How a firm can induce legislators to adopt a bad policy

This paper shows why a majority of legislators may vote for a policy that benefits a firm but harms all legislators. The firm may induce legislators to support the policy by suggesting that it is more likely to invest in a district where voters or their representative support the policy. In equilibrium, no one vote may be decisive, so each legislator who seeks the firm’s investment votes for the policy, though all legislators would be better off if they all voted against the policy. And when votes reveal information about the district, the firm’s implicit promise or threat can be credible. Unlike influence mechanisms based on contributions or bribes, the behavior considered is time consistent and in line with the low campaign contributions by special interests

Advertising Bans and the Substitutability of Online and Offline Advertising

The authors examine whether the growth of the Internet has reduced the effectiveness of government regulation of advertising. They combine nonexperimental variation in local regulation of offline alcohol advertising with data from field tests that randomized exposure to online advertising for 275 different online advertising campaigns to 61,580 people. The results show that people are 8% less likely to say that they will purchase an alcoholic beverage in states that have alcohol advertising bans compared with states that do not. For consumers exposed to online advertising, this gap narrows to 3%. There are similar effects for four changes in local offline alcohol advertising restrictions when advertising effectiveness is observed both before and after the change. The effect of online advertising is disproportionately high for new products and for products with low awareness in places that have bans. This suggests that online advertising could reduce the effectiveness of attempts to regulate offline advertising channels because online advertising substitutes for (rather than complements) offline advertising.Google (Firm)WPP (Firm

Social capital and health: Does egalitarianism matter? A literature review

The aim of the paper is to critically review the notion of social capital and review empirical literature on the association between social capital and health across countries. The methodology used for the review includes a systematic search on electronic databases for peer-reviewed published literature. We categorize studies according to level of analysis (single and multilevel) and examine whether studies reveal a significant health impact of individual and area level social capital. We compare the study conclusions according to the country's degrees of economic egalitarianism. Regardless of study design, our findings indicate that a positive association (fixed effect) exists between social capital and better health irrespective of countries degree of egalitarianism. However, we find that the between-area variance (random effect) in health tends to be lower in more egalitarian countries than in less egalitarian countries. Our tentative conclusion is that an association between social capital and health at the individual level is robust with respect to the degree of egalitarianism within a country. Area level or contextual social capital may be less salient in egalitarian countries in explaining health differences across places

Elections with contribution-maximizing candidates

Analyses of campaign contributions usually follow the Downsian model to suppose that candidates seek contributions to win elections. This paper takes the opposite approach, by assuming that each candidate aims to maximize the contributions he collects. A citizen contributes to a candidate with the aim of increasing that candidate’s chances of winning. These assumptions generate several results: in equilibrium citizens make campaign contributions; the positions the candidates adopt differ; because the rich are willing to make larger contributions than the poor, the candidates adopt positions the rich prefer. A cap on political contributions reduces spending by voters and reduces the distance between the positions adopted by the candidates; public funding of campaign contributions causes aggregate spending to increase. Copyright Springer Science + Business Media, Inc. 2005