Professor Arye L. Hillman, Bar-Ilan University CV

 

Publications by topic

Recent link

Books  link

1. Political economy and international economics link

2. Political economy and public policy

3. Socialism and transition  link

4. Short papers, comments, policy papers link

 

 

PUBLICATIONS (2)

POLITICAL ECONOMY AND PUBLIC POLICY

 

BOOKS

Public Finance and Public Policy: Responsibilities and Limitations of Government

Cambridge University Press, New York and Cambridge UK 1st edition, 2003, 2nd edition, 2009

Translations:

Chinese, Chinese Academy of Social Sciences, Beijing, 2006

Japanese, Keiso Shobo, Tokyo, 2006

Russian, Publishing House, State University, Higher School of Education, Moscow, 2007

Hebrew 2011

 

 

40 Years of Research on Rent Seeking

Roger D. Congleton, Arye L, Hillman, and Kai Konrad (Eds.)

Springer, Heidelberg, 2008

Volume 1: Theory of Rent Seeking

Volume 2: Applications: Rent Seeking in Practice

Introduction and contents

 

Markets and Politicians: Politicized Economic Choice

Arye L. Hillman (Ed.), Kluwer Academic Publishers, Boston and Dordrecht, 1991

 

 

PAPERS ON POLITICAL ECONOMY AND PUBLIC POLICY

TOPICS

2.1  Behavioral political economy

2.2  Rent creation and rent seeking

2.2.1     The social costs of rent seeking

2.2.2     Institutions and the creation of rents

2.2.3     Survey of the rent seeking literature

2.3  Economic development and development failure

2.4  Paternalist policies

2.5  Public policy and public safety

2.6  Clubs, privilege, and exclusion

 

2.1 BEHAVIORAL POLITICAL ECONOMY

In [1] I asked whether the study of rent seeking was subject to restraints of political correctness. The study of rent seeking presupposes that political decision makers can be influence to provide privileged personal benefit of rent seekers. Students are thereby exposed to the possibility that government is a source of privileged benefit rather than necessarily pursuing socially beneficial policy objectives. I proposed that presenting privileged gains from rent seeking as deserved rewards is contrary to imparting to students the necessities of voter vigilance regarding political behavior.

In [2] I describe the scope of expressive behavior in economics and politics. Expressive behavior is linked to utility from confirming identity. Expressive voting is a case of expressive behavior. I introduce expressive behavior in the forms of expressive rhetoric and expressive generosity. The questions for public policy are whether expressive behavior affects others, and if so whether beneficially or disadvantageously. In experiments, expressive behavior that is self-pleasing and pleasing to others benefits others. There are adverse social consequences when, in real-life decisions, the same pleasing expressive behavior results in unwanted public policies of expressive-policy traps. I consider the prospects for avoiding or exiting expressive-policy traps. [3] is an extended book review that describes a case of expressive voting in the U.S.

 

[1] “Political economy and political correctness”, Presidential Address, European Public Choice Society, Prague, April 1997. Public Choice, 1998, 96, 219-239. 

Reprinted in:

·        Forty Years of Research on Rent Seeking 2 – Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer, Berlin, 2008, pp. 791 – 811.

[2] “Expressive behavior in economics and politics”. European Journal of Political Economy, 2010, 26, 404-419.

[3] “Expressive voting and identity: Evidence from a case study of a group of US voters”, Public Choice, 2011, 148, 249-257 (review article).

 

 

2.2 RENT SEEKING AND RENT CREATION

Rent seeking is part of the study of political economy and public policy because of the social loss when political discretion creates contestable rents.

 

2.2.1 The social costs of rent seeking

The social costs of rent seeking occur through the diversion of resources from productive activity before a rent is assigned. Rent-seeking activity is by its nature in general unobserved; however, models of rent-seeking contests allow values of social loss to be inferred from the observed values of rent-seeking prizes. Complete rent dissipation in contests permits the social loss from rent seeking to be directly associated with the value of a contested rent.

In [4], complete dissipation is demonstrated for risk-neutral competitive rent seeking and computations are provided for risk-averse behavior by rent seekers.

In [5], complete dissipation is shown to result for any number of risk-neutral rent seekers when a rent-seeking contest takes the form of an all-pay auction (the highest rent-seeking outlay wins the rent). [5a] is a reply to Gordon Tullock.

In [6] the all-pay auction is extended to asymmetric valuations. The all-pay auction is compared with the Tullock rent-seeking contest.

In [7] rent dissipation occurs in hierarchies, with parts of bribes are transferred from lower to higher-level officials.

In [8] rent dissipation takes place in dual or nested contests in which insiders are placed to compete directly for rents assigned through political decisions, while outsiders compete to become insiders.

In [9] rents are recognized to endure over time. Future rights to rents are uncertain. Rents may need to be re-contested in the future or may altogether disappear.

 

[4] “Risk-averse rent seekers and the social cost of monopoly power”, Economic Journal, March 1984, 94, 104-110. Eliakim Katz co-author.

