Novel externalities are social activities for which the emerging cost (or benefit) of the spillover is unknown and must be discovered. Negative novel externalities have regained international salience following the COVID-19 pandemic. Such cases frequently are invoked as evidence of the limits of liberal political economy for dealing with public emergencies. Through a re-reading of classical political economy with the modern state's confrontation with infectious disease in mind, we defend the comparative efficacy of liberal democracy against authoritarian alternatives for coping with these social problems. Effective responses to novel externalities require producing and updating trustworthy public information and an independent scientific community to validate and interpret it. Those epistemic capacities are prevalent in liberal democratic regimes with multiple sources of political power, an independent civil society, and practices of academic freedom. Our analysis highlights the theoretical value of polycentrism and self-governance beyond their more familiar role, of increasing accountability and competition in the provision of local public goods, towards facilitating effective national policy.

Contemporary political and policy debate rhetoric increasingly employs the language of 'rights': how they are assigned and what entitlements individuals in a society are due. While the obvious constitution design issues surround how rights enumeration affects the relationship between a government and its citizens, we instead analyze how rights framing impacts how citizens interact with each other. We design and implement a novel experiment to test whether social cooperation depends on the enumeration and positive or negative framing of the right of subjects to take a particular action. We find that when rights are framed positively, there exists an 'entitlement effect' that reduces social cooperation levels and crowds-out the tendency of individuals to act pro-socially.

Dozens of municipalities in the United States pledged to defund the police after Minneapolis police officers murdered George Floyd, an unarmed Black man, while he was in their custody. We first consider whether the municipalities that promised to defund the police actually did so. We find that they did not: municipalities that promised to defund the police temporarily reduced police budgets, only to later increase them beyond what they were previously. We then argue that two mechanisms-the electoral incentives of city politicians to provide jobs and services (what we call allocational politics) and the strength of police unions-explain why the predominant political equilibrium is one with protected police officers as a barrier to reform. We discuss several additional reforms suggested by public choice scholars interested in the problem of predatory policing.

The extent of voluntary cooperation in the presence of externalities is shown as an equilibrium outcome in the supply and demand framework. The analysis uses familiar ingredients to provide a new way of understanding the results of the extensive literature beginning with Buchanan, Coase, Ostrom, Shapley, Telser, Tullock, and Williamson showing that a Pigouvian tax is not the only alternative to independently acting individuals who are coordinated merely through distorted market prices. Voluntary cooperation transforms the character of the costs resulting from externalities and may have a far different incidence than Pigouvian taxes and subsidies do. The paper discusses applications including forest management, volume discounts, residential associations, energy policy, the scope of planning of household activities, and the role of workplaces in preventing infectious disease.

Despite long-standing criticisms, restrictions on price increases during emergencies remain widespread in the US. Criticisms most often cite the social costs of the shortages, but, we have found another, as yet unknown, cost: price-gouging regulations increased social contact during the onset of the COVID-19 pandemic. During the pandemic, thirty-four US states declared emergencies, which activated their preexisting price-gouging regulations, and eight others introduced new regulation along with their emergency declarations. Because these states border eight others that also declared emergencies, but had no price-gouging regulations, this created a unique natural experiment. Exploiting the pandemic-induced variation in regulation, and cellphone mobility data, we find that price controls increased visits to, and social contact in, commercial spaces, presumably because the regulation-induced shortages forced consumers to visit more stores and come in contact with more people as they struggled to find what they needed. This, of course, undermines social distancing efforts.

Throughout the nineteenth century, federal Indian policy oscillated between two extreme positions: assimilation versus isolation. While scholars have often been interested in the impact of past federal policy on current levels of economic development among American Indian tribes, none have explicitly examined the influence of federal assimilation policy on long-run economic development. In this paper, I take advantage of tribal-level variation in the application of federal policies to estimate the effect of assimilation on long-run economic performance. To quantify the impact of such policies, I introduce a novel measure of cultural assimilation: the prevalence of traditional indigenous names relative to common American first names. To calculate the distribution of name types, I have gathered the names and locations for all American Indians enumerated in the 1900 United States census. After classifying each name, I calculated the reservation-specific share of non-indigenous names. I estimate the relationship between cultural assimilation in 1900 and per capita income from 1970 through 2020. I find that historical levels of assimilation are consistently associated with higher levels of per capita income in all census years. The results are robust to the inclusion of a variety of cultural and institutional controls and regional fixed effects.

