Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats

12 Pages Posted: 19 Jan 2018

See all articles by Tobias Thomas

Tobias Thomas

Heinrich Heine University Dusseldorf

Moritz Hess

Technical University of Dortmund

Gert G. Wagner

German Institute for Economic Research (DIW Berlin); Berlin University of Technology; German Socio-Economic Panel Study (SOEP)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2017

Abstract

As from a political economy perspective, politicians often fail to implement structural reforms, we investigate if the resistance to reform is based on the differences in the risk preferences of voters, politicians, and bureaucrats. Based on the empirical results of a survey of the population in Germany, 175 members of the Federal German Parliament (Bundestag), and 106 officials (“bureaucrats”) from German ministries, this is not the case. Since both politicians and bureaucrats have a higher risk appetite than the general population, their risk preferences cannot be seen as an explanation for the resistance to structural reform. Hence, it must be caused by other reasons. These can be for instance – as public choice scholars argue – interventions by veto players, wars of attrition by powerful interest groups, or reform logjams initiated. However, another point of view could be that modern democracies are doing better than many believe. During times of populist campaigns, the election process can put forth candidates with very high risk appetites, but the constitutions of democracies turn out to be rather smart if hazardous actions and measures by political rookies and gamblers are inhibited by checks and balances.

Keywords: political reforms, political decision-making, principal agent-theory, risk aversion, German, SOEP

JEL Classification: D71, D78, H11, H70, P16, Z13

Suggested Citation

Thomas, Tobias and Hess, Moritz and Wagner, Gert G., Reluctant to Reform? A Note on Risk-Loving Politicians and Bureaucrats (September 2017). SOEPpaper No. 933. Available at SSRN: https://ssrn.com/abstract=3100869 or http://dx.doi.org/10.2139/ssrn.3100869

Tobias Thomas (Contact Author)

Heinrich Heine University Dusseldorf ( email )

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Moritz Hess

Technical University of Dortmund

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Dortmund, 44227
Germany

Gert G. Wagner

German Institute for Economic Research (DIW Berlin) ( email )

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Berlin, 10117
Germany
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+49 30 8 978 9200 (Fax)

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?language=en&uid=gwagner

Berlin University of Technology ( email )

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Berlin, 10623
Germany
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German Socio-Economic Panel Study (SOEP) ( email )

DIW Berlin
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Germany
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+49 30 8978 9109 (Fax)

HOME PAGE: http://www.diw/en/soep

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