Volume 10, Issue 3

The classical question of moral philosophy reads: „What ought I to do?“ (Kant). Especially in modern times such a philosophy has been subject to criticism for not going beyond the ought. To address such criticism the question has to be answered in which way the ought can be implemented in modern, anonymous mass societies (Homann). Attempts to induce the members of such societies to translate the ought - out of insight, out of a sense of duty, out of religious convictions, or on the basis of cultural traditions - into action are prone to failure.Where the sanctions of face-to-face societies fail to have an impact, moral norms must be implemented in the rules governing societies. If there are effective sanctions for violating those rules, the majority of individuals will conform out of self-interest.

Non-governmental organizations (NGOs) are widely expected to provide better targeted aid than state agencies with a hidden agenda of commercial and political self-interest. However, principal-agent models question that NGOs decide autonomously on aid allocation. Summarizing the results of four new empirical studies, we show that NGO aid indeed offers no panacea: The focus of NGOs on the neediest recipients turns out to be surprisingly weak. The striking similarities across these studies suggest that poor targeting is not limited to NGO aid of a particular type or from specific sources. NGOs hardly make use of the perceived comparative advantage of working in “difficult environments.” Rather, they are strongly inclined to follow the herd of other NGOs and mimic the allocation behavior of state agencies, especially if they depend on public co-financing.

We determine the level and development of deficits during the period from 1998 to 2004 in German public hospitals and analyze the reasons for these deficits. Furthermore we discuss their implications for economic policy. In 2004, the deficits reach a peak of 3 billion Euro. Fixed effects estimations suggest that both the duration of treatment and the number of employees have a significant positive influence on the development of the deficits while the number of cases has a significant negative influence. The payment of public hospital deficits out of general budget resources constitutes an unjustified subsidy.

In 2009, Germany adopted a new system of regulating energy networks. The German regulatory commission (Bundesnetzagentur) now imposes price caps (RPI-X) on network charges in order to foster competition between power-supply companies. The price formula needed to calculate these price caps includes a so-called X-factor that quantifies expected productivity growth and inflation. Consequently, the meticulous estimation of the future productivity growth is crucial for the functioning of this form of incentive regulation. The German regulatory commission claims to base their estimates on the historical development of productivity growth in the electricity sector as a whole. To reveal the shortcomings of this approach, we show, first, that, in the second half of the 20th century, productivity growth in the German electricity sector was not constant but varied considerably over time, and, second, that productivity growth in the electricity networks was generally lower than in the electricity sector as a whole.