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Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies

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  • Clare Leaver

Abstract

This paper argues that bureaucrats are susceptible to `minimal squawk` behavior. I develop a simple model in which a desire to avoid criticism can prompt, otherwise public-spirited, bureaucrats to behave inefficiently. Decisions are taken to keep interest groups quiet and mistakes out of the public eye. The policy implications of this behavior are at odds with the received view that agencies should be structured to minimise the threat of `capture`. I test between theories of bureaucratic behaviour using a matched panel of U.S. State Public Utility Commissions and investor-owned electric utilities. The data soundly reject the capture hypothesis and are consistent with the minimal squawk hypothesis: longer PUC terms of office are associated with an increase in the incidence of rate reviews in period of falling input costs and, in turn, lower household electricity bills.

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  • Clare Leaver, 2007. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies," Economics Series Working Papers 344, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:344
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    References listed on IDEAS

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    Cited by:

    1. Flavio M. Menezes & Christian Roessler, 2010. "Good and Bad Consistency in Regulatory Decisions," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 504-516, December.

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    More about this item

    Keywords

    Bureaucratic Behavior; Professional Pride; Career Concerns; Regulatory Capture; Dynamic Panel Data Models;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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