Reprinted in:

·        The Political Economy of Rent Seeking, edited by Charles Rowley, Robert Tollison and Gordon Tullock, Kluwer Academic Publishers, Boston, 1988, pp. 81-90.

·        The Economic Analysis of Rent Seeking, edited by Roger Congleton and Robert Tollison, Edward Elgar, Oxford, 1995, pp. 243 – 249.

·        Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 97 – 103.

 

[5] “Dissipation of contestable rents by small numbers of contenders”, Public Choice, January 1987, 54, 63-82.  Dov Samet co-author.

Reprinted in:

·        Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 165 – 184.

[5a] “Characterizing equilibrium rent-seeking behavior: A reply to Tullock”, Public Choice, 1987, 54, 85-87.

 

[6] “Politically contestable rents and transfers, Economics and Politics, April 1989, 1, 17-39. John Riley co-author.  Also UCLA working paper #452, September 1987 (revised March 1988).

Reprinted in:

·        Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 185 – 207.

 

[7] “Hierarchical structure and the social costs of bribes and transfers, Journal of Public Economics, November 1987, 34, 129-142. Eliakim Katz co-author.

Reprinted in:

·        The Economics of Corruption and Illegal Markets, Gianluca Fiorentini and Stephano Zamagni (Eds.), Edward Elgar, Cheltenham UK 1999.  In the series The International Library of Critical Writings in Economics.

·        Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 523 – 536.

 

[8] “Political culture and economic decline, European Journal of Political Economy, June 2000, 16, 189-213. Heinrich W. Ursprung co-author.

Reprinted in:

·        Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 219 – 243.

 

[9] Enduring rents. European Journal of Political Economy, 2008, 24, 454 – 53. Toke Aidt co-author.

 

 

2.2.2 Institutions and the creation of rents

Rent creation and rent seeking require facilitating institutions. Rent creation under communism is described in [10]. The rents created when Israel still had a “market socialism” economic system (where there are markets but limited private ownership) are described in [11]. In [12] rents are described that arise in the context of fiscal federalism in China.

The political incentives to create new political jurisdictions for the purpose of rent creation are described in [13].

[14] is a comment on Hobbes. [14a] is a reply to Geoffrey Brennan. Hobbes used a quote from the prophet Samuel to justify leviathan government but in fact Samuel warned against the centralized power of a king.

 

[10] “Illegal activities and purges in a Soviet-type economy: A rent-seeking perspective, International Review of Law and Economics, June 1986, 6, 87-99.  Adi Schnytzer co-author.

Reprinted in:

·        Forty Years of Research on Rent Seeking 2 – Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 545 – 557.

 

[11] “Impediments to a competitive environment in Israel”. Presented at Symposium on American-Israel Economic Relations in Honor of the 40th Anniversary of the State of Israel, New York, June 1988. Published in conference proceedings, edited by Mordechai Hacohen, American-Israel Economic Corporation, New York 1989.

 

[12] “From the helping hand to the grabbing hand: Fiscal federalism in China”. China's Economy into the New Century: Structural Issues and Problems, John Wong and Lu Ding (Eds.), Singapore University Press, Singapore and World Scientific, New Jersey, 2002, pp. 193 – 215.  Chen Kang and Gu Qingyang, co-authors.

 

[13] “Political institutions, jurisdictional boundaries, and rent creation”.  Keio Economic Studies, nos. 1-2 2005, 42, 25 – 37. Special issue in honor of Professor Michihiro Ohyama, edited by Wilfred J. Ethier and Makoto Yano.

 

[14] “Hobbes and the prophet Samuel on leviathan government”. Public Choice, 2009, 141, 1 – 4.  

[14a] “Hobbes and Samuel: reply”. Public Choice, 2009, 141, 13 – 15.

 

 

2.2.3 Survey of the rent-seeking literature

[15] “Forty Years of Research on Rent Seeking: An overview”. Co-authors Roger D. Congleton and Kai A. Konrad. Springer, Berlin, 2008. In Volume 1: Theory of Rent Seeking and Volume 2: Applications: Rent Seeking in Practice, pp. 1 – 42.

[16] Rent seeking”. In The Elgar Companion to Public Choice, 2nd edition. Edited by Michael Reksulak, Laura Razzolini, and William F. Shughart II. Edward Elgar, forthcoming 2012.

 

 

 

2.3 ECONOMIC DEVELOPMENT AND DEVELOPMENT FAILURE

The below research on development policy and development failure was undertaken in the course of stays in the Fiscal Affairs Department of the International Monetary Fund.

In [17] the framework of strong and weak of Friedrich Nietzsche in a world without ethics and conscience is used to describe institutions of low-income countries. There are adverse productive incentives.

[18] describes self-financing of schooling through voluntary user prices by poor parents in poor countries. Parents resort to user prices in various countries when governments have failed in the basic responsibility of providing adequate schooling for children. Empirical results in [19] reveal that, in low-income countries, growth of per capita increases when public spending (or the government budgetary deficit) decreases. There is therefore negative marginal product of government, ostensibly because of the rent creation and rent seeking avoided when the size of government declines. [20] studies government-directed credits when government officials are corrupt.

