Working Paper: NBER ID: w25724
Authors: Pedro Dal B; Andrew Foster; Kenju Kamei
Abstract: Dal Bó, Foster and Putterman (2010) show experimentally that the effect of a policy may be greater when it is democratically selected than when it is exogenously imposed. In this paper we propose a new and simpler identification strategy to measure this democracy effect. We derive the distribution of the statistic of the democracy effect, and apply the new strategy to the data from Dal Bó, Foster and Putterman (2010) and data from a new real-effort experiment in which subjects’ payoffs do not depend on the effort of others. The new identification strategy is based on calculating the average behavior under democracy by weighting the behavior of each type of voter by its prevalence in the whole population (and not conditional on the vote outcome). We show that use of these weights eliminates selection effects under certain conditions. Application of this method to the data in Dal Bó, Foster and Putterman (2010) confirms the presence of the democracy effect in that experiment, but no such effect is found for the real-effort experiment.
Keywords: democracy; policy effectiveness; experimental economics; identification strategy
JEL Codes: C9; D7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| democratic selection (D79) | cooperation rates (C71) |
| democratic selection (D79) | presence of democracy effect (D72) |
| no significant democracy effect is observed in new real-effort experiment (D72) | democracy effect depends on context of strategic interactions (D72) |
| democratic selection (D79) | comparison of average behaviors under democratic and non-democratic conditions (D72) |