Markets In Everything: What Determines The Supply Of Politicians?

And now for something completely different…fresh from the NBER is this seriously scholarly paper, but which I had to read with my tongue firmly in my cheek (abstract):

Labor Supply of Politicians
Raymond Fisman, Nikolaj A. Harmon, Emir Kamenica, Inger Munk

We examine the labor supply of politicians using data on Members of the European Parliament (MEPs). We exploit the introduction of a law that equalized MEPs' salaries, which had previously differed by as much as a factor of ten. Doubling an MEP's salary increases the probability of running for reelection by 23 percentage points and increases the logarithm of the number of parties that field a candidate by 29 percent of a standard deviation. A salary increase has no discernible impact on absenteeism or shirking from legislative sessions; in contrast, non-pecuniary motives, proxied by home-country corruption, substantially impact the intensive margin of labor supply. Finally, an increase in salary lowers the quality of elected MEPs, measured by the selectivity of their undergraduate institutions.

Oh my, what fun…most of it conforms to intuition (raising salaries increases supply; politicians from more corrupt countries tend to put in less effort), but that last bit is priceless. Raising salaries, all things equal, reduces the quality of electoral candidates.

Singapore must be on the right track then, as they’ve just proposed cutting ministerial salaries by more than a third. Malaysia’s Budget 2012 on the other hand has offered to raise parliamentarians’ pay (*cough*).

Does this mean politicians are a type of inferior good?

Remember, I didn’t say anything.

Technical Notes

Fisman, Raymond and Nikolaj A. Harmon, Emir Kamenica & Inger Munk, "Labor Supply of Politicians", NBER Working Paper No. 17726, January 2012

Corruption: Real or Perceived?

Corruption remains a sore point among Malaysians, to the point where it was actually included as a national KRA under the Government’s GTP program. PEMANDU is claiming that progress on this issue is on track:

Corruption NKRA on track

TRANSPARENCY International's corruption perception index on Malay­sia may have shown a slight reduction from 4.5 in 2009 to 4.4 this year but some of the component surveys of the CPI have been indicating improvements in 2010…

…While Pemandu acknowledges that if one were to look only at Transparency International's Corruption Perception Index, there is a slight reduction, it means that "a lot more work has to be done".

An Absence Of Markets: IKEA Edition

It sometimes fun to apply economic principles to everyday matters, and the way people interact with each other. And sometimes, it’s a little depressing. This post outlines a case of the latter.

I was at the IKEA store at IKANO Power Centre in Kota Damansara last Saturday, having dinner with my family and my sister. It being the start of the IKEA sale, the place was of course packed to the gills. The in-store restaurant was no exception, with fairly long queues into the cafeteria area.