Reluctant to reform? A note on risk-loving politicians and bureaucrats

Tobias Thomas, Moritz Heß and Gert Wagner

No 272, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: From a political economy perspective, politicians often fail to implement structural reforms. In this contribution we investigate if the resistance to reform is based on the differences in the risk preferences of voters, politicians, and bureaucrats. Based on three surveys among the German electorate, 175 members of the Federal German Parliament and 106 officials from German ministries, this is not the case. Since both politicians and bureaucrats have a higher risk appetite than the voters, their risk preferences cannot be seen as an explanation for the resistance to structural reform. Hence, it must be caused by other reasons. These could be interventions by veto players, wars of attrition by powerful interest groups, or reform logjams initiated. However, as during times of populist campaigns, the election process can put forth candidates with very high risk appetites, 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: political reforms; political decision-making; principal agent-theory; risk aversion; German; SOEP (search for similar items in EconPapers)
JEL-codes: D71 D78 H11 H70 P16 Z13 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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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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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:272

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