Person: Di Tella, Rafael
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Di Tella
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Rafael
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Di Tella, Rafael
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Publication Populism and the Return of the “Paranoid Style”: Some Evidence and a Simple Model of Demand for Incompetence as Insurance against Elite Betrayal(2017-01-20) Di Tella, Rafael; Rotemberg, Julio J.We present a simple model of populism as the rejection of “disloyal” leaders. We show that adding the assumption that people are worse off when they experience low income as a result of leader betrayal (than when it is the result of bad luck) to a simple voter choice model yields a preference for incompetent leaders. These deliver worse material outcomes in general, but they reduce the feelings of betrayal during bad times. Some evidence consistent with our model is gathered from the Trump-Clinton 2016 election: on average, subjects primed with the importance of competence in policymaking decrease their support for Trump, the candidate who scores lower on competence in our survey. But two groups respond to the treatment with a large (between 5 and 7 percentage points) increase in their support for Donald Trump: those living in rural areas and those that are low educated, white and living in urban and suburban areas.Publication Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation(2017-03-22) Di Tella, Rafael; Dubra, Juan; Lagomarsino, AlejandroWe analyze the role of people’s beliefs about the rich in the determination of public policy in the context of a randomized online survey experiment. A question we study is the desirability of government-private sector meetings, a variable we argue is connected to State capacity. Survey respondents primed with negative views about business leaders want fewer meetings, as well as higher taxes to the top 1% and more regulation. We also study how these effects change when subjects are (additionally) primed with positive/negative views about government officials. Distrust in the government increases the preferred tax rate on the top 1% only when business legitimacy is low. A model with multiple equilibria helps interpret these findings. In one of the equilibria, meetings are allowed, business legitimacy is high, and people set a low income tax rate for businesspeople. In the other, meetings are forbidden, business legitimacy is low, and people set high taxes to punish the businesspeople for their corrupt behavior.Publication Criminal Recidivism after Prison and Electronic Monitoring(University of Chicago Press, 2013) Di Tella, Rafael; Schargrodsky, ErnestoWe study criminal recidivism in Argentina by focusing on the re-arrest rates of two groups: individuals released from prison and individuals released from electronic monitoring. Detainees are randomly assigned to judges, and ideological differences across judges translate into large differences in the allocation of electronic monitoring to an otherwise similar population. Using these peculiarities of the Argentine setting we argue that there is a large, negative causal effect on criminal recidivism of treating individuals with electronic monitoring relative to prison.Publication Government Advertising and Media Coverage of Corruption Scandals(American Economic Association, 2011) Di Tella, Rafael; Franceschelli, IgnacioWe construct measures of the extent to which the four main newspapers in Argentina report government corruption in their front page during the period 1998-2007 and correlate them with government advertising. The correlation is negative. The size is considerable: a one standard deviation increase in monthly government advertising is associated with a reduction in the coverage of the government's corruption scandals by 0.23 of a front page per month, or 18% of a standard deviation in coverage. The results are robust to the inclusion of newspaper, month, newspaper president, and individual-corruption scandal fixed effects as well as newspaper-president specific time trends.Publication Fairness and Redistribution: Comment(American Economic Association, 2013) Di Tella, Rafael; Dubra, JuanIn an influential paper, Alesina and Angeletos (2005)—henceforth, AA—argued that a preference for fairness could lead two identical societies to choose different economic systems. In particular, two equilibria might arise: one with low taxes and a belief that the income-generating process is "fair" because effort is important (an "American" equilibrium) and another with high taxes and the belief that the process is "unfair" because luck prevails. Piketty (1995) had shown that a similar pattern could arise from standard preferences if initial beliefs about the relative importance of effort and luck in generating income differed across the two societies, while Benabou and Tirole (2006) study this issue using more realistic preferences (Buera, Monge-Naranjo, and Primiceri 2011 discuss the evolution of beliefs about economic systems). A key contribution of AA is to obtain these two equilibria from identical societies assuming agents prefer outcomes that are fair, an important modification because fairness considerations seem central in the demand for redistribution, and because in several settings (as in some ultimatum games) such preferences for fairness can lead to large (material) inefficiencies. In this note we report a difficulty we encountered when interpreting the results in AA: we find multiplicity (and demand for redistribution) even if luck plays no role. In other words, there is multiplicity even if the equilibrium tax rate is independent of the signal-to-noise ratio (a quantity that expresses how important effort is, relative to luck, in the determination of income). This conflicts with the notion that the signal-to-noise ratio plays a central role in generating multiplicity with AA preferences for fairness.Publication Inequality and Happiness: Are Europeans and Americans Different?(Elsevier, 2004) Alesina, Alberto; Di Tella, Rafael; MacCulloch, RobertWe study the effect of the level of inequality in society on individual well-being using a total of 123,668 answers to a survey question about “happiness”. We find that individuals have a lower tendency to report themselves happy when inequality is high, even after controlling for individual income, a large set of personal characteristics, and year and country (or, in the case of the US, state) dummies. The effect, however, is more precisely defined statistically in Europe than in the US. In addition, we find striking differences across groups. In Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US, the rich are bothered by inequality. Comparing across continents, we find that left-wingers in Europe are more hurt by inequality than left-wingers in the US. And the poor in Europe are more concerned with inequality than the poor in America, an effect that is large in terms of size but is only significant at the 10% level. We argue that these findings are consistent with the perception (not necessarily the reality) that Americans have been living in a mobile society, where individual effort can move people up and down the income ladder, while Europeans believe that they live in less mobile societies.Publication Growth and Competitiveness in Kazakhstan: Issues and Priorities in the Areas of Macroeconomic, Industrial, Trade and Institutional Development Policies(Center for International Development at Harvard University, 2011) Hausmann, Ricardo; Deep, Akash; Di Tella, Rafael; Frankel, Jeffrey; Lawrence, Robert; Rodrik, Dani; Velasco, Andrés