential elections, see Congleton and Zhang (2013).
 
2
Our paper is complementary to other approaches that model the trade-offs of popular but potentially harmful policies. Bischoff and Siemers (2013) have offered an interesting approach in which voters may hold biased beliefs about economic outcomes and vote retrospectively. This causes parties to offer a mixture of popular, but bad, policies and less popular, but good, policies. See also Gersbach (2009).
 
3
We will later examine whether equilibria exist in which PG and PB choose I with different probabilities.
 
4
Fewer (more) inefficiencies occur if competent office seekers put a higher (lower) probability on selecting I upon observing H.
 
5
We stress that the result is obtained under the assumption that incompetent and competent office seekers choose I with the same probability.
 
6
In principle, the public might also try to not reelect the agent at all, in order to limit distortions. This could be achieved e.g. by term limits. However, if the evaluation of competence in activities other than current office (e.g. in ensuing careers) is of an arbitrarily small value for office seekers, office seekers would choose I with probability one, thus inducing more distortions than in the optimal case.
 
7
The purification approach was developed by Harsanyi (1973).
 
8
Details are available upon request.
 
9
To which extent the government can assess the contribution of the policy itself is unclear.
 
10
Of course, there is no complete ignorance. Yet, there is a great heterogeneity of scientific explanations how a set of banking regulations may impact the likelihood of a crisis, most notably whether and which capital requirements are efficient (see Gersbach et al. 2015 for a discussion).
 
11
In Stage 4, \(\theta \) does not become publicly known and utility changes cannot be traced back to the policy choices.
 
12
Similar cases may also be observed in firms. Sometimes, it remains unclear for a long time—or forever—whether a particular project was valuable, in particular if only a combination of several projects together determines success. If it is uncertain whether employees are intrinsically motivated or motivated by the assessment of competence, the curse of competence may impact promotion decisions.
 
Literature
Beniers, K. J., & Dur, R. (2007). Politicians’ motivation, political culture, and electoral competition. International Tax and Public Finance, 14(1), 29–54.CrossRef
Bernholz, P. (2013). The slow and hidden road to serfdom. Procesos de Mercado. Revista Europea de Economia Politica, X(2), 201–237.
Bischoff, I., & Siemers, L. (2013). Biased beliefs and retrospective voting: Why democracies choose mediocre policies. Public Choice, 156(1–2), 163–180.CrossRef
Coate, S., & Morris, S. (1995). On the form of transfers to special interests. Journal of Political Economy, 103, 1210–1235.CrossRef
Congleton, R. (2007). Informational limits to democratic public policy: The jury theorem, yardstick competition, and ignorance. Public Choice, 132, 333–352.CrossRef
Congleton, R., & Zhang, Y. (2013). Is it all about competence? The human capital of U.S. presidents and economic performance. Constitutional Political Economy, 24, 108–124.CrossRef
Dalton, R. J. (2017). Political trust in North America. In S. Zmerli & T. W. G. van der Meer (Eds.), Handbook on political trust. Cheltenham: Edward Elgar.
Dixit, A. (1992). Investment and hysteresis. Journal of Economic Perspectives, 6(1), 107–132.CrossRef
Dover, E. (1998). The presidential election of 1996, Clinton’s incumbency and television. Westport, CT: Greenwood.
Gersbach, H. (2009). Democratic mechanisms. Journal of the European Economic Association, 7(6), 1436–1469.CrossRef
Gersbach, H., Haller, H., & Muller, J. (2015). The macroeconomics of Modigliani–Miller. Journal of Economic Theory, 157, 1081–1113.CrossRef
Glazer, A. (1985). The advantages of being first. American Economic Review, 75(3), 473–480.
Goodhart, C. A., & Lastra, R. (2017) Populism and central bank independence, CEPR Discussion Paper DP12122.
Harsanyi, J. C. (1973). Games with randomly disturbed payoffs: A new rationale for mixed-strategy equilibrium points. International Journal of Game Theory, 2(1), 1–23.CrossRef
Hess, G. D., & Orphanides, A. (1995). War politics—An economic, rational-voter framework. American Economic Review, 85(4), 828–846.
Hetherington, M. J. (2005). Why trust matters: Declining political trust and the demise of American liberalism. Princeton, NJ: Princeton University Press.
Hetherington, M. J., & Rudolph, T. J. (2015). Why Washington won’t work: Polarization, political trust, and the governing crisis. Chicago, IL: University of Chicago Press.CrossRef
Holmström, B. (1999). Managerial incentive problems: A dynamic perspective. Review of Economic Studies, 66(1), 169–182.CrossRef
Lupia, A., & McCubbins, M. D. (1998). The democratic dilemma: Can citizens learn what they need to know?. Cambridge: Cambridge University Press.
Morris, S. (2001). Political correctness. Journal of Political Economy, 109(2), 231–265.CrossRef
Nye, J. S, Jr., Zelikow, P. D., & King, D. C. (1997). Why people don’t trust government. Cambridge, MA: Harvard University Press.
Pindyck, R. S. (1991). Irreversibility, uncertainty, and investment. Journal of Economic Literature, 29, 1110–1148.
Rodrik, D. (2017) Populism and the economics of globalization, CEPR Discussion Paper DP12119.
Rogoff, K. (1990). Equilibrium political budget cycles. American Economic Review, 80(1), 12–36.
Rogoff, K., & Sibert, A. (1988). Elections and macroeconomic policy cycles. Review of Economic Studies, 55, 1–16.CrossRef
Scharfstein, D. S., & Stein, J. C. (1990). Herd behavior and investment. American Economic Review, 80(3), 465–479.
Stevenson, B., & Wolfers, J. (2011). Trust in public institutions over the business cycle. American Economic Review, 101(3), 281–87.CrossRef
Warren, M. E. (Ed.). (1999). Democracy and trust. New York, NY: Cambridge University Press.
Metadata
Title
Elections, the curse of competence and credence policies
Author
Hans Gersbach
Publication date
07-01-2020
Publisher
Springer US
Published in
Public Choice / Issue 3-4/2021
Print ISSN: 0048-5829
Electronic ISSN: 1573-7101
DOI
https://doi.org/10.1007/s11127-019-00753-w

Other articles of this Issue 3-4/2021

Public Choice 3-4/2021 Go to the issue

OriginalPaper

Third-party intervention in the presence of supreme values

Correction

Correction to: The transformation of supreme values: Evidence from Poland on salvation through civic engagement

OriginalPaper

Education, political discontent, and emigration intentions: evidence from a natural experiment in Turkey

OriginalPaper

The role of ECB communication in guiding markets

OriginalPaper

Partisan bias in inflation expectations

OriginalPaper

Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability