ROBEK: To spend or not to spend

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ROBEK: To spend or not to spend

How Norwegian politicians and voters respond to the pressure of administration

Gjermund Sandbakk

Master’s thesis, Department of Economics University of Oslo

June, 2020

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ii Acknowledgments:

Firstly, I would like to thank my supervisor Henrik Sigstad for invaluable feedback, suggestions and discussions during my work on this thesis. I would also like to thank my family who have supported me my whole life and especially throughout my studies. Last but not least I need to thank my girlfriend who stuck with me and kept me going through some tough times when I was working from home.

All remaining errors are my own.

Abstract:

The ROBEK register is a source for debate in Norwegian municipalities. Poor fiscal control could lead to being entered on the list which means being put under administration and criticism from local media and opposition. The literature has found that incumbent mayors in ROBEK

municipalities do worse in elections and has worse reelection prospects than other mayors. I contribute to the literature by estimating the effect of entering the register before an election and how the fiscal performance in the election year is. I find evidence that better financial results means worse electoral results when comparing ROBEK municipalities entered at roughly the same time. Thus, the mayors might not be having the incentives they should have to stop spending. Some explanations could be signaling effect from mayors, that voters prefer that the level of public services is being upheld at a reasonable level and lower trust between voters and national governments. I also find that a stronger local media presence has little effect on how a mayor on the ROBEK list is being treated in elections.

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1. Introduction

In 2001 the Norwegian government established the ROBEK register. By law, if a municipality is out of control financially, it ends up under administration and needs approval from the

government for budgets, loans and other investments. Often, entering the ROBEK register is a long process for the municipality, with substantial attention from the media and the public.

Especially by implying poor fiscal control, it would be a bad look for an incumbent mayor to be responsible for entering his or her municipality to the ROBEK list. In this thesis, I look at the effect on electoral results of not only being entered to the ROBEK register, but also how the incumbent mayor of the Norwegian local governments responds.

Hopland (2014) has shown that incumbents in a ROBEK municipality generally receive fewer votes and has a lower probability of being reelected than incumbents not on the ROBEK register.

However, it is unclear whether this reduction is due to municipalities being punished for being on the ROBEK list, or whether they are punished for having to cut spending due to being on the ROBEK list. This is important to know, since if the first is true mayors have incentives to cut spending to get out of the ROBEK list, but if the latter is true mayors might have no electoral incentives to cut spending. By including timing of entrance to the list and an indicator of the financial health of the municipality, I show that entering the ROBEK list has a negative effect on reelection only for municipalities that cut spending in response. This is consistent with the latter explanation.

In addition to this, I take a look at how the media might affect an incumbent mayor on the

ROBEK list. A stronger local media should be able to pressurize politicians either by highlighting the threat of ROBEK for voters or question the politicians’ fiscal decisions. By using a

measurement on how the media market is in a given municipality similar to Snyder and

Stromberg (2010), one should see how better informed voters react. In a municipality where the local newspaper has less competition and at the same time has most of its customers, the

incumbent seems to be doing worse in the elections.

I point to several possible reasons and mechanisms behind these results. ROBEK might be interpreted as a signal of poor fiscal performance, but a mayor not recognizing or taking action to an inclusion to the register is also something the voters will take notice of. An incumbent mayor

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who reacts like this may calm the voters’ possible concern after being entered into the ROBEK register. A theory behind the fact that incumbent mayors do worse when enlisted is that the ROBEK list brings shame and scrutiny. That is certainly true to some degree, but when given a choice a voter might prefer keeping public services and such at a higher level. A third explanation is that, like for instance seen in Southern Europe after the great recession, there is some kind of distrust between voters and the national government which incumbent mayors might take

advantage of. By blaming the national government, who are responsible for the register, may be a tactic that wins elections in some municipalities, even when ROBEK registered and not taking the appropriate action needed to get off the list.

My thesis is structured as follows: In section 2 I present information about the register and where the literature stand at the moment. Section 3 contains data and summary statistics before I present the model in section 4. In section 5 I propose some additional specifications before I discuss some possible interpretations and explanations of the results in section 6. Finally, I conclude in section 7.

