Institutions and prosperity

This article reviews ‘Pillars of Prosperity’ by Timothy Besley and Torsten Persson and ‘Why Nations Fail’ by Daron Acemoglu and James Robinson. Both books are focussed on the role of institutions in determining the wealth of nations and the review compares and contrasts the different approaches contained in the two texts. The review also attempts to locate the texts within the broader literature in development and political economics and to link them to other recent work in these areas.

Three Essays on the Formation and Impact of Economic Policy

Introduction In my thesis I argue that economic policy is all about economics and politics. Consequently, analysing and understanding economic policy ideally has at least two parts. The economics part, which is centered around the expected impact of a specific policy on the real economy both in terms of efficiency and equity. The insights of this part point into which direction the fine-tuning of economic policies should go. However, fine-tuning of economic policies will be most likely subject to political constraints. That is why, in the politics part, a much better understanding can be gained by taking into account how the incentives of politicians and special interest groups as well as the role played by different institutional features affect the formation of economic policies. The first part and chapter of my thesis concentrates on the efficiency-related impact of economic policies: how does corporate income taxation in general, and corporate income tax progressivity in specific, affect the creation of new firms? Reduced progressivity and flat-rate taxes are in vogue. By 2009, 22 countries are operating flat-rate income tax systems, as do 7 US states and 14 Swiss cantons (for corporate income only). Tax reform proposals in the spirit of the "flat tax" model typically aim to reduce three parameters: the average tax burden, the progressivity of the tax schedule, and the complexity of the tax code. In joint work, Marius Brülhart and I explore the implications of changes in these three parameters on entrepreneurial activity, measured by counts of firm births in a panel of Swiss municipalities. Our results show that lower average tax rates and reduced complexity of the tax code promote firm births. Controlling for these effects, reduced progressivity inhibits firm births. Our reading of these results is that tax progressivity has an insurance effect that facilitates entrepreneurial risk taking. The positive effects of lower tax levels and reduced complexity are estimated to be significantly stronger than the negative effect of reduced progressivity. To the extent that firm births reflect desirable entrepreneurial dynamism, it is not the flattening of tax schedules that is key to successful tax reforms, but the lowering of average tax burdens and the simplification of tax codes. Flatness per se is of secondary importance and even appears to be detrimental to firm births. The second part of my thesis, which corresponds to the second and third chapter, concentrates on how economic policies are formed. By the nature of the analysis, these two chapters draw on a broader literature than the first chapter. Both economists and political scientists have done extensive research on how economic policies are formed. Thereby, researchers in both disciplines have recognised the importance of special interest groups trying to influence policy-making through various channels. In general, economists base their analysis on a formal and microeconomically founded approach, while abstracting from institutional details. In contrast, political scientists' frameworks are generally richer in terms of institutional features but lack the theoretical rigour of economists' approaches. I start from the economist's point of view. However, I try to borrow as much as possible from the findings of political science to gain a better understanding of how economic policies are formed in reality. In the second chapter, I take a theoretical approach and focus on the institutional policy framework to explore how interactions between different political institutions affect the outcome of trade policy in presence of special interest groups' lobbying. Standard political economy theory treats the government as a single institutional actor which sets tariffs by trading off social welfare against contributions from special interest groups seeking industry-specific protection from imports. However, these models lack important (institutional) features of reality. That is why, in my model, I split up the government into a legislative and executive branch which can both be lobbied by special interest groups. Furthermore, the legislative has the option to delegate its trade policy authority to the executive. I allow the executive to compensate the legislative in exchange for delegation. Despite ample anecdotal evidence, bargaining over delegation of trade policy authority has not yet been formally modelled in the literature. I show that delegation has an impact on policy formation in that it leads to lower equilibrium tariffs compared to a standard model without delegation. I also show that delegation will only take place if the lobby is not strong enough to prevent it. Furthermore, the option to delegate increases the bargaining power of the legislative at the expense of the lobbies. Therefore, the findings of this model can shed a light on why the U.S. Congress often practices delegation to the executive. In the final chapter of my thesis, my coauthor, Antonio Fidalgo, and I take a narrower approach and focus on the individual politician level of policy-making to explore how connections to private firms and networks within parliament affect individual politicians' decision-making. Theories in the spirit of the model of the second chapter show how campaign contributions from lobbies to politicians can influence economic policies. There exists an abundant empirical literature that analyses ties between firms and politicians based on campaign contributions. However, the evidence on the impact of campaign contributions is mixed, at best. In our paper, we analyse an alternative channel of influence in the shape of personal connections between politicians and firms through board membership. We identify a direct effect of board membership on individual politicians' voting behaviour and an indirect leverage effect when politicians with board connections influence non-connected peers. We assess the importance of these two effects using a vote in the Swiss parliament on a government bailout of the national airline, Swissair, in 2001, which serves as a natural experiment. We find that both the direct effect of connections to firms and the indirect leverage effect had a strong and positive impact on the probability that a politician supported the government bailout.

