TY - JOUR
T1 - OPTIONS TO THE REALM
T2 - A COST NEUTRAL PROPOSAL TO IMPROVE POLITICAL INCENTIVES
AU - Hendrickson, Joshua R.
AU - Salter, Alexander William
N1 - Publisher Copyright:
© 2019 Western Economic Association International
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2020/7/1
Y1 - 2020/7/1
N2 - In this article, we draw on the literature on political property rights, political accountability, and strategic management and entrepreneurship to propose a cost neutral reform aimed at promoting long-run economic prosperity. We propose replacing politicians' defined benefit pensions with a financial contract that is tied to economic performance. In particular, we propose a contract that pays out a lump sum to a politician 30 years after their election if real gross domestic product per capita is above some preset benchmark. Furthermore, we show that the contract can be priced such that it is cost neutral in terms of present value with a defined-benefit pension. We argue that this contract provides a net benefit to society. (JEL D70, D72).
AB - In this article, we draw on the literature on political property rights, political accountability, and strategic management and entrepreneurship to propose a cost neutral reform aimed at promoting long-run economic prosperity. We propose replacing politicians' defined benefit pensions with a financial contract that is tied to economic performance. In particular, we propose a contract that pays out a lump sum to a politician 30 years after their election if real gross domestic product per capita is above some preset benchmark. Furthermore, we show that the contract can be priced such that it is cost neutral in terms of present value with a defined-benefit pension. We argue that this contract provides a net benefit to society. (JEL D70, D72).
UR - http://www.scopus.com/inward/record.url?scp=85075468763&partnerID=8YFLogxK
U2 - 10.1111/coep.12453
DO - 10.1111/coep.12453
M3 - Article
AN - SCOPUS:85075468763
VL - 38
SP - 515
EP - 529
JO - Contemporary Economic Policy
JF - Contemporary Economic Policy
SN - 1074-3529
IS - 3
ER -