2. Background and literature review

The process of being registered to the ROBEK list is loosely as follows: if the municipality does not upheld what is written in the law, it will be entered to the ROBEK register. The one

responsible for recommending when this will happen is the county governor. When entered, the municipality is under state control and is thus under administration. Every investment, budget and loan needs to be accepted by national government officials which means that the local politicians' hands are somewhat tied.

Legally, the requirements for registration has undergone small changes during the ROBEK register’s lifetime. For instance, Hopland (2014) explains it as municipalities “violating the budget balance requirement by passing a budget with a net operating deficit, or have been unable to cover an actual deficit within 2 years”. Econ Analyse (2006) uses TBU, the The Statistical Reports Committee for county and municipal government finance as a reference. At the time, they proposed that the net operating result was the best indication of financial balance in a municipality. The best indicator for ROBEK, however, was the net operating result, plus provisions to funds and earlier non-used provisions. Today, the Local Government Act

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(Kommuneloven, 2018, §28-1) states that for a municipality to be entered into the ROBEK register if one of the following situations occurs: if the municipality approves a budget with a deficit, approves a «management plan» with a deficit, any budget, plan or accounts showing that a deficit will be covered more than two years after it occurred, an accumulated deficit larger than three percent of gross operating revenues, or not upholding deadlines set by law or department.

To exit the register (Kommuneloven, 2018, §28-5), the municipality simply has to cover its deficits or approve budgets or plan without deficits.

A few private consulting companies have looked into how a municipality reacts to being included on the register. By interviewing chief municipal executives, they try to explain how the thought process in a typical ROBEK municipality proceeds after a ROBEK entrance. Albeit produced in 2006, in the younger years of the ROBEK register, they reveal some interesting insight. Econ Analyse (2006) discussed municipalities who exited the register between October 2004 and October 2005. They analyzed 20 of the 47 municipalities in question by interviewing key personnel in each of the municipalities. ECON Analyse found that the most important factor of getting out of the ROBEK register was to cut expenses, usually through changes in culture and structure, both in the municipal organization and in politics. It was pointed out that changing the income level was much more difficult as only some operations generally was viable, like selling stocks or doing some financial juggling. There were signs that being entered on the ROBEK register had a unifying effect on politicians across party lines and public employees, as it became easier to take unpopular decisions when they had a gun to their head, in the shape of the county governor. It also looked like a ROBEK municipality had to downsize in every sector, most in total health and schools, but relatively most in the administration.

My thesis mainly relate to Hopland’s works on ROBEK municipalities, but also to media and elections and trust between government and voters.

There exists some literature regarding the ROBEK register and how it affects electoral results.

Hopland (2014) shows that an incumbent suffers in the next election if the municipality is

included in the ROBEK register – an incumbent would expect to receive 2.8 % less of the votes if the municipality is on the register on Election Day. He also finds that the probability of reelection is reduced by 12% for a mayor on the ROBEK register. He performs an OLS estimation of

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incumbent results on ROBEK participation and controls for several different variables, both political and socioeconomical.

Hopland (2013) shows that ROBEK municipalities on a whole improves their operating surplus, mainly by reducing costs and that the ROBEK register works in the sense that it helps

municipalities improve their fiscal strength. Brender (2003) uses Israeli data to look at the connection between fiscal performances and reelection prospects of local politicians. He finds that after a structural change in the mid-1990s where local governments were forced to report financial status and given harder budget constraints, amongst others, lead to mayors who practised looser fiscal policy were punished harder in the next election. On the same note,

Brender and Drazen (2008) find no evidence that fiscal manipulation in an election year works in an established democracy.

Snyder and Stromberg (2010) has created a measure on newspaper markets and electoral districts, where a higher correlation, or congruence, is associated with better political knowledge for voters and a stronger result for the incumbent in the next election.

The ROBEK register could be a source of conflict between local and national government and local government and voters. The literature on how voters behave when the trust is lowered, for instance by worsened economic conditions or poor political performances, is vast. Dal Bo, Finan, Folke, Persson and Rickne (2018) studies Sweden's political environment, and find that voters who are “economic losers”, decrease their trust in established parties and institutions by looking at the right wing party Swedish Democrats from a citizen candidate point of view.

Similarly, Algan, Guriev, Papaioannou and Passari (2017) studies European politics after the Great Recession and finds that an economic downturn is correlated with a rise in political extremism and less trust toward political institutions. They also show that the trust is based on shorter term actions and events and is more volatile.

Ferraz and Finan (2008) uses a regression discontinuity design to compare Brazilian incumbent mayors' results in the election when they either are audited before or after the election. They show that corrupt politicians are punished harder when the level of corruption is shown to be

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high, compared to not knowing the level of corruption, or if the politician indeed was corrupt at all. A functioning local radio station magnified the effect on the mayor's reelection chances.

Muro and Vidal (2016) has two explanations for lower trust toward politicians and the political system: it blossomed when the state of the economy was worse and the incumbents were

punished for poor economic conditions. They explain the distrust as a function of political crisis, where voters punish politicians for their behavior, for instance increased corruption levels and lower political effectiveness, which is a measure of quality of public services and policy implementation amongst others.

3. Data and summary statistics

The data used have been collected from Statistics Norway and consists of panel data of voting results from every local election during the ROBEK register's existence until 2015. The number of municipalities have been changing from election to election due to merging municipalities.

Financial panel data with spending details in every municipality since 2003, including

accumulated budget surpluses and deficits and yearly results have also been collected from SSB, namely the KOSTRA section where every municipality report their results. In addition to this, all expenses is divided into groups by sector by SSB. Examples of these groups are schools, health sector, fire department and culture sector amongst many others. I thus have data on what every municipality spend on each group every year.

The voting data consists of votes for each of the largest parties at national level, in every municipality in which they participate. These parties are Rødt (R), the party normally the party farthest left, Sosialistisk Venstreparti (SV), a leftist party with a green profile, Arbeiderpartiet (Ap), social democratic party which historically have been the largest, Senterpartiet (Sp) left/central party who often do well in peripheral Norway, Kristelig Folkeparti (KrF), a centrist party built on Christian values, Venstre (V), liberals, Høyre (H), the largest conservative party, and Fremskrittspartiet (Frp), the party farthest to the right. However, in many municipalities with a smaller population, some, or in some cases, none of these parties participate, of logical reasons.

It is not unusual to collaborate and create local electoral lists across different parties. These can differ from election to election. In my data, LL indicates the local lists result if the incumbent

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participated in the next election with the same or almost the same list, or if the same parties collaborated in the next election, but with another candidate. The local lists can be electoral lists with long tradition of running without particular party affiliation, or it could be changing

constellations from election to election, for instance conditional on how many local politicians interested in running from each party.

Table 1 shows that the average results for all incumbent mayors are relatively stable in all elections. It also shows the total number of municipalities in the data. Looking at table 2 and 3 it is notable that incumbent mayors seems to do worse when included in the ROBEK register.

Table 1: incumbents’ average election results in all municipalities

year N mean sd min max

2003 434 .3 .126 0 .702

2007 430 .331 .127 0 .775

2011 429 .331 .128 0 .797

2015 428 .33 .125 0 .711

Table 2: incumbents’ average results in municipalities on the ROBEK register on election day

2003 104 .268 .132 0 .689

2007 43 .308 .123 .096 .686

2011 50 .311 .12 0 .637

2015 48 .303 .112 0 .596

Table 3: incumbents’ average results in municipalities not on the ROBEK register on Election Day

2003 330 .31 .123 0 .702

2007 387 .333 .127 0 .775

2011 379 .334 .129 0 .797

2015 380 .333 .126 0 .711

Table 4 shows that the number of ROBEK municipalities was highest in the mid-2000s before stabilizing around 50 for almost a decade. Now, there are few municipalities left on the register.

Figure 1 displays the average net operating results for both municipalities on the ROBEK register on the 1^st of January that year and municipalities not registered.

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Table 4: Number of municipalities on the ROBEK list by January 1st

year number

1999 0

2001 56

2002 81

2003 78

2004 107

2005 118

2006 89

2007 74

2008 42

2009 44

2010 47

2011 47

2012 50

2013 47

2014 46

2015 54

2016 49

2017 47

2018 28

2019 17

Figure 1: Average net operating results on the ROBEK register in blue, net operating results municipalities not on the register in red. Y axis shows net result in percent.

