Economics of Politicians

“We’d all like to vote for the best man, but he is never a candidate.”

- F. McKinney Hubbard

~~~

Two very interesting but unorthodox NBER working papers have just been released last month which methodically (translation: using loads and loads of numbers and equations and squiggly Greeks) explain some of the observed characteristics of the phenomenon called Politicians.

The first is aptly titled Mediocracy¹. Here is the abstract:

Mediocracy
by Andrea Mattozzi, Antonio Merlo

In this paper, we study the initial recruitment of individuals in the political sector. We propose an equilibrium model of political recruitment by a party who faces competition for political talent from the lobbying sector. We show that a political party may deliberately choose to recruit only mediocre politicians, in spite of the fact that it could afford to recruit better individuals who would like to become politicians. We argue that this finding may contribute to explain the observation that in many countries the political class is mostly composed of mediocre people.

The second one, also by the same authors, is no less interesting and illuminating. Here is the abstract:

Political Careers or Career Politicians?
by Andrea Mattozzi, Antonio Merlo

Two main career paths are prevalent among politicians in modern democracies: there are career politicians (i.e., politicians who work in the political sector until retirement), and political careers (i.e., there are politicians who leave politics before retirement and work in the private sector). In this paper, we propose a dynamic equilibrium model of the careers of politicians in an environment with a private sector and a political sector, where individuals are heterogeneous with respect to their market ability and political skills. Our analysis provides an explanation for the existence of career politicians and individuals with political careers, and their motivations. We also investigate the effects of monetary incentives and other features of the political-economic environment on the quality of politicians and their careers. We show that an increase in the salary a politician receives while in office decreases the average quality of individuals who become politicians, decreases turnover in office, and may either decrease or increase the average quality of career politicians.

So what does this mean? Let’s try to sloppily interpret and link the conclusions together:

1. Politicians are mediocre people and are stuck in system that perpetuates mediocrity.
2. The higher the salary (direct or ‘ehem’ non-direct), the worse the quality of the politician and the longer they remain in office.
3. Highly paid low-quality mediocre politicians are voluntarily stuck for long in a system that breeds more mediocrity. Vicious cycle.

Gosh, at times while reading the papers, I thought the authors were really describing Malaysia.

Amazing what you could do with Economics.

Elanor

¹ Rule by the mediocre