Measuring Political Information Rents: Evidence from the European Agricultural Reform

30 Pages Posted: 2 May 2013

See all articles by H. P. Gruner

H. P. Gruner

University of Mannheim - Department of Economics; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

Daniel Müller

University of Bonn; Queensland University of Technology

Date Written: April 2013

Abstract

This paper develops a method to estimate information rents of losers of a reform who receive a monetary compensation. Our method explicitly accounts for survey respondents' reluctance to reveal a willingness to accept which is smaller than the actual compensation. We apply our approach to the case of the 2005 European agricultural reform using uniquely gathered survey data from farmers in Lower Saxony, Germany. We find empirical indications for strategic misreporting. Correcting for these effects with a structural model, we find that information rents are in the order of up to 15 per cent of total compensation paid. Moreover, we show that the reform could not have been implemented distinctly cheaper by conditioning compensation schemes on observable factors.

Keywords: European agricultural reform, information rents

JEL Classification: D70, D78, H20

Suggested Citation

Grüner, Hans Peter and Müller, Daniel, Measuring Political Information Rents: Evidence from the European Agricultural Reform (April 2013). CEPR Discussion Paper No. DP9452, Available at SSRN: https://ssrn.com/abstract=2258921

Hans Peter Grüner (Contact Author)

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Daniel Müller

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
7
Abstract Views
412
PlumX Metrics