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4. Model & main results

By replicating Hopland’s specification (Public Choice, 2014, p.241), using my data with more municipalities and local lists included,

𝑦𝑦_{𝑖𝑖𝑖𝑖} =𝛽𝛽₁𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅_{𝑖𝑖𝑖𝑖}+𝛼𝛼_𝑖𝑖 + 𝛿𝛿_𝑖𝑖,

where 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅_{𝑖𝑖𝑖𝑖} is a dummy variable being set equal to 1 if the municipality is on the ROBEK register on the day of the election and 𝛼𝛼𝑖𝑖being local government fixed effects and 𝛿𝛿𝑖𝑖 being time fixed effects, we get the results seen in column B in table 5. Being a mayor in a municipality on the ROBEK register on Election Day has a negative effect of 2.2% on the electoral results.

The mechanisms behind this result, however, is not clear. There are many possible reasons for a reduction in vote share, especially for a mayor in a municipality on the ROBEK list. Voters in municipalities who have just entered the register will probably consider ROBEK more when deciding who to vote for, compared to voters in municipalities who have been on the register for several years. Similarly, voters who are experiencing severe cuts and lower quality and supply of public services will experience ROBEK different to voters in a municipality who has not had to do a similar amount of cuts.

As Hopland (2013) showed, ROBEK municipalities generally cut their spending and thereby reduce their deficits. However, as interviews with local government officials done by ECON Analyse revealed, every ROBEK municipality is different. It would therefore be interesting to see if the net operating results, which could be seen as an indicator on how the municipality is being run, together with a ROBEK registration relatively close to the election affects the results for the incumbent.

To do this, I have tried to create a difference in difference study with a third difference, not dissimilar to the one discussed by Goodman-Bacon (2018). To try to capture the effects on electoral results for incumbent mayors in ROBEK listed municipalities, I suggest the following specification, with interactions of when the municipality entered the ROBEK register and if the municipality had a negative result or not in the year of the election:

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𝑦𝑦_{𝑖𝑖𝑖𝑖} =𝛽𝛽₀𝑅𝑅_𝑖𝑖0+𝛽𝛽₁𝑅𝑅_𝑖𝑖1+𝛽𝛽₂𝑅𝑅_𝑖𝑖2+𝛽𝛽₃𝑁𝑁𝑁𝑁𝑁𝑁_{𝑖𝑖𝑖𝑖}+𝛽𝛽₄(𝑅𝑅_𝑖𝑖0 × 𝑁𝑁𝑁𝑁𝑁𝑁_{𝑖𝑖𝑖𝑖}) + 𝛽𝛽₅(𝑅𝑅_𝑖𝑖1 × 𝑁𝑁𝑁𝑁𝑁𝑁_{𝑖𝑖𝑖𝑖}) + 𝛽𝛽₆(𝑅𝑅_𝑖𝑖2 × 𝑁𝑁𝑁𝑁𝑁𝑁_{𝑖𝑖𝑖𝑖}) + 𝛼𝛼_𝑖𝑖 + 𝛿𝛿_𝑖𝑖,

where 𝑦𝑦_{𝑖𝑖𝑖𝑖} is the result of the incumbent in municipality 𝑖𝑖 in election 𝑁𝑁, 𝑅𝑅_𝑖𝑖0 is a dummy variable set equal to one if municipality 𝑖𝑖 was registered the same year as the election, 𝑅𝑅_𝑖𝑖1 and 𝑅𝑅_𝑖𝑖2 being dummy variables set equal to 1 if municipality 𝑖𝑖 was registered respectively one and two years ahead of the election, 𝑁𝑁𝑁𝑁𝑁𝑁𝑖𝑖𝑖𝑖 being a dummy indicating whether municipality 𝑖𝑖 was having a negative result in election year 𝑁𝑁, 𝛼𝛼_𝑖𝑖 is local fixed effects and 𝛿𝛿_𝑖𝑖 is controlling for time fixed effects.

I try to capture the difference on an incumbent mayor's result when the municipality have been entered to the ROBEK register and is or is not having a negative net operating result in the election year. If the municipality is taken off the register before Election Day, the ROBEK dummy variables is set to zero. Consequently, all municipalities with an event dummy equal to one is still on the ROBEK register as the election occurs. This should capture the municipalities not cutting costs or spending, and who consequently might struggle to get out of the ROBEK register. I interpret the results as how Royston (2014) and Puhani (2014) does: when the

interaction are two dummy variables the product of the interaction terms can be interpreted as the difference in the dependent variable between a dummy equal to one and zero, when the other dummy is either equal to 1 or 0.