U.S. National Parks and "The Tragedy of the Commons" : A contribution to the characterization of U.S. mountain guides' professional practice

This paper aims at presenting the stakes related to the access to protected land in the United States and to its conservation, through the analysis of the professional practice of U.S. mountain guides. From a methodological standpoint, this research is based both on a theoretical analysis grounded in the field of environmental economics and on an empirical study. The authors' starting point is Garrett Hardin's paper, "The Tragedy of the Commons" (Science, 1968), even if it introduces some confusion on the notion of common goods. So as to avoid this confusion, the authors use two theoretical tools pertaining to a typology of common goods and the different property rights that can be applied in National Parks. Finally, they apply this framework to the observations made on the field in Colorado in July 2009.

A large study of androgen receptor germline variants and their relation to sex hormone levels and prostate cancer risk. Results from the National Cancer Institute Breast and Prostate Cancer Cohort Consortium

Background: Androgens are key regulators of prostate gland maintenance and prostate cancer growth, and androgen deprivation therapy has been the mainstay of treatment for advanced prostate cancer for many years. A long-standing hypothesis has been that inherited variation in the androgen receptor (AR) gene plays a role in prostate cancer initiation. However, studies to date have been inconclusive and often suffered from small sample sizes. Objective and Methods: We investigated the association of AR sequence variants with circulating sex hormone levels and prostate cancer risk in 6058 prostate cancer cases and 6725 controls of Caucasian origin within the Breast and Prostate Cancer Cohort Consortium. We genotyped a highly polymorphic CAG microsatellite in exon 1 and six haplotype tagging single nucleotide polymorphisms and tested each genetic variant for association with prostate cancer risk and with sex steroid levels. Results: We observed no association between AR genetic variants and prostate cancer risk. However, there was a strong association between longer CAG repeats and higher levels of testosterone (P = 4.73 × 10−5) and estradiol (P = 0.0002), although the amount of variance explained was small (0.4 and 0.7%, respectively). Conclusions: This study is the largest to date investigating AR sequence variants, sex steroid levels, and prostate cancer risk. Although we observed no association between AR sequence variants and prostate cancer risk, our results support earlier findings of a relation between the number of CAG repeats and circulating levels of testosterone and estradiol.

Prevention of overweight and obesity: a Spanish approach

Background. Obesity is considered a major public health issue in most developed countries nowadays. This paper provides an overview of current population data available in Spain and the approach to develop preventive strategies in the country. Methods. Review of population data available is based on individually measured weight and height as well as determinants. On this basis, the approach used in the country to develop preventive strategies is discussed. Results. According to the DORICA study, the prevalence of obesity (BMI ≥30 kg m−2) is 15.5% in Spanish adults aged 25–60 years (13.2% in men and 17.5% in women). Obesity rates are higher among women aged 45 years and older, low social class, living in semi-urban places. Population estimates for the prevalence of obesity in Spanish children and young people based on the enKid study are 13.9% for the whole group. In this study, overweight and obesity is related to absence of breastfeeding, low consumption of fruit and vegetables, high consumption of cakes, buns, softdrinks and butchery products, low physical activity levels and a positive association with time spent watching TV. In 2005, the Spanish Ministry of Health jointly with the Spanish Agency for Food Safety and Nutrition launched the multifaceted NAOS strategy for nutrition, physical activity and the prevention of obesity. The important role of the family and the school setting as well as the responsibility of the Health Administration and Pediatric Care in the prevention of obesity is highlighted in the document. The need for environmental actions is recognised. The PERSEO programme, a multicomponent school-based intervention project is part of the strategy currently in place. Conclusion. Obesity is a public health issue in Spain. A national multifaceted strategy was launched to counteract the problem. Environmental and policy actions are a priority. Young children and their families are among the main target groups.

