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This paper provides a public choice analysis of the 2008 banking bailout in the United States. The paper introduces heterogeneity of congressional districts into the common agency problem in special interest politics. District heterogeneity implies district-specific electoral constraints on legislators' ability to collect rents from, and cast dissonant votes in support of, special interests. An empirical analysis examines legislative voting on the initial bailout proposal, using campaign contributions to legislators from special interest groups and the importance of financial services for employment within congressional districts as the main explanatory variables. The empirical analysis corrects for possible endogeneity bias, using valid instruments, and considers several intuitive sub-sample estimations as alternative methods for addressing the endogeneity issue. The paper provides empirical evidence that campaign contributions from the financial services sector influenced legislative voting on the banking bailout. Adapted from the source document.

This paper explores the micro-foundations of public policy over environmental protection in developing economies by examining individual-level preferences for economically costly pollution abatement. The paper empirically investigates individuals' marginal willingness to pay (MWTP) for stronger environmental protection, analyzing nearly 24,000 survey responses, from 24 developing economies, to environmental questions from the 2005-2008 wave of the World Values Survey. I analyze the probability that an individual states she is WTP for further environmental protection depending on her individual-level characteristics and her country's characteristics. The main results to emerge from the analysis include: (i) perceived environmental problems that are local do not determine MWTP, where as perceived problems that are global do, (ii) self-identification as a world citizen is the strongest determinant of demand for greater environmental protection, indicating that motivation to contribute to a global public good is not a strictly post-material notion, and (iii) the primary determinants of MWTP are not qualitatively different from those among respondents in advanced economies. The results pose a challenge to the objective problems, subjective values response to the critique of the post-materialism hypothesis. It appears that the WTP for environmental protection in developing economies follows from subjective values that are universal, rather than from objective problems.

This paper considers the future of free market capitalism in the wake of the American boom-bust-bailout experience. The political economy of financial sector influence in the United States is examined within the context of the banking bailout of 2008. I argue that the banking bailout, enabled by a corrupted political system, will have implications for (i) the future growth of the U.S. economy and for (ii) the philosophical foundations of freemarket capitalism. Taken together, these implications may catalyze a re-evaluation of the optimality of the American model of free-market democratic capitalism, both in the United States and abroad.

The collective choice of public consumption expenditure is reconsidered when voters are socially mobile. In accordance with previous work on social mobility and political economics, the analysis concerns a class of mobility processes that induce mappings from initial income to expected future income that are monotonically increasing and concave. The paper abstracts from the explicitly redistributive role of government and concentrates on public consumption which is modeled as a classical public good. In equilibrium, provision is sensitive to the degree of social mobility, theoretically linking social mobility to public consumption. Further, empirical puzzles about the impact of voting franchise extensions on the growth of government spending are addressed within the context of social mobility. Adapted from the source document.

ObjectiveThis article examines the extent to which individual‐level determinants of environmental concern in underdeveloped economies differ from those in advanced economies.MethodsTo measure environmental concern, I use survey responses to environmental questions asked in 40 countries from the 2005–2008 wave of the World Values Survey. My econometric analysis tests the extent to which individual‐level determinants of environmental concern are conditional upon the level of national economic development.ResultsI find that proxies for objective environmental problems do not explain environmental concern at any level of development. Furthermore, in both advanced and underdeveloped economies, environmental concern is determined by subjective value orientations, but the effect is stronger in the advanced economies.ConclusionsThe findings reinforce the notion that environmentalism is value driven and support a generalized interpretation of postmaterialism in which the relevance of subjective values for explaining environmental concern increases as countries develop.

Most theoretical accounts imply that democratization will reduce income inequality as representative governments become accountable to citizens who would benefit from increased redistribution from the elite. Yet, available empirical evidence does not support the notion that democratization , on average, leads to more equal income distributions. This paper starts from the simple observation that autocracies are quite heterogeneous and govern extreme distributional outcomes (also egalitarian). From extreme initial conditions, democratization may lead income distributions to a " middle ground ". We thus examine the extent to which initial inequality levels determine the path of distributional dynamics following democratization. Using fixed effects and instrumental variable estimates we demonstrate that egalitarian autocracies become more unequal following democratization, whereas democratization has an equalizing effect in highly unequal autocracies.

Most theoretical accounts imply that democratization will reduce income inequality as representative governments become accountable to citizens who would benefit from increased redistribution from the elite. Yet, available empirical evidence does not support the notion that democratization , on average, leads to more equal income distributions. This paper starts from the simple observation that autocracies are quite heterogeneous and govern extreme distributional outcomes (also egalitarian). From extreme initial conditions, democratization may lead income distributions to a " middle ground ". We thus examine the extent to which initial inequality levels determine the path of distributional dynamics following democratization. Using fixed effects and instrumental variable estimates we demonstrate that egalitarian autocracies become more unequal following democratization, whereas democratization has an equalizing effect in highly unequal autocracies.