Some governments distribute profits from state-owned enterprises to citizens on a per capita basis while others do not. Does the use of per capita payments affect how governments trade off pro-economy policies with other constituent interests such as environmental quality and public health? We study that question in the context of tribal government decisions to close or keep open casinos on American Indian reservations during the COVID-19 pandemic. Relying on per capita payment data and administrative information on the operational status of over 200 tribal casinos, we investigate how the distribution of per capita payments relates to the number of days casinos were closed from February 2020 through February 2022. After controlling for casino size at the onset of COVID-19, as well as demographic, economic, and geographic characteristics of the reservations on which the casinos operate, we find that casinos governed by per capita payments remained open about 17-29% longer than other reservation-based casinos. That finding suggests that per capita payments create a pro-economy constituency and implies that the decision to pay dividends directly to citizens affects the sizes of revenues from state-owned enterprises, such as tribal-government-owned casinos, rather than merely determining how they are distributed.

We argue that criminal justice institutions must be accessible to citizens, legitimate and have capacity to enforce law. Such was the case with the military societies of the Plains Indians: a system of criminal justice that predated the time of European contact and which remained a significant source of law and order in Indian country until the Indian Wars concluded at the end of the nineteenth century. Nonetheless, the federal government attempted to replace military societies with federal police starting circa 1850. Despite such attempts, we show that military societies remain an important institution for criminal justice on the contemporary Northern Cheyenne Reservation. When the federal government shirked on policing during the coronavirus pandemic, military societies took over important policing functions. This does not mean that traditional military societies should replace federal enforcement; rather, it shows that until the quality of federal policing improves, traditional institutions of criminal justice remain an important source of public safety in Indian country.

Economic interests are assumed to be the leading driver of political preferences, and various empirical studies have examined how economic conditions affect political views and voting behavior. Meanwhile, populism is on the rise in European Union (EU) member countries. Against that backdrop, this paper aims to examine the effect of economic uncertainty on populist voting behavior based on a panel dataset of 24 EU countries from 1980 to 2020. We focus on whether total populist, right-wing populist, and left-wing populist votes are affected by a new indicator of economic uncertainty, namely, the World Uncertainty Index (WUI). Relying on a fixed-effects, bias-corrected least squares dummy variable estimator and instrumental variable estimations, we show that a higher WUI increases total populism and right-wing populist voting behavior. The baseline results remain consistent when dealing with potential issues of endogeneity and reverse causality, addressing omitted variable bias, and excluding outliers.

This paper examines the political economy of epidemic disease. First, it outlines the incentive and information problems facing policymakers in responding to a new epidemic. Second, it considers the existence of a tradeoff between public health and freedom. Informed by a survey of the history of public health and an analysis of the response to Covid-19, it presents evidence that such a tradeoff can obtain in the short run but that, in the long run, the negative relationship is reversed and the trade-off disappears.

I propose two alternative versions of a "Tullock Index" for assessing the effectiveness of income or wealth redistribution. In the spirit of Atkinson's (J Econ Theory 2:244-263, 1970) inequality index, the Tullock Index is constructed with reference to either (A) the maximum inequality reduction attainable with current transfer spending or (B) the minimum transfer spending necessary to achieve current post-transfer inequality. Using Current Population Survey (CPS) microdata from 1988 to 2014, I construct annual estimates of the Tullock Index at the national level for the United States. The Tullock Index is increasing over that period, suggesting that redistribution has become less effective in reducing inequality. State-level panel fixed-effects estimates show that ineffective redistribution is related to higher state-level poverty rates, lower employment-to-population ratios, and lower levels of overall employment.

Despite the unprecedented levels of liquidity provided by the Federal Reserve to banks during the 2007-2008 financial crisis, lending by banks slowed dramatically during and after that global episode. In this study, we propose that, given capital constraints, the lobbying expenditures by banks to combat Dodd-Frank might have crowded out lending activity. A variety of univariate and multivariate tests show that while lending by banks fell significantly around the financial crisis, lobbying rose dramatically. Our results also show that bank lobbying and lending are imperfect substitutes during non-crisis periods. Such substitutability likely is explained by the value perceived in the political connections gained through lobbying, such as the ability to influence regulation, preferential treatment on supervisory or enforcement decisions, and protection against adverse shocks in the form of government bailouts.

This paper provides a framework for understanding optimal lockdowns and makes three contributions. First, it theoretically analyzes lockdown policies and argues that policy makers systematically enact too strict lockdowns because their incentives are misaligned with achieving desired ends and they cannot adapt to changing circumstances. Second, it provides a benchmark to determine how strongly policy makers in different locations should respond to COVID-19. Finally, it provides a framework for understanding how, when, and why lockdown policy is expected to change.

In this article, we study the local political mobilization effects of political protests in the context of the Black Lives Matter (BLM) movement. We analyze monthly voter registration data from 2136 US counties across 32 states, leveraging variation in the exposure to BLM protests across counties in a two-way fixed-effects framework with a matched control group. In contrast to previous studies, which reported substantial mobilization effects of local protests in other contexts, we show that voter registrations in the aggregate were insensitive to the presence of local BLM protests. We further disentangle the effects along party lines and the degree to which protests were associated with violent behaviors and find similarly insignificant effects. We present some preliminary evidence that the large scale of the protests and their extensive news coverage might have reduced the importance of experiencing a protest firsthand.