Good clinical and cost outcomes using dexrazoxane to treat accidental epirubicin extravasation

A 75-year-old man diagnosed with lower esophageal adenocarcinoma suffered from epirubicin extravasation during the second cycle of neoadjuvant chemotherapy with epirubicin and oxaliplatin. A full recovery was achieved after treatment with dexrazoxane (Cardioxane® ). This is the first time in our hospital that extravasation of an anthracycline has been treated with dexrazoxane. We used Cardioxane® , approved for the prevention of anthracycline-induced cardiotoxicity, while Savene® is indicated for the treatment of anthracycline extravasation. The treatment was effective, and the selection of Cardioxane® (seven-fold cheaper than Savene® ) yielded a cost saving. Consequently, Cardioxane® has been included in our guidelines for anthracycline extravasation.

Childbirth and labour plan Andalusian public health System

En la cub.: Plan de parto y nacimiento. Publicado en la página web de la Consejería de Salud y Bienestar Social: www.juntadeandalucia.es/salud (Consejería de Salud y Bienestar Social / Ciudadanía / Inicio / Nuestra salud / Vida sana / Embarazo y salud)

Liver safety assessment: required data elements and best practices for data collection and standardization in clinical trials.

A workshop was convened to discuss best practices for the assessment of drug-induced liver injury (DILI) in clinical trials. In a breakout session, workshop attendees discussed necessary data elements and standards for the accurate measurement of DILI risk associated with new therapeutic agents in clinical trials. There was agreement that in order to achieve this goal the systematic acquisition of protocol-specified clinical measures and lab specimens from all study subjects is crucial. In addition, standard DILI terms that address the diverse clinical and pathologic signatures of DILI were considered essential. There was a strong consensus that clinical and lab analyses necessary for the evaluation of cases of acute liver injury should be consistent with the US Food and Drug Administration (FDA) guidance on pre-marketing risk assessment of DILI in clinical trials issued in 2009. A recommendation that liver injury case review and management be guided by clinicians with hepatologic expertise was made. Of note, there was agreement that emerging DILI signals should prompt the systematic collection of candidate pharmacogenomic, proteomic and/or metabonomic biomarkers from all study subjects. The use of emerging standardized clinical terminology, CRFs and graphic tools for data review to enable harmonization across clinical trials was strongly encouraged. Many of the recommendations made in the breakout session are in alignment with those made in the other parallel sessions on methodology to assess clinical liver safety data, causality assessment for suspected DILI, and liver safety assessment in special populations (hepatitis B, C, and oncology trials). Nonetheless, a few outstanding issues remain for future consideration.

Efficacy and safety of acupuncture for the treatment of non-specific acute low back pain: a randomised controlled multicentre trial protocol [ISRCTN65814467]

BACKGROUND Low back pain and its associated incapacitating effects constitute an important healthcare and socioeconomic problem, as well as being one of the main causes of disability among adults of working age. The prevalence of non-specific low back pain is very high among the general population, and 60-70% of adults are believed to have suffered this problem at some time. Nevertheless, few randomised clinical trials have been made of the efficacy and efficiency of acupuncture with respect to acute low back pain. The present study is intended to assess the efficacy of acupuncture for acute low back pain in terms of the improvement reported on the Roland Morris Questionnaire (RMQ) on low back pain incapacity, to estimate the specific and non-specific effects produced by the technique, and to carry out a cost-effectiveness analysis. METHODS/DESIGN Randomised four-branch controlled multicentre prospective study made to compare semi-standardised real acupuncture, sham acupuncture (acupuncture at non-specific points), placebo acupuncture and conventional treatment. The patients are blinded to the real, sham and placebo acupuncture treatments. Patients in the sample present symptoms of non specific acute low back pain, with a case history of 2 weeks or less, and will be selected from working-age patients, whether in paid employment or not, referred by General Practitioners from Primary Healthcare Clinics to the four clinics participating in this study. In order to assess the primary and secondary result measures, the patients will be requested to fill in a questionnaire before the randomisation and again at 3, 12 and 48 weeks after starting the treatment. The primary result measure will be the clinical relevant improvement (CRI) at 3 weeks after randomisation. We define CRI as a reduction of 35% or more in the RMQ results. DISCUSSION This study is intended to obtain further evidence on the effectiveness of acupuncture on acute low back pain and to isolate the specific and non-specific effects of the treatment.