Looking at the results in table 5, the interaction of entered ROBEK one year before election and the net result dummy being zero is significantly negative. The interpretation of this is that the result of the incumbent is significantly worse when the municipality became ROBEK registered the year before the election, compared to every other incumbent with a positive financial result in the year before election. The interaction of entering ROBEK two years before an election is also significantly negative at the 1% level, meaning that an incumbent in a municipality on the ROBEK list is punished, compared to a non ROBEK incumbent. It is in line with what Hopland found: “The coefficient indicates that inclusion in Robek on the day of the election is associated with a reduction in voter support of as much as 2.8 percentage points for the incumbent’s party”

(Public Choice 161, 2014, p. 243).

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10 Table 5: Main results

Incumbent result Coef. St.Err. Sig (B) Coef. St.Err.

Entered ROBEK

in election year -0.030 0.021 Entered

ROBEK on election day

-0.023 0.009

Net result dummy -0.005 0.007 Constant 0.307 0.005

Entered ROBEK in election year x net result dummy

0.009 0.028

Entered ROBEK one year before election

-0.052 0.018 ***

Entered ROBEK one year before election x net result dummy

0.040 0.038

Entered ROBEK two years before election

-0.059 0.013 ***

Entered ROBEK two years before election x net result dummy

0.058 0.022 ***

Constant 0.330 0.003 ***

Mean dependent var 0.323 SD dependent var 0.127

R-squared 0.024 Number of obs 1721

F-test 4.406 Prob > F 0.000

The most intriguing result here, is that the interaction between entering ROBEK two years before an election and a negative financial result, 𝛽𝛽6 is significantly positive. This means that the

negative effect a ROBEK registration has on the incumbent result is stronger when the financial result is positive that year, rather than negative. This effect is significant, and can be interpreted as voters dislike the cutting of costs and loss of services rather than being on the ROBEK register and doing something about it. The coefficient of the interaction term of the net result and being entered the year before the election is also positive, but not significant.

Why is not the event and net result dummy significantly positive? It might be that when the ROBEK registration happens the same year as the election, it does not matter if the incumbent is practicing austerity or not. The ROBEK registration is still fresh in the minds of the voters and they are therefore voting accordingly. I have also chosen not to involve entrances three years before an election. This is because the effect of registration should be weaker over time as voters forget. It is also very possible that the incumbent is more likely to blame earlier administrations for a ROBEK entrance that occurred early in his tenure. It has to be pointed out that the model

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has very low power (an R-squared below 0.1), the p-values are however far away from not being significant.

5. Other specifications

5.1. Including not only negative results

An alternative specification could be to include some more observations in the dummy variable of net operating results. In the main result only the negative results are counted. By allowing for municipalities to have 1% positive result as well as negative, it is not inconceivable that one could capture some other municipalities not taking enough measures to leave the ROBEK register. However, as we see in table 6, this does not massively change the results.

Table 6. Included only just positive net operating results Incumbent result Coef. St.Err. Sig Entered ROBEK

in election year -0.006 0.024

Net result dummy 0.001 0.007

Entered ROBEK in election year x net result dummy

-0.007 0.030

Entered ROBEK one year before election

-0.040 0.020 **

Entered ROBEK one year before election x net result dummy

0.019 0.032

Entered ROBEK two years before election

-0.054 0.015 ***

Entered ROBEK two years before election x net result dummy

0.057 0.021 ***

Constant 0.308 0.007 ***

R-squared 0.035 Number of obs 1721.000

F-test 4.593 Prob > F 0.000

5.2 Media's role

The impact of media will always be a possible factor in any election. With its possibilities to reach out to many voters and its trust and credibility, whatever is written about politics in the newspaper should have some effect on voter knowledge and preference. This could also be true

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for the ROBEK register. A municipality on its way to be entered may experience substantial attention in local media and every decision being under scrutiny. Snyder & Stromberg (2010) showed that voters in areas where the newspaper had incentives to cover elections and politicians more extensively had better knowledge of politicians and were more likely to vote for the

incumbent. Here, I try to see if being registered to ROBEK changes how media effects elections.

