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

Tobias Thomas, Moritz Heß () and Gert Wagner
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Moritz Heß: TU Dortmund

No 11096, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: principal agent-theory; political reforms; SOEP; risk aversion; political decision-making; German (search for similar items in EconPapers)
JEL-codes: D71 D78 H11 H70 P16 Z13 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2017-10
New Economics Papers: this item is included in nep-pol
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Citations: View citations in EconPapers (6)

Published - published in: Review of Economics (Jahrbuch für Wirtschaftswissenschaften), 2017, 68 (3), 167-179

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Related works:
Journal Article: Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats (2017)
Working Paper: Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats (2017)
Working Paper: Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats (2017)
Working Paper: Reluctant to reform? A note on risk-loving politicians and bureaucrats (2017)
Working Paper: Reluctant to reform? A note on risk-loving politicians and bureaucrats (2017)
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