Are We Better Off if Our Politicians Have More Information?

Johan Lagerlof

Scandinavian Journal of Economics, 2004, vol. 106, issue 1, 123-142

Abstract: The model of public policy studied in this paper has heterogeneous citizens/voters and two public goods: one (roads) chosen directly by an elected policy‐maker, and the other (pollution) stochastically dependent on the amount of roads. Both a one‐country and a two‐country version of the model are analyzed; the latter displays externalities across the countries which create incentives for free riding and strategic delegation. The welfare effects of providing the policy‐maker with information about the relationship between roads and pollution are investigated, and it is shown that more information hurts some—sometimes even all—citizens. In particular, the opportunity not to create an institution for information gathering can serve as a commitment device for a country, although with the unfortunate effect of making the overall outcome even worse. Implications for the welfare effects of “informational lobbying” are also discussed.

Date: 2004
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https://doi.org/10.1111/j.0347-0520.2004.t01-1-00351.x

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