Monday, September 24, 2012
Research on policy makers' backgrounds
I have been collecting data on the backgrounds of members of regulatory agencies in Latin America and Spain, and reviewing some related literature. There is a paper on the professional and educational bakckrounds of central bankers, stating that insiders are more hawkish than outsiders, which is reiterated by research on dissenting votes in the Bank of England. There is also recent research by Paul Grout among others on the "experience effect" in the Competition Commission in the UK. They find that more experienced regulators in competition policy tend to be tougher on companies potentially abusing their monopolistic position. What to make of this empirical evidence? There are two potential intepretations: that many regulators do not easily apply efficient welfare enhancing decisions, but the most politically expedient ones, or that they have biases that come from different cultural views and not from different sources of information as experts, as argued by social pshychologist Slovic. Perhaps both interpretations can be reconciled by the fact that behavioral biases usually go into the direction of making policies closer to the more politically expedient (or populist) options, as argued by Kovacic and a co.auhtor in a recent paper in the Journal of Regulatory Economics.