Influence of advisory councils

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1/11/2019

Influence of advisory councils

Do organizational characteristics matter?

Esmee Braam – s1276573

ADVISOR: DR. N.A.J. VAN DER ZWAN

SECOND READER: DR. J. CHRISTENSEN

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ESMEE BRAAM – S1276573 1

Chapter 1. Introduction

There is a demand for the use of expertise in the policy process to support politicians in their decisions. Therefore, some European countries have a history of institutionalized advisory systems. For example, the Netherlands, Belgium and Ireland have institutionalized advisory councils to give solicited and unsolicited advice about policy issues. These advisory councils combine different kinds of expertise. There are academics to take a scientific look at a problem, but often there are also representatives of the business- and labour organizations that bring the experience and knowledge from practice.

This thesis investigates the changes in tax policies for housing finance in the Netherlands, Belgium and Ireland. The advisory councils in these countries face similar institutional surroundings, while all three countries recently made changes to these tax measures. Although these advisory councils might operate in the same context, they do not have the same organizational characteristics. One council is recently created. The other two councils longer ago. Furthermore, some operate with a large budget, some operate with more staff, and some with more societal support than others. Do different organizational characteristics matter for the influence that advisory councils have in the policy process? This is the main question that this thesis tries to answer: Is there a relationship between the organizational characteristics of advisory councils and their influence on policy? To answer this question, I will study the case of housing finance reform between 2008-2018 in the Netherlands, Belgium and Ireland. It is interesting to examine the policy area of housing finance, because the policy field is a much discussed and politically sensitive issue in these three countries. Several tax reforms and changes were made between 2008 and 2018. Additionally, the financial crisis caused economic declines and budget deficits and as a result, fiscal measures were re-examined. It is interesting to investigate whether the policy-makers listened to experts when they made reforms in this policy field.

Furthermore, this thesis is academically relevant, because it gives a better understanding of how expertise and policy advisory systems influence policy-making in small corporatist countries. Often research addresses the general concepts of knowledge regimes (e.g. Campbell & Pedersen, 2015), evidence-based policy (e.g. Head, 2015) and policy advisory systems (e.g. Berg, 2017). In addition, frequently research about expertise focuses on think-tanks (e.g. Stone, 2011), scientific venues (e.g. Timmermans & Scholten, 2006) and advisory committees (e.g. Jasanoff, 1990). Less research has been done about the influence of advisory councils in light of their organizational characteristics. An exception is the research from Fobe, Brans, Vancoppenolle, & Van Damme (2013). They investigate the influence of advisory councils in Belgium. The added value of this thesis is the comparison of different advisory councils in institutionally similar countries.

Moreover, this thesis is societal relevant, because it gives more insight in the influence of advisory councils. In a representative democracy, elected representatives make decisions for the population. Those representatives face widely varied policy issues. Politicians often do not have expertise about all policy and fail to address the right cause-and-effect relationships between policy

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ESMEE BRAAM – S1276573 4 problems and policy solutions (Stone, 2011, p. 275). If a society demands more use of expertise in the policy process or a stronger involvement of labour market actors, this thesis provides knowledge in which organizational characteristics an advisory council should have to achieve more influence.

This thesis uses comparative case study as a method. In particular, the research question is answered through a co-variational analysis of most similar cases. This means that causal relationship is assessed through the existence of co-variation between the independent variable organizational characteristics of advisory councils and the dependent variable the influence of the advice. The countries are the Netherlands, Belgium and Ireland. The countries are examples of small corporatist countries in the EU. They are most similar in their institutionally context. However, the selected advisory councils differ in their organizational characteristics. The advisory councils are the Sociaal-Economische Raad (Social Economic Council) (SER) in the Netherlands, the Vlaamse Woonraad (Flemish Housing Council) (VW) in Belgium and the National Social and Economic Council (NESC) in Ireland. This thesis focuses on the instrumental influence of the advice. This is advice from the advisory councils that is directly used by policy-makers. The data is collected by a document analysis. The documents from the government, the advisory councils and the four biggest newspapers are analysed.