Subjective health assessments and active labor market participation of older men: evidence from a semiparametric binary choice model with nonadditive correlated individual-specific effects

We use panel data from the U. S. Health and Retirement Study, 1992-2002, to estimate the effect of self-assessed health limitations on the active labor market participation of older men. Self-assessments of health are likely to be endogenous to labor supply due to justification bias and individual-specific heterogeneity in subjective evaluations. We address both concerns. We propose a semiparametric binary choice procedure that incorporates nonadditive correlated individual-specific effects. Our estimation strategy identifies and estimates the average partial effects of health and functioning on labor market participation. The results indicate that poor health plays a major role in labor market exit decisions.

Solidarity finance through community development banks as a strategy for reshaping local economies: lessons from Banco Palmas

The purpose of this paper is to reflect on the possibilities and challenges of Community Development Banks (CDBs) as an innovative method of socioeconomic management of microcredit for poor populations. To this end, we will discuss the case of Banco Palmas in Conjunto Palmeiras in the city of Fortaleza, in the northeastern state of Ceará, as an empirical case study. The analyses presented here are based on information obtained from Banco Palmas between late 2011 and early 2012. In addition, previous studies by other researchers on the bank and other studies on CDBs were important. The primary data collected at Banco Palmas came from documents made available by the bank, such as reports and mappings. The analyses describe some of the characteristics of the granting of microcredit and allow one to situate it in the universe of microfinance and solidarity finance. They also show the significant growth of local consumption, mostly through the use of the Palmas social currency. The Banco Palmas experience, aside from influencing national public policies of solidarity finance, initiated a CDBs network that encourages the replication of these experiences throughout the country.

Eager for fairness or revenge: psychological altruism in economics

To understand the human capacity for psychological altruism, one requires a proper understanding of how people actually think and feel. This paper addresses the possible relevance of recent findings in experimental economics and neuroeconomics to the philosophical controversy over altruism and egoism. After briefly sketching and contextualizing the controversy, we survey and discuss the results of various studies on behaviourally altruistic helping and punishing behaviour, which provide stimulating clues for the debate over psychological altruism. On closer analysis, these studies prove less relevant than originally expected because the data obtained admit competing interpretations such as people seeking fairness versus people seeking revenge. However, this mitigated conclusion does not preclude the possibility of more fruitful research in the area in the future. Throughout our analysis, we provide hints for the direction of future research on the question.

Common law and civil law as pro-market adaptations

We argue that in the development of the Western legal system, cognitive departures are themain determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.

Market and institutional determinants in the regulation of conveyancers

Demand for law professionals in the conveyancing of property is decreasing because of market and institutional changes. On the market side, many transactions feature large, well-known parties and standardized transactions, which make professionals less effective or necessary for protecting the parties to private contracts. On the institutional side, public titling makes it possible to dispense with a broadening set of their former functions. Recording of deeds made professionals redundant as depositories of deeds and reduced demand for them to design title guarantees. Effective registration of rights increasingly substitutes professionals for detecting title conflicts with third parties and gathering their consent. Market changes undermine the information asymmetry rationale for regulating conveyancing, while institutional changes facilitate liberalizing not only conduct but also license regulations. These arguments are supported here by disentangling the logic of titling systems and presenting empirical evidence from the European and USA markets.

Additive utility with intransitive indifference and without independence: A homogeneous case

In the homogeneous case of one type of goods or objects, we prove theexistence of an additive utility function without assuming transitivityof indifference and independence. The representation reveals a positivefactor smaller than 1 that infuences rational choice beyond the utilityfunction and explains departures from these standard axioms of utilitytheory (factor equals to 1).