Using Snyder & Stromberg's measure of congruence, one can try to estimate the effect of the media on ROBEK municipalities and elections. Congruence, the measure of how the newspaper markets and the electoral districts fit with each other, can be calculated by taking the reader share weighted by the market share. The market share for a newspaper in a municipality is calculated by taking the number of households it is delivered to and dividing it on number of the households receiving a newspaper in total. The reader share is the number of readers a newspaper has in that municipality divided on how many readers the newspaper has in total. The market share and the reader share is then multiplied, and all these numbers are summarized to find an estimation of congruence in every municipality. For example, the municipalities where one newspaper is dominating the readership and that municipality being the largest market for said newspaper will have a high congruence. A municipality where the people read different newspapers which does not have a large reader share in that municipality will have small congruence.

Table 7: Average congruence by year year mean

2003 .151

2004 .153

2005 .154

2006 .158

2007 .159

2008 .16

2009 .157

2010 .153

2011 .149

2012 .146

2013 .141

2014 .134

2015 .13

2016 .122

2017 .126

2018 .122

Table 7 shows how the mean of congruence has evolved over the years. As the average today is lower than it used to be in the 2000s, it seems that local newspapers has become a little bit more centralized over the last decade. Lower average congruence implies that there are fewer

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municipalities now where a newspaper is dominating or fewer newspapers where a municipality has a dominant reader share. A possible explanation would be the evolvement of newspapers online.

By doing an estimation we can see the effect of a stronger local media presence on ROBEK registrations and incumbent results:

𝑦𝑦_{𝑖𝑖𝑁𝑁} =𝛽𝛽₁𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑖𝑖𝑖𝑖+𝛽𝛽2𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑁𝑁𝑐𝑐𝑐𝑐𝑁𝑁𝑖𝑖𝑖𝑖+𝛽𝛽3(𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅_{𝑖𝑖𝑖𝑖}+𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑁𝑁𝑐𝑐𝑐𝑐𝑁𝑁𝑖𝑖𝑖𝑖) + 𝛼𝛼_𝑖𝑖+ 𝛿𝛿_𝑁𝑁,

where 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑁𝑁𝑐𝑐𝑐𝑐𝑁𝑁_{𝑖𝑖𝑖𝑖} is congruence in municipality 𝑖𝑖 in year 𝑁𝑁.

Table 8: ROBEK and congruence interaction

Incumbent result Coef. St.Err. Sig

ROBEK registered -0.024 0.012 **

congruence -0.176 0.065 ***

ROBEK x

congruence 0.015 0.046

Constant 0.333 0.011 ***

R-squared 0.032 Number of obs 1718.000

F-test 6.913 Prob > F 0.000

The results can be seen in table 8. Both ROBEK status and higher congruence has a negative effect on the result of the incumbent which somewhat contradicts Snyder & Stromberg's (2014) results from the US. They expect an increase in votes for the incumbent when the newspaper market is more concentrated. It has to be said that the newspaper markets in the USA is a lot richer than in Norway, with many more small local newspapers. Their calculation of congruence also differ from mine as the expected newspaper market and the congressional districts often does not match.

The reason that the incumbent seems to be hurting by a more concentrated newspaper market is not obvious. The interaction term also reveals that the effect of congruence on ROBEK and incumbent result is not significant. That means that the effect of congruence on the incumbent result does not change significantly if the municipality is in ROBEK or not. This could be further indications that the ROBEK list maybe is not as shameful as it was thought to be.

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My congruence estimation is not perfect. The media landscape is not the same in the US and Norway. However, increased knowledge about the local political sphere could hurt incompetent politicians as their mistakes would be more scrutinized. But then one could expect incumbents ROBEK municipalities to be punished harder with higher congruence. Another effect could be that media increases the political competition instead of the shame of ROBEK, which in turn leads politicians to not react enough to a ROBEK registration close to an election, as cutting costs might be harmful in a tight election. Finally, if the media market is not diverse or critical enough, strong politicians might use this as a window to exploit by knowing they will not be criticized if they are reluctant to do something about a ROBEK registration.