This thesis is structured as follows. The second chapter addresses several theories about the use of expertise in small corporatist countries. It elaborates on different policy advisory systems and how different organizational characteristics might affect the influence an advisory council has in the policy process. After that, the third chapter explains the methodology that is used to gather information to answer the research question. It operationalizes the variables and explains the case selection. The following three chapters set out the empirical evidence that is found in the document analysis. The seventh chapter provides an analysis of the expectations from chapter two and the empirical evidence in chapter four, five and six. The final chapter answers the research question and gives a self-reflection on the theories and the research itself.

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Chapter 2. Literature review and theoretical framework

This literature review contains six sections. The first section explains general ideas of the use of expertise in politics. Subsequently, the second section elaborates on the role of experts in the policy-making process. After that, an explanation of the role of experts in different systems follows. The fourth section addresses the knowledge utilization and the influence of organizational characteristics. The fifth section elaborates on the great financial crisis as focusing event. Finally, expectations are derived from the theories, that identify five organizational characteristics of advisory councils which may shape the influence they have on policy.

2.1 Use of expertise in politics

The use of expertise in de policy process has grown over time. Chiles (1999) argues that the responsibilities of the state have expanded after WOII and this has resulted in an increased use of expert opinions in the policy process. Today, policy-makers often seek expert opinions when making policies and society sees this as a wise thing to do (Chiles, 1999, p. 2). Experts act mainly on mandates from the government, and this enables them to influence policy outcomes in a formal way (Chiles, 1999, p. 6). Secondly, the increased use of expert knowledge in the policy process is a result of rising complexity of policy issues and legitimacy arguments (Chiles, 1999, p. 6). He argues that policy-makers need the expertise to provide the legitimacy for their policy decisions towards society and important actors of the policy area. Furthermore, experts help the policy-makers to evaluate policy and give alternative policy options. This is especially important in policy fields with rising complexity (Chiles, 1999, p. 49).

In the same line of reasoning, Stone (2011) states that if policy-makers want to change a specific behaviour and create effective incentives for that, they need to understand the causes of this behaviour. Policy-makers often fail to use the right cause-and-effect relationship (Stone, 2011, p. 275). An individual faces multiple incentives, rewards and penalties. Thus, multiple factors influence someone’s behaviour (Stone, 2011, p. 277).

Similarly, Timmermans & Scholten (2006) argue that experts can point to causal relationships of the current policy and therefore, experts can facilitate knowledge to create or support policies. Additionally, they can limit conflicts and take arguments based on emotions out of the debate. Thus, policy-makers frequently base their arguments on experts’ opinion. The influence of experts increases when policy areas are more complex (Timmermans & Scholten, 2006, p. 1106).

Correspondingly, Gilley (2017) explains the use of expertise in politics with the democratic and technocratic approaches. The technocratic approach advocates that experts should make the rules, because they are the most skilled to do so (Gilley, 2017, p. 10). The advocates for technocracy base their arguments on the rising complexity, risks and uncertainties that public policy faces. This led to an increase of policy analysis by experts (Gilley, 2017, p. 11). The technocratic approach agrees with the arguments of Chiles (1999), Stone (2011) and Timmermans & Scholten (2006) that an increased complexity of policy problems is one of the causes of increased use of expertise in the policy process.

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ESMEE BRAAM – S1276573 6 However, the increase of technocratic policy-makers brought problems of democratic accountability. Followers of the democratic approach demand a government that is customer service-oriented with a high level of participation in governance and information transparency (Gilley, 2017, p. 11). The democratic approach is in line with the arguments of Chiles (1999) that an increased demand for legitimacy is one of the causes of increased use of expertise in the policy process. Neither of the approaches alone provides society with the best answers for public policy. Thus, choices between the democratic or technocratic approach often create dilemmas in public policy (Gilley, 2017, p. 17). Gilley argues, “issues involving complex rationality, sanctity and care lead to technocratic solutions, while in issues involving plural rationalities, they lead to democratic ones.” (Gilley, 2017, p. 19).

