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Ruben Durante wins the American Economic Journal 2017 prize for his article on advertising investment as a political lobby in Italy

Ruben Durante wins the American Economic Journal 2017 prize for his article on advertising investment as a political lobby in Italy

The lecturer with the Department of Economics and Business has received this award from the American Economic Association for a study that focuses on the evidence of ad spending as a means of political pressure. These increases in advertising investments, especially by certain regulated Italian companies benefited the Mediaset group between 1993 and 2009, when Berlusconi held power at several points in time.

27.04.2017

Ruben Durante, lecturer with the Department of Economics and Business and Barcelona GSE, has received an award from the American Economic Association (AEA), in recognition for being one of the authors of the best article published on applied economics in the American Economic Journal (AEJ) in 2016.

The winning work, titled “Market-Based Lobbying: Evidence from Advertising Spending in Italy”, analyses the tendency of companies to direct their advertising spending towards business related to the political environment, with the aim of ensuring favourable legislative regulations.

The article, published in the AEJ January 2016 edition, was also written by Stefano DellaVigna (University of California, Berkeley, USA), Brian Knight (Brown University, USA), and Eliana La Ferrara (Bocconi University, Italy).

Each year, the AEA selects the best scientific paper published during the previous year in the American Economic Journal (AEJ), one of the highest impact scientific publications in the world in each of the four areas it encompasses: Applied Economics, Macroeconomics, Microeconomics and Economic Policy.

In their study, the researchers examined the evolution of advertising spending in Italy for the period 1993-2009 (using Nielsen data), when the Italian prime minister, Silvio Berlusconi, held power on three different occasions, while keeping control of Mediaset, the largest private television group in the country.

The authors document a significant bias in favour of Mediaset in the distribution of advertising during Berlusconi’s political mandate, especially in the companies belonging to most the regulated sectors. In addition, companies tended to orient their advertising budgets towards Mediaset despite the fact that the communication group increased the price of its advertising spaces.

The research results estimate that Mediaset obtained an increase of 1 billion euros in extra advertising revenue during this period, and that regulated companies anticipated considerable yields. According to the logic of the model proposed by the authors, this amount is a measure of the political benefit that the companies are expecting to receive from this lobby indirectly.

Thus, if Mediaset is able to raise its prices considerably during the periods in which Berlusconi holds office, and regulated companies intensify their advertising campaigns and further increase the purchase of adspace, this implies that these companies hope to obtain political influences and benefits in exchange for their investments.

According to the authors, the fact that a democratically elected head of state controls a major trading company is not exclusive to Berlusconi, as this has also occurred in other young democracies such as Argentina or Thailand, and more recently, in the United States, where President Trump has significant interests in various sectors of the economy. The work shows how economic groups can effectively pressure the political system indirectly and legally, and indicates the importance of the laws governing conflicts of interest.

Reference work: ”Market-Based Lobbying: Evidence from Advertising Spending in Italy” (January 2016). Stefano DellaVigna, Ruben Durante, Brian Knight and Eliana La Ferrara. American Economic Journal: Applied Economics. Vol. 8, no.1

 

 

 

 

 

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