6. Discussion

A natural question to ask is why a mayor in a ROBEK municipality that actually makes an effort to reduce their deficits is punished harder in the next election than a mayor that is not willing or able to do so. In fact, one could interpret this as having a negative net result while ROBEK registered is being rewarded by the voters, compared to managing a positive result. It may be possible that the ROBEK list does not work entirely as a “list of shame”, as has it has been speculated earlier.

Seeing as having negative results is not a reason to end up on the ROBEK register nor is the opposite, the financial result not a clear ROBEK indicator. It is merely a picture of how the municipality is being run. Accumulating surplus or deficits could also be used, but it does not change much of the analysis. There are only a few municipalities who have posted accumulated deficits over the ROBEK threshold of three percent. A substantial share of the ROBEK

municipalities is also registered because of budget issues and not covering their deficits in time. I have therefore chosen the net result.

There may be several effects pulling voters to the incumbent mayor on the ROBEK register who is not able to do much with deficits and results. Firstly, there may be some kind of signaling effect present. If the message from the local government is that everything is fine and no action need to be taken, the voters might not react as severely to a ROBEK registration compared to voters in similar municipalities where the mayors have taken action, regardless of how bad the financial situation in the municipality is or what the local or national media have written about it.

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This effect would be more significant if there mistrust between the voters and the national government.

Another effect might be that the voters acknowledge the worsened financial situation and subsequent ROBEK involvement, but that they simply prefer the ROBEK scrutiny and to have services and jobs kept intact over a situation where people are fired and public service supply and quality lowered, but with the politicians taking more severe action.

Moreover, we could also be seeing an example of the same psychological voting pattern we have seen a lot of over the last decade all over the world, where voters demonstrate against national government politics by supporting a mayor standing up against the ROBEK policy. Thus, rewarding mayors not caring about ROBEK can be understood as a protest against central

government politics and against the “elite”, which is a term often used in Norwegian politics. We can be seeing the effect of some mistrust towards the central government with the blame being put on them, instead of the local government.

Anti-centralizing parties have done well over the last elections and this feeling among the people might be reflected here; if the mayor has succeeded in creating an “us against the government”

atmosphere and put voters against the government, this might be the result. In the latter years Senterpartiet (Sp) has experienced an upturn in vote shares in national elections with similar rhetoric¹.

An important point to make is that there is difference in type and amount of spending and cuts done to get in and out of ROBEK. It might be overwhelming for local politicians to be put in a situation like ROBEK. A possible factor for an incumbent being punished harder when having a positive net result is that he or she might be cutting too much, for instance due to pressure from the government, media or opposition to get off the ROBEK register as soon as possible. This might not be what the optimal solution would be to win the next election. Furthermore, being a mayor in a well-run municipality might be seen as a sign of incompetence in itself. If the basis for being a rich municipality is there, for example by having some kind of natural resources or a lot

1 See interview e.g. https://www.dagsavisen.no/portrett/ulvedodaren-trygve-slagsvold-vedum-1.909952

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of tax income, being a ROBEK municipality might indicate to the voters that there is possible to get a mayor of a higher quality in the next election.

7. Conclusion

In this thesis I have offered an alternative explanations of the effect the ROBEK register has on incumbent mayors’ electoral results and how they behave when faced with the task of winning an election and at the same time trying to leave the list. Previous literature have argued that

municipalities cut spending and reduce deficits after being included, while the incumbent mayor struggles relatively in elections. This is evidence that ROBEK does what it is supposed to, keeping local governments in check and punishing incompetent politicians. My findings, however, suggest that other factors are in play: voters punish mayors with positive net results harder than mayors with negative results when the municipality is on the ROBEK list.

That the optimal strategy for an incumbent is to spend more have seemed to be an idea for the past. Here, however, it might be true. ROBEK does have an aura that attracts attention from people and the media, and for an incumbent seeking reelection the best bet may be to try to defeat that aura, either by keeping up as before or taking advantage of an already hostile political

environment. Lastly, my results are not able to say if politicians actively choose a negative result or not. An interesting avenue for further research could be trying to find behavior pointing on or the other way, to better see how my results and interpretations hold.

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ROBEK: To spend or not to spend