In the same way, Weingart (1999) argues that there is a legitimation dilemma between rationality and democracy. Elected representatives of society must make policy decisions rationally. The knowledge of experts facilitates the rational arguments for policy decisions. Nevertheless, elected representatives in a democracy must make the decisions. Thus, solely technocratic decisions based only on the knowledge of experts lack the legitimacy from society and policy decisions that solely rely on the opinion of elected representatives lack the rational basis. Therefore, policy decisions must be made in a combination of rational and democratic features (Weingart, 1999, p. 154). This argument corresponds with the statements of Gilley (2017). The use of expertise in the policy process is the result of the demand for rationality in the policy process, but this demand goes hand in hand with the demand for democracy in the policy process.

Furthermore, policy-makers base their decisions on policy advices given by different actors and sources (Hustedt & Veit, 2017, p. 41). Policy advice facilitates the use of rational argumentation in the policy process (Hustedt & Veit, 2017, p. 42). At the same time, policy advice facilitates the legitimization of policy and the process to opponents of the policy (Weiss, 1980, p. 429). This argument corresponds with the ideas of Weingart (1999) and Gilley (2017). They argue that policy decisions must be made in a combination of rational and democratic features.

Following these arguments, the use of expert knowledge in politics resulted from the demand for rationality in the policy process. On the one hand, experts are the best able to give policy advice, because they are the most skilled to do so. They can give the rational argumentation for policy decisions and point to causal-relationships. They facilitate knowledge about policy evaluation and alternatives. This is especially important when policies become more complex. On the other hand, expert knowledge is useful to provide legitimacy for policy decisions. Besides this, society needs to agree with the policy and feel represented in the policy decisions. This rationalization in the policy process should not be at the expense of democracy in policy decisions.

Hence, expert knowledge is used to provide policy advice. It is useful to define the concepts expert and policy advice. Firstly, experts are owners of formal or technical knowledge that have a certain legitimate status in a policy area. Moreover, expertise is received through a mix of training and the

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ESMEE BRAAM – S1276573 7 professional career system (Chiles, 1999, p. 7). Secondly, policy advice is “a broader suite of techniques and activities, at various points in the policy process, including the provision of recommendations, guidance, and the articulation of preferences in support of policy work.” (Craft & Halligan, 2017, p. 49). In this thesis, policy advice is any report or formal documentation that gives policy recommendations, directions or value judgements.

Problems and paradoxes

There are two problems with the use of expert knowledge in the policy process. First, expert knowledge is socially constructed and for that reason can be deconstructed again (Jasanoff, 1990, pp. 12-13) . For example, an expert in a policy field declares that fact A disturbs the desired outcome of the policy. It is believed that this expert is competent enough to know that this is true. However, the expert constructed this fact with his/her own knowledge. Consequently, this fact can be deconstructed again if another expert declares that fact B disturbs the desired outcome of the policy (Jasanoff, 1990, pp. 12-13). This means that facts can lose their factual status again. Secondly, scientific knowledge cannot be isolated from political value judgements (Weingart, 1999, p. 156). Experts do not only give objective knowledge to policy-makers. Scientists are often chosen to publicly spread their beliefs when this corresponds with the beliefs of politicians. Due to the involvement of scientific expertise in the policy process, the scientist becomes subject to a political role. This is a politicisation of scientists (Weingart, 1999, p. 156). It is important to consider these problems in the analyses of the influence of expert advice. It may cause policy-makers not to follow-up on expert advice.

Weingart (1999) further elaborates on two paradoxes emerging in the field of scientific advice to policy-makers. As state above, a major concern with scientific advice is the lack of democratic accountability of experts. Although, these concerns faded away when policy-makers increasingly used this expert advice. There was a democratization of expert knowledge. This entails that knowledge is better widely accessible and more groups are using scientific expertise (Weingart, 1999, p. 152). However, this increased use of expertise has not led to more certainty for policy-makers, judges and administrators. They must choose between the different advices experts give on a topic. This results in de-legitimization, because knowledge is now open for debate and there are multiple contrasting solutions offered to policy issues (Weingart, 1999, p. 158).

