DESIGN AS A RESPONSE TO SOCIAL AND ECONOMIC

Design as a Response

Design as a Response

1 Design as a response to Social and Economic situation

The New Political Economy borrows and develops designs from all of its historical predecessors. Among the main ideas that shape current thinking. The new developments in theory, emphasizing its eclecticism. The second is the centrality of confronting theory with idea. The third design is comparative institutional analysis aiming to study the implications of alternative rules of the game. Fourth, we discuss how issues of imperfect information figure centrally in our thinking about politics. Fifth, we discuss dynamic issues. The New Political Economy is really a collection of studies of specific phenomena. This specificity is the sixth design. To illustrate, the three studies from the literature and discuss their findings. This provides a way of illustrating how the other designs shape specific applications. Even though the tool kit has been refined somewhat, the key issue is to pick that theoretical framework that will give an insightful and transparent account of the phenomenon at hand. There is no reason to believe that any single theoretical approach will dominate.

2 How design reinforces our political economy

The New Political Economy has not solved the problem of studying political competition in the absence of a Condorcet winner. But it has made sure to keep this firmly in the background. There are some new modeling ap- proaches, but the approach is not built around any kind of dominant political paradigm. These models suppose that citizens elect politicians who then implement their preferred outcomes. An implication of the candidate centred view of political competition discussed above is that the identity of candidates matter to policy outcomes.

A recent ingenious paper by Lee, Moretti and Butler (2004) has looked at close elections (i.e. those determined by a few points) As we discuss in one of our examples below, there is mounting evidence that patterns of representation matter. Models of extra-electoral policy making are important. This approach has provided a much more transparent way of thinking about lobbying compared to the previous generation of models which typically had a black box influence function.

The New Political Economy has a core concern with empirical testing of ideas. There is a wealth of idea to be exploited as well as scope to generate new idea sets. The great advantage of this is that the extent of institutional variation is vast creating many possibilities for comparisons of institutions. However, on the downside, such institutions tend to be relatively fixed over time and there many sources of heterogeneity across countries which it is di¢ cult to control for in a convincing manner.

The difficulty then lies in telling the di¤erences between the working of institutions and some other unmeasurable factor that is correlated with institutions. In some cases this can be overcome with ingenuity. Another class of studies exploits variation within countries where there are di¤erences in politics across sub-jurisdictions. This is not immune to the problems of unobserved heterogeneity discussed ...