Revealed Political Favoritism: Evidence from the Allocation of State Lottery Grants in Israel

34 Pages Posted: 23 Oct 2019

See all articles by Momi Dahan

Momi Dahan

Hebrew University of Jerusalem - School of Public Policy; CESifo (Center for Economic Studies and Ifo Institute)

Itamar Yakir

Hebrew University of Jerusalem - School of Public Policy

Date Written: 2019

Abstract

This paper offers a complementary empirical approach that might be better suited to identify the extent of political favoritism in a multi-decision-maker institution than the standard identification strategy. The typical diff-in-diff identification strategy to estimate political favoritism, which rests on a comparison of two decision makers that allocate public funds to two groups, seems inadequate in a multi-player setting due to the multiple and conflicting political interests and social affiliations. To illustrate how our approach uncovers the degree of political favoritism, we use a policy change in allocating state lottery revenues to Israeli municipalities from discretion-based allocation to rules-based allocation. We find significant political favoritism under the old regime relative to the new one toward Jewish (versus Arab) and affluent (versus less affluent) municipalities. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism.

Keywords: political favoritism, grant allocation, local government, rules vs. discretion

Suggested Citation

Dahan, Momi and Yakir, Itamar, Revealed Political Favoritism: Evidence from the Allocation of State Lottery Grants in Israel (2019). Available at SSRN: https://ssrn.com/abstract=3473598 or http://dx.doi.org/10.2139/ssrn.3473598

Momi Dahan (Contact Author)

Hebrew University of Jerusalem - School of Public Policy ( email )

Mount Scopus
Jerusalem 91905
Israel
972-2-5883709 (Phone)
972-2-5880047 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Itamar Yakir

Hebrew University of Jerusalem - School of Public Policy ( email )

Israel

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
22
Abstract Views
206
PlumX Metrics