In the midst of a health crisis, a drug in development and candidate for COVID-19 contagious disease was granted orphan-drug designation (ODD). This decision by the US Food and Drug Administration was immediately denounced as an abuse of the Orphan Drug Act (ODA). This paper outlines how this decision may be considered as the result of a complex case of capture along the regulatory process. Therefore, a case study of the remdesivir episode is conducted, combining the definition of a framework for the analysis of capture and the identification of stylized facts marking the trajectory of a repositioned drug and candidate for COVID-19. In doing so, arguments are put forward to show to what extent this granting of ODD can be described as the result of a series of captures, a case of weak capture however that calls for an amendment of the ODA to preclude drugs for contagious and communicable epidemic diseases from obtaining orphan status in the first place.

COVID-19 vaccine mandates are in place or being debated across the world. Standard neoclassical economics argues that the marginal social benefit from vaccination exceeds the marginal private benefit; everyone vaccinated against a given infectious disease protects others by not transmitting the disease. Consequently, private levels of vaccination will be lower than the socially optimal levels due to free-riding, which requires mandates to overcome the problem. We argue that universal mandates based on free-riding are less compelling for COVID-19. We argue that because the virus can be transmitted even after receiving the vaccine, most of the benefits of the COVID-19 vaccine are internalized: vaccinated individuals are protected from the worst effects of the disease. Therefore, any positive externality may be inframarginal or policy irrelevant. Even when all the benefits are not internalized by the individual, the externalities mainly are local, mostly affecting family and closely associated individuals, requiring local institutional (private and civil society) arrangements to boost vaccine rates, even in a global pandemic. Economists and politicians must justify such universal vaccine mandates on some basis other than free-riding.

In , Werner Troesken details the tradeoff between liberal institutions and communicable disease. According to Troesken, individual freedom presents a danger to the public health in the face of infectious disease, while constitutional constraints restrict the government's ability to implement effective policy. Contra Troesken, I argue that decision-makers, amidst a crisis of contagion, neglect intertemporal tradeoffs, thereby discounting long run costs while favoring short run policies. These policies, once implemented, are difficult to reverse due to the path dependent nature of political institutions. Irreversible and self-reinforcing growth in political institutions established to enhance health can have an unintended negative impact on health during future crises, where political agents must operate in a more cumbersome and error-prone institutional environment. Using events from the history of public health in the U.S. as support for my theory, I conclude that Troesken's alleged tradeoff ought to be met with greater skepticism.

On September 4, 2022, Chilean voters massively turned down a constitutional proposal that responded to widely shared criticisms of the 1980 constitution and emerged from a consensual and participatory process. This result is paradoxical because ex ante, the odds seemed largely in favor of changing the status quo. We argue that three factors, which derived from the interaction between rules and political contingency, explain the outcome: a Convention under the control of party-less independents, the exceptional underrepresentation of the political right, and a highly decentralized and public writing process. We extract some lessons from the failed experience that can be useful for countries seeking to deepen democratization through constitutional change and for a future constitution-making process in Chile.

Monetary policy and institutions are far from exempt from political influences. In this paper, we analyze monetary institutions not as being run by either benevolent technocrats or a wealth-maximizing Leviathan, but as the outcome of competition between interest groups trying to capture wealth transfers. We argue that while interest groups gaining from specific monetary policies and institutions can easily identify themselves, losers often cannot. As a result, losers have a more difficult time fighting back, and both the organization of money production and monetary policy are shaped by political competition between rent-seekers. We use our framework to analyze modern developments in monetary policies and institutions, namely (1) the Fed's reaction to the 2007 financial crisis, (2) the Fed's reaction to the COVID crisis, and (3) the establishment and development of the euro.

We theoretically and experimentally investigate the effect of self-serving information avoidance on moral bias in democratic and individual decisions in the context of climate change mitigation. Subjects choose between two allocations that differ in payoffs and contributions to climate change mitigation. We vary the observability of the environmental contribution, as well as the decision context associated with different levels of pivotality. If the contribution is directly observable, we find evidence for lower pivotality leading to higher levels of "green" decisions, as predicted by the low-cost theory of voting. This effect disappears if subjects can avoid information on the contribution. Instead, we find evidence for the exploitation of moral wiggle room via information avoidance in larger democracies as well as in the consumption context. Our results indicate that information avoidance substitutes expressive voting as an instrument to manage cognitive dissonance on the part of the voter. Hence, moral biases in elections might be less likely than previously thought.