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Diversity and the power of the elites in democratic societies: a model and a test

Bandiera, Oriana and Levy, Gilat (2010) Diversity and the power of the elites in democratic societies: a model and a test. CEPR discussion papers, 7985. Centre for Economic Policy Research, London School of Economics and Political Science, London, UK.

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Identification Number: 7985

Abstract

This paper analyzes whether political outcomes in local democracies are determined by the preferences of the median -typically poor- agents or whether they reflect the wishes of the wealthy elites. A model shows that when politicians belonging to different groups can form coalitions, the wealthy elites’ influence on policy choices is endogenously higher when there is diversity in preferences among the poor. In line with the theoretical predictions, the pattern of public good provision by local governments in Indonesia reveals that when individuals have different preferences —here due to different ethnicities— democratic policy outcomes are closer to the preferences of the elites, rather than the preferences of the poor majority.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=7...
Additional Information: © 2010 The Authors
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Collections > Economists Online
Date Deposited: 13 Dec 2010 14:19
Last Modified: 18 May 2011 09:52
URI: http://eprints.lse.ac.uk/id/eprint/30696

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