Media economics

Topics: Economics, Newspaper, Government Pages: 7 (2464 words) Published: June 16, 2015
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The Political Economy of Government Responsiveness: Theory and Evidence from India Self-Study Assignment – Media Economics


1. Introduction2
2. Theory, Propositions and Empirical Strategy2
3. Results3
4. Evaluation of Empirical Strategy4
5. Conclusion5
6. References6

1. Introduction
Extensive research has been conducted on the topic of how media circulation affects political accountability and government policy. Theory predicts that for a higher share of media receivers, political accountability and hence government expenditures increase. Besley & Burgess (2002) give additional insight into this topic by analyzing the impact of media circulation on government responsiveness to falls in food production and crop flood damage in Indian states. The authors use the extent of public food distribution and calamity relief as proxies for government responsiveness. In addition to media factors, political and economic factors are introduced as potential determinants of policies. The predictions of the theory are underlined by the results of the paper: Government responsiveness increases with a higher amount of media users within a state. Further, political factors are also relevant determinants, whereas, economic factors are of low importance. In the following, the paper will be critically assessed within these sections. First, the theory, the propositions as well as the empirical strategy are introduced and compared to discussions in class. Second, the results of the paper are outlined. Third, the empirical strategy as well as the results will be analyzed and compared to prior research and theory. Finally, a short conclusion and outlook will be given. 2. Theory, Propositions and Empirical Strategy

The theoretical two-period model of Besley & Burgess (2002) is based on several assumptions. There are vulnerable and non-vulnerable citizens. Part of the vulnerable citizens are needy, meaning that they suffer after a shock in a certain period and that public action would improve their situation. Moreover, there are altruistic, selfish, and opportunistic incumbents. For the purpose of the study, opportunistic incumbents are most interesting because they put in effort if reelection chances increase thereby, whereas altruistic incumbents always put in the maximal effort level and selfish incumbents always put in zero effort. Finally, citizens base their voting decisions on different criteria. Only vulnerable citizens are influenced in their decision by the effort put in by incumbents. Vulnerable citizens who are not needy receive information about an incumbents’ effort from the media, needy citizens do in addition directly experience the effort level. It is assumed that uninformed vulnerable citizens do not vote. Non-vulnerable citizens decide who to vote for solely by means of ideological reasons. The model assumes that an opportunistic incumbent elected in the first period chooses the effort level in order to maximize reelection chances for the subsequent period. In the second period however, only altruistic incumbents will put in effort to help the needy because there is no incentive anymore for opportunistic incumbents to put in effort since a third period and therefore also reelection chances are nonexistent. As vulnerable citizens do not vote for selfish incumbents, they only vote for an incumbent in case they learned about effort put in by this incumbent in the prior period. The above outlined model gives the following predictions: An opportunistic incumbent increases his effort level if voters have better access to media because in this case the population learns about the effort. Moreover incumbents show more effort if turnout is higher in elections, if a larger fraction of the population is vulnerable, and if the incumbent’s advantage over the challenger is low. The third section below will show to what extent these propositions are supported by the results...

References: Besley, T., & Burgess, R.S.L. (2002), The Political Economy of Government Responsiveness: Theory and Evidence from India. Quarterly Journal of Economics, 117 (4), 1415-51.
Prat, A., & Strömberg, D. (2013). The Political Economy of Mass Media. Advances in Economics and Econometrics. Tenth World Congress, vol. 2. Applied Economics. Cambridge, UK. 135-187.
Radhakrishna, R., & Subbarao, K. (1997), India 's Public Food Distribution System. World Bank Discussion Paper No. 380, World Bank, Washington, DC.
Reinikka, R., & Svensson, J. (2005), Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda. Journal of the European Economic Association, 3, 259-67.
Snyder, J. M., & Strömberg, D. (2010), Press Coverage and Political Accountability. Journal of Political Economy, 118 (2), 355-408
Strömberg, D. (2004), Radio 's Impact on Public Spending. Quarterly Journal of Economics, 119(1), 189-221.
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