[21] and [22] are extended review articles of books substantiating that development failure is the consequence of behavior of political decision makers in poor countries. [23] is an overview of the relation between institutions and economic development.

 

[17]Nietzschean  development failures, Public Choice, June 2004, 119, 263 – 280.

·        Revised version of “Poverty, inequality, and unethical behavior of the strong”. Working Paper no 00/187, November 2000, International Monetary Fund, Washington D.C.

[18] “User payments for basic education in low-income countries”. In: Helping countries Develop: The Role of Fiscal Policy, Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Eds.), International Monetary Fund, Washington DC, 2004, pp. 233 – 264. Eva Jenkner, co-author.

·        Working Paper no 02/182, November 2002, International Monetary Fund, Washington D.C.

·        Non-technical version: How to pay for basic education: Poor children in poor countries, Economic Issues 33, 2004, International Monetary Fund, Washington DC.

[19] “Growth, governance, and fiscal-policy transmission channels in low-income countries”.   European Journal of Political Economy, September 2004, 20, 517 – 549.  Emanuele Baldacci, Naoko Kojo co-authors.

Revised version of Working Paper no 03/237, December 2003, International Monetary Fund, Washington DC).

·        Reprinted in: Helping countries Develop: The Role of Fiscal Policy, Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Eds.), International Monetary Fund, Washington DC, 2004, pp. 67 – 104.

[20] “Directed credits and corruption”. In Rahul Gupta and Santap Sanhari Mishra (Eds.), Corruption: The Causes and Combating Strategies.  The Icfai University Press, Hyderabad, 2007, pp. 73-81. Miriam Krausz, co-author.

 

Review articles and surveys

[21] “Corruption and public finance: an IMF perspective”.  European Journal of Political Economy, December 2004, 20, 1067 – 77.  Review of: Governance, Corruption, and Economic Performance.  George T. Abed and Sanjeev Gupta, (Eds.), International Monetary Fund, Washington, DC, 2002.

[22] “The World Bank and the persistence of poverty in poor countries, European Journal of Political Economy, December 2002, 18, 783 – 95.  Review of: The Elusive Quest for Growth, by William Easterly, MIT Press, 2001.

[23] “Democracy and low-income countries”. In Public Choice and Challenges of Democracy, edited by José Casas Pardo and Pedro Schwartz, Edward Elgar, Cheltenham, U.K., 2007, pp. 277 – 294.

 

 

2.5 PUBLIC POLICY AND PUBLIC SAFETY

There is a moral dilemma when it is impossible to identify who is a terrorist before an act of terror is committed. [24] describes how the moral dilemma affects the public policy response in defense against terror. [25] reviews the literature on economic consequences of Islam. Supreme values are identiifed as a primary reason for lagging economic outcomes under radical Islam.

 

[24] “Public safety and the moral dilemma in the defense against terror”, Defense and Peace Economics, October 2005, 16, 347 – 364.  Raphael Franck, Miriam Krausz co-authors. (CEPR DP 4736, November 2004). 

[25] “Economic and security consequences of supreme values”.  Public Choice, 2007, 30, 259 – 280.

Reprinted as:

·        An economic perspective on radical Islam. In Hillel Frisch and Efraim Inbar (Eds.), Radical Islam and International Security: Challenges and Responses, Routledge, London, 2008, pp. 44 – 69.

 

 

2.6 CLUBS, PRIVILEGE, AND EXCLUSION

In early papers I studied voluntary sharing arrangements, also known as the theory of “clubs”. I was interested in the consequences of privilege and exclusion.

[26] “Two remarks on optimal club size”, Economica, August 1977, 44, 293 – 96. Elhanan Helpman co-author.

[27] “The theory of clubs: A technological formulation”, in Essays in Public Economics, edited by Agnar Sandmo, D.C. Heath and Co., Lexington, Mass., 1978, 29 – 47.

[28] “Club participation under uncertainty”, Economics Letters, 1979, 4, 307 – 12. Peter L. Swan co-author.

[29] “Participation rules for Pareto-optimal clubs”, Journal of Public Economics, February 1983, 20, 55 – 76. Peter L. Swan co-author.

 

 

2.7 OTHER TOPICS IN PUBLIC POLICY

Paternalism

[30] “Notions of merit want”, Public Finance, No. 2, 1980, 35, 213 – 226.

Tax competition

[31] “State-federal resource tax rivalry: The Queensland railway and the federal export tax”. Economic Record, 1982, 58, 235 -241. James Cassing, co-author

Public goods and public inputs

[32] “Symmetries and asymmetries between public input and public good equilibria”, Public Finance, No.3, 1978, 33, 269 – 79.

Political culture

[33] “Why political culture should be in the lexicon of economics”, European Journal of Political Economy, March 2000, 16, 1 – 4. Otto Swank co-author.