Friday, October 19, 2007

Campaign Advertising and Election Outcomes

The recent electoral reform in Mexico will surely change the use of TV and radio ads in political campaigns.  Will this make "media effects" larger or smaller?  The Brazilian experience seems to say larger.
By: Bernardo S. da Silveira (Department of Economic, New York University)
João Manoel Pinho de Mello (Department of Economics, PUC-Rio)
Despite the "minimal effects" conventional wisdom, the question of whether campaign advertising influence elections outcome remains open. This is paradoxical because in the absence of a causal link from advertising to candidate performance, it is difficult to rationalize the amounts spent on campaigns in general, and on TV advertising in particular. Most studies using US data, however, suffer from omitted variable bias and reverse causality problems caused by the decentralized market-based method of allocating campaign spending and TV advertising. In contrast with received literature, we explore a quasi-natural experiment produced by the Brazilian electoral legislation, and show that TV and radio advertising has a much larger impact on election outcomes than previously found by the literature. In Brazil, by law, campaign advertising is free of charge and allocated among candidates in a centralized manner. Guber natorial elections work in a runoff system. While in the first round, candidates' TV and radio time shares are determined by their coalitions' share of seats in the national parliament, the two most voted candidates split equally TV time if a second round is necessary. Thus, differences in TV and radio advertising time between the first and second rounds are explored as a source of exogenous variation to evaluate the impact of TV advertising on election outcomes. Estimates suggest that a one percentage point increase in TV time causes a 0.241 percentage point increase in votes. Since TV advertising is the most important item in campaign expenditures, this result sheds light on the more general question of the effect of campaign spending on elections outcome.
Keywords: Campaign Expenditures, Election Outcomes, Endogeneity, Quasi-Natural Experiments
JEL: G12 C22 C53 E44

Tuesday, October 09, 2007

Rational chimps?

Luego de 20 mil años (o más) de evolución, científicos alemanes comprueban que los chimpancés juegan con más egoísmo juegos de ultimátum que los homo sapiens.  ¿Cómo interpretar esta evidencia?  Algunas posibilidades:
a) Los modelos de teoría de juegos son para chimpancés.
b) Los humanos son "rule utilitarians" mientras que los chimpancés son "act utilitarians"
c) Los chimpancés juegan "one shot strategies" mientras que los humanos como si fuera un juego repetido.
d) Los chimpancés tienen horizontes muy cortos o son más impacientes que los humanos. 
e) Los chimpancés no tienen noción alguna de "justicia" o no han desarrollado la convención social de reciprocidad.
Noten que empíricamente es muy difícil distinguir cuál es el mecanismo subyacente pues las opciones anteriores nos llevan a una predicción similar.

LEIPZIG, Germany, Oct. 8 (UPI) -- German researchers have demonstrated chimpanzees make choices that protect their self-interest more consistently than do humans.

Researchers from the Max Planck Institute of Evolutionary Anthropology in Leipzig studied the chimp's choices by using an economic game with two players. In the game, a human or chimpanzee who receives something of value can offer to share it with another. If the proposed share is rejected, neither player gets anything.
Humans typically make offers close to 50 percent of the reward. They also reject as unfair offers of significantly less than half of the reward, even though this choice means they get nothing.
The study, however, showed chimpanzees reliably made offers of substantially less than 50 percent, and accepted offers of any size, no matter how small.  The researchers concluded chimpanzees do not show a willingness to make fair offers and reject unfair ones. In this way, they protect their self interest and are unwilling to pay a cost to punish someone they perceive as unfair.

The study appeared in the Oct. 5 issue of the journal Science.

Saturday, October 06, 2007

Il liberismo è di sinistra?

In Mexico the so called right-wing ruling party wants to raise higher tax revenues (to increase social spending, for instance), to allow private investments in energy (to promote growth and employment)--and many more so called neoliberal reforms—all of which the lefty oppositon party adamantly oppose.  Granted, such means and ends are somewhat debatable but remind me again which party is more concerned about the poor?  Indeed, the "left vs. right-wing" policy label brings more confusion than clarity in many countries.  This VoxEU short op-ed by Alesina and Giavazzi (authors of The future of Europe, MIT 2006) is right on the mark.  (By the way, I will surely refer back to VoxEU, the new and notable blog with "research-based policy analysis and commentary from Europe's leading economists", in my political economy class.)


Why the Left should learn to love liberalism

By Alberto Alesina  and Francesco Giavazzi (5 October 2007)


"Anti-reformists in Europe claim to be protecting Europe's weak and poor. Nothing could be further from the truth. Labour-market flexibility, deregulation of the service industry, pension reforms and greater competition in university funding might harm the interest of well-connected, privileged citizens but it would open up opportunities for Europe's youth and disadvantaged groups. A real left-wing agenda would embrace reform.

Continental Europe is in the midst of a burning discussion about the pros and cons of market-friendly reforms and greater economic liberalism. We all know what the package contains – competition, labour-market flexibility, liberalisation of services, lower taxes, and privatisations.

The traditional debate runs as follows. These reforms are "right wing" policies. They may increase efficiency – perhaps even economic growth – but they also tend to increase inequality and to be detrimental for the poorest in society. Therefore – and here comes the typical "socially compassionate" European argument – be very careful moving in that direction. Governments should proceed cautiously and be ready to backtrack at any point.

Much of this reasoning is fundamentally wrong. Labour-market flexibility, deregulation of the service industry, pension reforms and greater competition in university funding is not anti-equality. Such reforms shift financing from taxpayers to the users themselves and, as such, tend to eliminate rents. They tend to increase productivity by basing rewards on merit rather than on being an insider. They tend to open up opportunities for younger workers who are not yet well-connected. Pursuing pro-market reforms does not imply facing a trade-off between efficiency and social justice. In this sense, pro-market policies are "left wing", if that means reducing the economic privileges enjoyed by "insiders".


Read the whole thing.