Mayors, Using Cultural Expenditure in An Opportunistic Way Improves the Chances of Re-Election, but Do Not Do It: Revisiting Political Budget Cycles

This article analyzes whether expenditure on the provision of merit goods, culture, health, education, and sports, by local governments, in medium-sized cities (between 20,000 and 100,000 inhabitants) is tied to the electoral cycle; that is, whether expenditure increases in the run up to an electoral process. Further, we analyze whether the increase in spending on Culture by local governments has any significant effect on the probability of local governments being re-elected. To answer these questions, a database of 350 medium-sized municipalities is used comprising the period 2011 to 2019, when two municipal elections were held in Spain; in 2015 and in 2019. The results confirm that both total spending and spending on culture and sports, are tied to the electoral cycle, while expenditure on other merit goods is not. Moreover, using a logit model, it is confirmed that an increase in culture expenditure has a significant effect on the probability of the government being re-elected. Specifically, a one-third increase in cultural expenditure, as a proportion of total expenditure (e.g., passing from 6% to 8%) at local government level, improves re-election chances by almost 10%.

Specifics of the Production of Pensionary Good in Russia

The author considers the concept of «pensionary good» and the specifics of its production at the state and non-state levels. The purpose of the study is to analyze the actions aimed at creating a «pensionary good» under the influence of incentives and coercion. Drawing on the theory of goods, the author comes to conclusion that the elements of pensionary good can be produced in the form of public goods, merit goods, club goods and private goods. The author identifies the specifics of pensionary good structure at the analyzed levels and shows that national pension in the Russian Federation is based on coercion, with stimulation being of secondary importance. Non-state-funded retirement also uses the coercion and incentives. It has been established that coercion and incentives provide contradictory results as mechanisms used in the process of producing a pensionary good. While preparing the article, the author used the data from the Federal Statistic Service, the Pension Fund of Russia and various sociological surveys and scientific works on pensions and insurance. The conclusions of the study may be useful for further research on the development of Russian pension system.

Calabresi on Merit Goods

Guido Calabresi has been one of the first scholars to use the concept of merit goods coined by Richard A. Musgrave in The Theory of Public Finance (1959). Although the concept had a mixed reception in economics, Calabresi detected its fruitfulness for a more realistic theorisation of the allocation of goods. Starting from a study of the tragic choices a society needs to make concerning the value of life, Calabresi provides an original conceptualisation of merit goods which is partly complementary to the classical definitions given by Musgrave. However, Calabresi’s conceptualisation is limited by its cost/benefit welfarist approach. Moreover, it leaves out important strands of justification for merit goods. After some preliminary remarks on Calabresi’s encounter with Musgrave, the paper analyses Calabresi’s two arguments for merit goods exposed in The Future of Law & Economics (2016). It then suggests that a theory of merit goods would gain from moving away from the emotivist conceptualisation according to which people feel bad about certain goods being traded for money to a conceptualisation of the reasons for allocating specific goods to specific institutions.

Fundamental Rights and Merit Goods: The Case of the VAT Exemptions in the Public Interest

This contribution aims at providing both a current example of how a collaboration in tax matters between economists and lawyers could be highly beneficial in tax matters and how fundamental values can step up in this conversation. In particular, the following analysis focuses on the exemptions for public interests listed in Article 132 of the EU Value Added Tax Directive (from now on VAT Directive) which refer to some of the traditional merit goods as so considered by economists. The same exemptions could be also read under the light of the European Fundamental Rights Charter which covers not only civil and political rights but also socio-economic ones. Moreover, since the entry into force of the Lisbon Treaty, we can find “social justice” as one of the core values that the Union is committed to promote and which therefore should guide the Union’s policies. However, economic studies have shown that there might be some downsides to the adoption of VAT exemptions, especially in terms of social and redistributive goals. VAT exemptions aimed at ensuring those merit goods/fundamental rights might erode the tax base and backlash on the wider goal of social justice. From a legal perspective, they lead to several interpretative issues. In spite of its theoretical interest and practical importance, there is still not too much literature on this topic and none addressing this issue from a fundamental rights and values perspective. The purpose of this paper is to be a starting point for further discussions on how economic and legal studies together can provide better solutions on how to handle merit goods in VAT by keeping in mind the broader picture of a fair tax system and legal principles, such as those enshrined in the Charter of Fundamental Rights of the European Union.