The next meeting of the Political Economy Seminar takes place on Thursday, May 4, from 12.15-13.45. The meeting takes place in Room H.001 and on Zoom at https://tum-conf.zoom.us/j/64979277311?pwd=d2NYcGNUeEZ4U09heGw0YXZHQkdzUT09.
Professor Vincent Arel-Bundock, Université de Montréal, will present his paper, “Buy-In for Buyouts: Attitudes toward Compensation for Reforms”, co-authored with Professor Krzysztof Pelc. The paper examines public support for bundling disruptive policy reforms with compensation schemes.
Abstract: Political reforms are often held up by concentrated interest groups who lobby to block change that would benefit the majority. One under-examined policy response is to compensate the recalcitrant group in exchange for agreeing to the reform. We refer to such mass compensation schemes as public buyouts. After laying out the theoretical case for and against buyouts, we design a series of survey experiments to gauge the determinants of public support for buyouts linked to two reforms—phasing out coal energy, and simplifying tax filing—both held up by vested interest groups. Partisanship appears systematically related to attitudes towards buyouts, as does program design: buyouts find significantly more favor when they target individual workers, rather than companies. Yet the chief objection to buyouts is normative: individuals’ “moral aversion” to compensating actors who hold up beneficial reforms dominates other salient concerns, like moral hazard. Our results also highlight a vexing credibility problem: those who support reform also support reneging on the compensation once the reform is passed. Recipients may thus be right to fear policy reversals. Buyouts may be a democratically viable means of passing beneficial reforms that have been blocked for decades—yet their design proves decisive.