In this paper, we revisit the association between happiness and inequality. We argue that the interaction between the perceived and the actual fairness of the income generation process affects this association. Building on a simple model of individual labor-market participation under...

This paper critically discusses the standard concept of hierarchical preferences, which presupposes that a stable system of higher- and lower-order preferences exists, wherein the former contains an individual's fundamental purposes and values, while the latter guides everyday choices. It is...

We argue that perceived fairness of the income generation process affects the association between income inequality and subjective well-being, and that there are systematic differences in this regard between countries that are characterized by a high or, respectively, low level of actual...

This paper argues that an evolutionary approach to policy-making, which emphasizes openness to change and political variety, is particularly compatible with the central tenets of classical liberalism. The chief reasons are that classical liberalism acknowledges the ubiquity of uncertainty, as...

Using a framework that distinguishes short-term consumer preferences, individual reflective preferences and political preferences, we discuss from a constitutional economics perspective whether individuals find it in their common constitutional interest to endow representatives and bureaucrats...

Explaining individual behavior in politics should rely on the same motivational assumptions as explaining behavior in the market: That's what Political Economy, understood as the application of economics to the study of political processes, is all about. In its standard variant, those who played...

The theoretical literature on the economics of fiscal federalism has identified several potential effects of government decentralization on economic growth. Much of the traditional literature focuses on the efficiency aspects of a decentralized provision of public services. However,...

In explaining individual behavior in politics, economists should rely on the same motivational assumptions they use to explain behavior in the market: That is what Political Economy, understood as the application of economics to the study of political processes, is all about. In its standard...

We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-)distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries...

The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true...