Off-the-peak preferences over government size

Francisco Martínez-Mora and M. Socorro Puy

No 2009-9, Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center

Abstract: In this paper, we analyze the political consequences derived from policy preferences which are non-symmetric around the peak. While the assumption of symmetric preferences is innocuous in political equi- libria with platforms convergence, it is not neutral when candidates are differentiated. Following the citizen-candidate approach, we show that a larger government size emerges when preferences of the me- dian voter off-the-peak are more intense towards overprovision (what we call wasteful preferences), whereas a smaller government results when her preferences are more intense towards underprovision (what we call scrooge preferences). We next study the determinants of the shape of preferences off-the-peak and find that: (i) A positive sign of the third derivative of the policy-induced utility function indicates wasteful preferences, while a negative sign indicates scrooge prefer- ences. (ii) The analog of KimballÕs coefficient of prudence (which is closely related to Arrow-PrattÕs coefficient of risk aversion), can be used to measure degrees of wastefulness and scroogeness. (iii) Symmetric preferences require imposing quite stringent restrictions on the policy problem. Numerical examples illustrate the discrepancies de- rived from symmetric preferences versus scrooge preferences in terms of equilibrium predictions.

Keywords: Single-peaked preferences; citizen-candidate; coefficient of prudence; differentiated platforms; risk-aversion (search for similar items in EconPapers)
JEL-codes: D72 H31 H5 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2009-12
New Economics Papers: this item is included in nep-cdm, nep-pol, nep-pub and nep-upt
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Related works:
Working Paper: Off-the-peak preferences over government size (2010)
Working Paper: Off-the-peak preferences over government size* (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mal:wpaper:2009-9

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