Time Inconsistency

In some countries -the Netherlands, UK and USA -the expected economic implications of election platforms of political parties are evaluated by independent economic institutions prior to the election. This paper analyzes the merits and limitations of this process, taking 25 years of Dutch experience as a point of reference. In particular in times of financial crisis and unsustainable public finance, evaluation of election platforms can serve as a disciplining device for unrealistic or (time) inconsistent promises by politicians. More in general, it can help political parties to credibly inform voters about the implications of their platforms, to design more efficient policies and to reach consensus on them. It can also create a level playing field for political parties not represented in the government, in particular those with limited resources for economic information and expertise. However, there may be adverse effects, in particular when trade-offs are presented in an unbalanced way or when the rules of the evaluation provide too much room for gaming and free lunches. 1 The authors would like to thank Peter Dekker, Bas Jacobs and Wim Suyker for comments on an earlier draft. 2 Previous assessments of the Dutch experience with the economic evaluation of election platforms are Haffner and Van Bergeijk (1994), Don (2003) and the papers in Graafland and Ros (2003). 3 The IFS is an independent economic research institute funded by public and private grants. It produces academic and policy related findings on UK taxation and public policy. It was launched in 1971 in order to improve UK tax policy and to make the UK tax debate more informed and rational by bringing together political, legal, accounting and economic arguments. Its first major success was the Meade report published in 1978. This report by a committee chaired by Professor James Meade, winner of the Nobel Prize in economics in 1977, evaluated the UK tax system as a whole, what are the objectives, to what extent are these objectives met by the current UK tax system and what reforms should be undertaken? 4 The CBO was established in 1974 to serve the American Congress and plays a major role in measuring the budgetary impact of new legislation and other policy proposals: "CBO's score can doom legislation or smooth the way to passage; it can compel committees and members to modify pending legislation, even after political deals have been negotiated; and it can complicate or thwart the president's legislative ambitions" (Schick, 2007, p. 133).

Domestic action on climate change is increasingly important in the light of the difficulties with international agreements and requires a combination of solutions, in terms of institutions and policy instruments. One way of achieving government carbon policy goals may be the creation of an independent body to advise, set or monitor policy. This paper critically assesses the Committee on Climate Change (CCC), which was created in 2008 as an independent body to help move the UK towards a low carbon economy. We look at the motivation for its creation in terms of: information provision, advice, monitoring, or policy delegation. In particular we consider its ability to overcome a time inconsistency problem by comparing and contrasting it with another independent body, the Monetary Policy Committee of the Bank of England.

This study investigates whether drinker-drivers attributes are associated with imperfect rationality or irrationality. Using data from eight U.S. cities, we determine whether drinker-drivers differ from other drinkers in cognitive ability, ignorance of driving while intoxicated (DWI) laws, have higher rates of time preference, are time inconsistent, and lack self-control on other measures. We find that drinker-drivers are relatively knowledgeable about DWI laws and do not differ on two of three study measures of cognitive ability from other drinkers. Drinker-drivers are less prone to plan events involving drinking, e.g., selecting a designated driver in advance of drinking, and are more impulsive. Furthermore, we find evidence in support of hyperbolic discounting. In particular, relative to non-drinker-drivers, the difference between short-and long-term discount rates is much higher for drinker-drivers than for other drinkers. Implications of our findings for public policy, including incapacitation, treatment, and educational interventions, are discussed.