In important situations, individual decision-making is systematically biased. Whendeciding (rather than consuming), extrinsic attributes of choice options are more salient thanintrinsic attributes. People overestimate extrinsic attributes and therefore put too much effortinto acquiring income...

This paper analyses whether large governments in Europe reflect efficient responses to a changing social and economic environment (‘welfare economic view’) as opposed to wasteful spending (‘public choice view’). To this end, the effect of government size on subjective well-being is...

An examination of how increased turnover among legislators in the fifty U.S. states affects fiscal policy and economic growth finds that it makes legislators short-sighted. Turnover increases the size of government by increasing the shares of both total spending and taxes in income. In...

I develop a model of public sector contracting based on the multitask framework by Holmström and Milgrom (1991). In this model, an agent can put effort into increasing the quality of a service or reducing costs. Being residual claimants, private owners have stronger incentives to cut costs than...

There are several theoretical accounts of public sector outsourcing. We note that leading theories give different predictions of the influence of political variables and test the predictions on a Swedish data set in which outsourcing varies between municipalities and over time as well as between...

A wide range of services provided by the public sector are credence goods, i.e., services for which the producer has private information whether a certain treatment is needed or not. This paper studies how ownership affects the incentives for producers to reveal such information to public...

We test whether generosity is related to political preferences and partisanship in Canada, Sweden, the United Kingdom and the United States using incentivized dictator games. The total sample consists of more than 5,000 respondents. We document that support for social spending and redistribution...

Institutions are common predictors of voter turnout. Most research in this field focuses on cross-country comparisons of voting systems, like the impact of compulsory voting or registration systems. Fewer efforts have been devoted to understand the role of local institutions and their impact on...

The present study examines empirically the relationship between Happiness and public spending. We use a panel data from 2006 to 2015 for about 132 countries. We first estimated a Pooled, fixed effect and finally a GMM model to deal with the endogeneity problem. Our main findings suggest, first,...

Political polarization combined with political turnover have been shown to amplify economic fluctuations (Azzimonti and Talbert, 2014). This paper analyzes a fiscal policy institution capable of reducing the volatility caused by these political frictions. We introduce the distinction between...