Open access
Date
2012-03Type
- Working Paper
ETH Bibliography
yes
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Abstract
The absence of the deselection threat in incumbents’ last term in office can be negative or positive for society. Some politicians may reduce their efforts, while others may pursue beneficial long-term policies that may be unpopular in the short term. We propose a novel pension system that solves the effort problem while preserving willingness to implement long-term policies. The idea is to give politicians the option to choose between a flexible pension scheme and a fixed pension scheme. In a flexible pension scheme, the pension increases with short term performance as measured by the vote share of the officeholder’s party in the next election. This system increases social welfare by letting officeholders self-select into those activities that most benefit society. We analyze the properties and consequences of such a system and assess its robustness. Finally, we extend the pension system with choice to non-last-term situations and derive a general welfare result. Show more
Permanent link
https://doi.org/10.3929/ethz-a-007049500Publication status
publishedJournal / series
Economics Working Paper SeriesVolume
Publisher
ETH Zurich, Center of Economic Research (CER-ETH)Subject
Selection; Elections; Political contracts; Vote-share thresholds; Incumbents; EffortOrganisational unit
02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.03729 - Gersbach, Hans / Gersbach, Hans
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Is previous version of: https://doi.org/10.3929/ethz-b-000229132
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ETH Bibliography
yes
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