How do econs vote? A study of voting in German Council of Economic Experts

A nice paper from a political economy perspective.

German Council of Economic Experts is a special body for econ advice. I think it should be much like our EAC, which I think is more political than economic.

We usually look at voting patterns in central banks’ MPC. However, this CEA kind of thing also helps understand some interesting patterns:

I investigate voting in another type of committee: the German Council of Economic Experts. Members of the Council, who are generally professors of economics, offer policy advice to the German government. These economists may disagree on the correct policies for different professional reasons, such as the effectiveness of monetary policy, the desired size of fiscal deficits, the balance between tax financing and government borrowing, the value of  labor-supply elasticities etc. Differences may also be systematic and ideological, relating to the responsibilities of government and the weight placed on the income distribution consequences of policies relative to efficiency (see the summary in Hillman, 2009, chapter 10 on how the views held by economists can differ). The opinions on economic policy-making used to correlate with policy preferences (Alston et al. 1992, Fuchs et al. 1998, Mayer 2001, Klein and Stern 2006, Gordon and Dahl 2013).

As compared to MPC committees, the members of the German Council of Economic Experts all have the same professional background. Differences in voting behavior in the German Council of Economic Experts may thus be more aligned with political ideology than professional background.

German CEA appointments make it for an int analysis:

The German Council of Economic Experts has advised the Federal Government on matters of economic policy since 1964.7 The Council assesses the current macroeconomic situation and forecasts future economic developments.8 The members of the Council enjoy independence in advising the government. On its webpage the Council claims that its advisory activities are an “essential part of German economic policy-making and have notably influenced political decisions” (German Council of Economic Experts, 2011). The German Council of Economic Experts consists of five economics professors who have different fields of expertise.

The formal procedure for becoming a member of the German Council of Economic Experts is as follows: the German federal government nominates candidates and the federal president appoints them. The informal procedure, however, is different. In fact, three members are nominated on the strength of their academic record. One member is nominated in consultation with the trade unions (union ticket) and one member is nominated in consultation with the employers’ association (employers’ ticket). It is important to note that the trade union and the employers’ association do not directly nominate candidates.

The author shows that the one econ appointed after consulting with Trade Union usually votes against majority:

The best predictor of minority voting in the German Council of Economic Experts is that a member of the Council was nominated for membership by the trade unions. A council member nominated by the trade unions is about 70 percentage points more likely to vote against the majority opinion. My results showing that council members nominated by the
trade unions submit minority votes correspond with the empirical findings on voting in MPCs. In the FOMC and the German Bundesbank, the channel of political appointment has been shown to influence voting behavior: appointees nominated by the political left have voted differently from appointees nominated by the political right.

Dissent from the majority in the German Council of Economic Experts certainly confirms the dissenting expert’s identity. Confirming identity is an element of expressive voting.15 A key question is the extent to which minority voting in the German Council of Economic Experts is purely expressive in the sense that it is motivated solely by the act of dissenting and not by the consequence of this act.16 Hillman (2010) proposes that expressive voting is a category of low-cost acts that enable individuals to confirm their identity to themselves and to others. Confirming identity to others is best achieved when voting is visible rather than anonymous. Hillman (2010) also proposes that expressive voting can result in an expressive policy trap whereby a majority of voters has voted for a policy that each voter  would veto individually if s/he were able to do so. The expressive policy trap is implicit in Tullock’s observation (Tullock 1971) that individuals may support outcomes with the hope that they will be in the minority.

Fascinating..

One Response to “How do econs vote? A study of voting in German Council of Economic Experts”

  1. Car Elevators Says:

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    How do econs vote? A study of voting in German Council of Economic Experts | Mostly Economics

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