tag:blogger.com,1999:blog-2830084253401570472.post212177423967645858..comments2024-03-18T15:42:43.140+13:00Comments on Offsetting Behaviour: Tierney on conflictsEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2830084253401570472.post-55500123624630278642010-05-31T21:59:07.993+12:002010-05-31T21:59:07.993+12:00The postcard version of Niskanen:
It's a mist...The postcard version of Niskanen:<br /><br />It's a mistake to view government bureaus as all facing the same constraints. They all want to maximize discretionary budget, but some agencies are demand constrained - the public values negatively the marginal unit even if free - and some are budget constrained - total surplus from early parts of production are exceeded by excess costs from later parts of production before marginal gross value of the last unit turns negative.<br /><br />If budget constrained, a bureau will produce efficiently but will produce too much output (twice as much under linear systems); if demand constrained, a bureau will produce the right amount of output but at too high a cost. In both cases, the bureaus are optimally choosing their preferred budget/output combination; constraints vary.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-17246750007090774552010-05-28T18:31:40.948+12:002010-05-28T18:31:40.948+12:00Thanks Eric. As the most dabbling of dabblers in ...Thanks Eric. As the most dabbling of dabblers in economics, we are now officially over my head :) Someday I should read up on Niskanen, as this topic ("Industry has incentives to be naughty, while government doesn't") is something that seems to come up frequently and I'd like to be better informed.<br /><br />Thanks!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-78983372662994951412010-05-26T13:39:11.633+12:002010-05-26T13:39:11.633+12:00@Tim: In a Niskanen model, a budget-constrained bu...@Tim: In a Niskanen model, a budget-constrained bureau has every incentive to keep costs down while a demand constrained one will inflate costs. Health is more budget constrained than demand constrained. I had Niskanen in the back of my head when writing.<br /><br />Seamus's response reminds me then of Niskanen's response about legislative controls: the high demanders get onto the committees....Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-73832058379414513902010-05-25T18:07:51.221+12:002010-05-25T18:07:51.221+12:00Thanks Eric and Seamus. Eric, you're certainl...Thanks Eric and Seamus. Eric, you're certainly right to point out that government consists of different parts with (often) different agendas. But is there really pressure on a *public* health department to reduce expenditure? There's no possibility of competition. I'd even go so far as to suggest that a government that promotes itself as left-leaning might have a perverse incentive to spend more on health, to bolster its image as "the provider". (I know, more single-actor-think...) So I'm not (yet) convinced that parts of a government meet the requirements of being rational actors.<br /><br />Seamus, that sounds totally plausible to me. But I hope there's more to it than that, because that explanation invites the retort that self-selection surely operates in the private sector also, where it could be said to skew company directors toward the criminally greedy, ultimately resulting in inefficient allocation of resources. It's hard (I think) to believe that one of these self-selection effects could be pervasive, and the other negligible.<br /><br />Very interested to hear your thoughts!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-72172090212622098302010-05-16T16:44:45.235+12:002010-05-16T16:44:45.235+12:00No reason both can't be going on at the same t...No reason both can't be going on at the same time...Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-29076702986415184502010-05-16T13:25:04.526+12:002010-05-16T13:25:04.526+12:00Tim and Eric,
I have a different model (based on ...Tim and Eric,<br /><br />I have a different model (based on bitter experience working at Health Canada). There is a lot of self selection amongst public servants in terms of which Department they are working at. Public servants at, say, a government health department very likley put more weight on good health compared to other pleasures of life compared to the general population, and would like to see policies that refelct that view. Knowing that the general population don't share the same mindset, they have an incentive to commission studies that can justify the policies they want.Seamus Hoganhttps://www.blogger.com/profile/06752338906486087395noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-50229549432537075172010-05-16T06:25:58.788+12:002010-05-16T06:25:58.788+12:00Pretty simple model on this one, really. Stop thi...Pretty simple model on this one, really. Stop thinking of government as a unitary actor. Health departments bear fiscal costs of alcohol use but gain few of the benefits, so they'd like to have tougher regulations on alcohol use because those regs are an off-budget expenditure that don't cost them much other than lobbying costs. So they commission studies that inflate the perceived costs of alcohol to push policy in their preferred direction via voter pressure.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-37891555825550304722010-05-14T18:32:16.527+12:002010-05-14T18:32:16.527+12:00Thank you, it's refreshing to hear someone voi...Thank you, it's refreshing to hear someone voice this.<br /><br />One thing has always bothered me however: while the incentive for industry to distort scientific results is well-understood, it's harder to pin down incentives for governments or other elected bodies -- after all, what do they stand to gain? I suppose it's conceivable that they might push for results to be in alignment with public sentiment in order to increase their popularity and thus chances of reelection, but I find that answer a bit unsatisfying. If you have a better answer, or could point me to a good discussion it would be great!<br /><br />Thanks,<br />TimAnonymousnoreply@blogger.com