The Political Economy of Transparency: What Makes Disclosure Policies Effective?

48 Pages Posted: 17 Aug 2005

See all articles by Archon Fung

Archon Fung

Harvard University - Harvard Kennedy School (HKS)

Mary Graham

Harvard University - Harvard Kennedy School (HKS)

David Weil

Brandeis University - The Heller School for Social Policy and Management

Elena Fagotto

Transparency Policy Project

Date Written: December 2004

Abstract

Regulatory transparency - mandatory disclosure of information by private or public institutions with a regulatory intent - has become an important frontier of government innovation. This paper assesses the effectiveness of such transparency systems by examining the design and impact of financial disclosure, nutritional labeling, workplace hazard communication, and five other diverse systems in the United States. We argue that transparency policies are effective only when the information they produce becomes "embedded" in the everyday decision-making routines of information users and information disclosers. This double-sided embeddedness is the most important condition for transparency systems' effectiveness. Based on detailed case analyses, we evaluate the user and discloser embeddedness of the eight major transparency policies. We then draw on a comprehensive inventory of prior studies of regulatory effectiveness to assess whether predictions about effectiveness based on characteristics of embeddedness are consistent with those evaluations.

Keywords: transparency, information disclosure, regulation

JEL Classification: L51, K32, I18, D80, D82, G18, J28, M41, M45

Suggested Citation

Fung, Archon and Graham, Mary and Weil, David and Fagotto, Elena, The Political Economy of Transparency: What Makes Disclosure Policies Effective? (December 2004). Available at SSRN: https://ssrn.com/abstract=766287 or http://dx.doi.org/10.2139/ssrn.766287

Archon Fung (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-9846 (Phone)
617-496-1722 (Fax)

Mary Graham

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-7891 (Phone)
617-496-1722 (Fax)

David Weil

Brandeis University - The Heller School for Social Policy and Management ( email )

P.O. Box 549110/MS 035
415 South Street
Waltham, MA 02454
United States

Elena Fagotto

Transparency Policy Project ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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