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Working papers of the Institute for Empirical Research in Economics (excerpt for MfDD / HzPD) 1. Beyond Bentham - Measuring Procedural Utility 18. A Proposal for a Flexible Europe 27. A Utopia? Government without Territorial Monopoly 37. Does Economics have an Effect? Towards an Economics of Economics 45. Managerial Power and Compensation 48. Outcome, Process & Power in Direct Democracy 49. Was bewirkt die Volkswirtschaftslehre? 50. Demokratieindizes für die Kantone der Schweiz 51. Maximising Happiness? 58. Happiness, Economy and Institutions BEYOND BENTHAM - MEASURING PROCEDURAL UTILITY Author(s) : Bruno S. Frey and Alois Stutzer Abstract : We propose that outcome utility and process utility can be distinguished and empirically measured. People gain procedural utility from participating in the political decision-making process itself, irrespective of the outcome. Nationals enjoy both outcome and process utility, while foreigners are excluded from political decision-making and therefore cannot enjoy the corresponding procedural utility. Utility is measured by individuals' reported subjective well-being or happiness. We find that participation rights provide more procedural utility in terms of a feeling of self-determination and influence than actual participation. Published : April 2001 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page A Proposal for a Flexible Europe Author(s) : Bruno S. Frey and Reiner Eichenberger Abstract : At present, new EU-members have to fully accept the "acquis communautaire" even if their economic and institutional development differs drastically from the EU-average. In contrast, we propose that there should be the possibility of partial entry into the EU. East European Countries should have the option of specifically entering with respect to functions where they expect positive net benefits. In order to enable such partial entry, a new type of jurisdictions called FOCJ (Functional, Overlapping and Competing Jurisdictions) is proposed between the EU, the CEECs, and beyond. Such FOCJ allow for partial integration based on economic efficiency and democratic rules. Published : August 2000 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page A Utopia? Government without Territorial Monopoly Author(s) : Bruno S. Frey Abstract : We normally take it for granted: a government or state has its corresponding territory. This paper shows that government need not have a territorial monopoly. The paper advances a practical, constitutional proposal, based on the notion that there are meaningful government units, whose major characteristic is not the territorial extension but its function. The constitution proposal allows for the emergence of governmental organizations, which will be called FOCJ according to the acronym for "Functional, Overlapping, Competing Jurisdictions". Their territory is variable, and they do not have a territorial monopoly over it. Rather, they are in competition with other such FOCJ, and they are, moreover, exposed to political competition. Published : Juni 2000 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Does Economics have an Effect? Towards an Economics of Economics Author(s) : Bruno S. Frey Abstract : Due to its formality and highly analytic thinking, economics is often attributed a leading role among the social sciences and a prominent position as contributor to economic or social issues in the real world. Fact is, however, that the empirical proof for such a claim is either missing or anecdotal. This paper aims to outline the "economics of economics". It surveys and compares approaches of impact measurement such as a production function of economics or the demand and supply of trained economists and discusses the determinants of the strength of the influence of economics. It furthermore discriminates between the impact of economic ideas versus that of economists as scientists or politicians. Published : Februar 2000 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Managerial Power and Compensation Author(s) : Bruno S. Frey and Marcel Kucher Abstract : According to the widely used Managerial Power Model, a higher hierarchical position with associated higher power leads to higher compensation. In contrast, the Compensating Wage Differentials Model argues that there is a non-positive relationship between positional power and total compensation. Both power and income yield utility and in equilibrium managers are prepared to trade-off the two elements. The two opposing propositions are tested using a large survey data set from Switzerland. The results suggest that power positions do not yield higher compensation. Rather, there is a non-positive relationship between power position and compensation, if one takes into account all relevant factors influencing total compensation. Published : Dezember 1999 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Outcome, Process & Power in Direct Democracy Author(s) : Bruno S. Frey, Marcel Kucher and Alois Stutzer Abstract : Based on survey data for Switzerland, new empirical findings on direct democracy are presented. In the first part, we show that, on average, public employees receive lower financial compensation under more direct democratic institutions. However, top bureaucrats are more constrained in direct democracies and have to be compensated by higher wages for that loss of power. In the second part, we demonstrate that reported subjective well-being of the population is much higher in jurisdictions with stronger direct democratic rights. This is not only the case because people value political outcomes higher but they derive utility from the political process itself. Published : November 1999 in : forthcoming in: Public Choice Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Was bewirkt die Volkswirtschaftslehre? Author(s) : Bruno S. Frey Abstract : Due to its formality and highly analytic thinking, economics is often attributed a leading role among the social sciences and a prominent position as contributor to economic or social issues in the real world. Fact is, however, that the empirical proof for such a claim is either missing or anecdotal. This paper aims to outline the "economics of economics". It surveys and compares approaches of impact measurement such as a production function of economics or the demand and supply of trained economists. It furthermore discriminates between the impact of economic ideas versus that of economists as scientists or politicians. Published : Oktober 1999 in : published in: Perspektiven der Wirtschaftspolitik 1 (1), 5-33 Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Demokratieindizes für die Kantone der Schweiz Author(s) : Alois Stutzer Abstract : Die direkte Demokratie ist in den Kantonen der Schweiz unterschiedlich stark ausgeprägt. Die Beteiligung der Bürger im politischen Prozess via Verfassungs- und Gesetzesinitiative, Gesetzesreferendum und Finanzreferendum ist durch verschieden hohe Hürden eingeschränkt. Unterschiede bestehen beispielsweise bei der Anzahl Unterschriften, die verlangt werden, um ein Instrument zu ergreifen, der Zeit, welche für die Sammlung der Unterschriften zur Verfügung steht, oder der Ausgabenhöhe, ab welcher ein Finanzreferendum möglich ist. Diese Unterschiede werden verwendet, um Indizes für die direktdemokratischen Beteiligungsmöglichkeiten der Bürger zu berechnen. Die Indizes öffnen ein weites Feld für die institutionell vergleichende Forschung in der Schweiz. Published : Oktober 1999 in : Working Paper - Institute for Empirical Research in Economics Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Maximising Happiness? Author(s) : Bruno S. Frey and Alois Stutzer Abstract : The measurement of individual happiness challenges the notion that revealed preferences only reliably reflect individual utility. Reported subjective well-being is a broader concept than traditional decision utility; it also includes concepts like experience and procedural utility. Micro- and macroeconometric happiness functions offer new insights on determinants of life satisfaction. However, one should not leap to the conclusion that happiness should be maximized in the sense of social welfare function maximization. In contrast, happiness research strengthens the validity of an institutional approach such as reflected in the theory of democratic economic policy. Published : Oktober 1999 in : German Economic Review, Vol. 1, No. 2, May 2000, 145-167 Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page Happiness, Economy and Institutions Author(s) : Bruno S. Frey and Alois Stutzer Abstract : A cross-regional econometric analysis is conducted suggesting that institutional factors in the form of direct democracy (via initiatives and referenda) and of federal structure (local autonomy) systematically and sizeably raise self-reported individual well-being. This positive effect can be attributed to political outcomes closer to voters preferences as well as to the procedural utility of political participation. Moreover, the results of "standard" microeconometric well-being functions previously published are supported. Unemployment among economic variables and bad health among demographic variables have a strongly depressing effect on happiness. Income only significantly raises happiness for higher income groups. Published : Juli 1999 in : The Economic Journal, 110 (466, October), 2000, pp. 918-938 Download : Adobe Acrobat (PDF) - Order a hardcopy Back to the top of the page