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.
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