This development resulted in the second paradox. While there has been a loss of authority from experts and consequently, their legitimizing function for policy-makers has decreased (Weingart, 1999, p. 152). Meanwhile, policy-makers did not change the arrangement they had with experts and continued to rely on them (Weingart, 1999, p. 151). The main reason is that scientific expertise is an essential component to provide legitimacy for political decisions and often is institutionalised. So far, there is no alternative to change this (Weingart, 1999, p. 159). It is important to consider these paradoxes in the analyses of the influence of expert advice. Although, the institutional relationship between advisory

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ESMEE BRAAM – S1276573 8 councils and policy-makers might have stayed intact. There has been a democratization of expert knowledge. This may result in that policy-makers have to choose between expert advices from multiple sources. Therefore, expert advice from other sources needs to be included in the analysis as well.

2.2 Role of experts in the policy process

Scholars vary in the conceptualization of the public policy process (e.g. see Ostrom, 2007) for the institutional rational choice or (True, Jones, & Baumgartner, 2007) for punctuated-equilibrium theory. In the 1970s and 1980s, this process was explained as the stages heuristic. First, there is a conceptualization of the problems. After that, different solutions are offered. Next, the governmental institutes picked a solution. Then, the implementation follows and later evaluation of that solution (Sabatier, 2007, p. 3). Thus, the stages of the policy process generally included agenda setting, policy formulation and legitimation, implementation and evaluation (Sabatier, 2007, p. 7).

However, over time the concept of the policy process evolved. As a reaction to definition above, the policy process is now defined as an interaction of elements that change over time. This makes the concept complicated to analyse. For instance, numerous actors are involved when decisions about policies are made, like interest groups, regulatory agencies and different levels of government. These actors have their own values and policy preferences (Sabatier, 2007, p. 3). Furthermore, the time span of policy decision-making can cost many years and the policy process can be very technical. In addition, policy-decisions often involve high stakes in terms of values, money and coercion (Sabatier, 2007, pp. 3-4). Other critiques mention the lack of causality, inaccurate sequence of stages and the ignoring of the interaction between policy cycles of different policy proposals at different levels of the government (Sabatier, 2007, p. 7).

Nevertheless, the concept of policy process of Sabatier (2007) provides a good basis for the definition of the policy process in this thesis, while bearing in mind the critiques on this definition. In this thesis, the policy process is defined as consecutive stages. First, the politicians and policy-makers conceptualize policy issues, the agenda-setting stage, although the experts can also put policy issues on the agenda in this stage. The next step is the exploration of possible solutions of the policy problem. In this stage, the policy-makers will consult experts to elaborate on possible solutions. Furthermore, other actors will try to push for their own policy solutions. Later, the policy-makers decide which policy solutions they will follow. Finally, the policy is implemented and later evaluated. It is expected that experts are consulted to evaluate the policy outcomes.

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2.3 Role of experts in different systems

2.3.1 Knowledge regimes

Campbell & Pedersen (2015) state that the organization and working of the knowledge regime is influenced by the political economy in a country (Campbell & Pedersen, 2015, p. 680). Consequently, knowledge regimes inherit national characters (Campbell & Pedersen, 2015, p. 679). They define knowledge regimes as “the interaction between ideas and institutions in the production of economic and policy knowledge” (Campbell & Pedersen, 2010, p. 167). Knowledge regimes create policy ideas. As a result, the kind of knowledge regime that exists in a country is important for the knowledge that is produced. The ideas about what effective policy is, matters (Campbell & Pedersen, 2015, p. 682).

Furthermore, Campbell & Pedersen (2015) argue that the knowledge regime can change in a crisis (Campbell & Pedersen, 2015, p. 680). During a crisis, policy analysis from experts can help to solve the complex policy issues that the policy-maker is facing (Campbell & Pedersen, 2015, p. 680). Nevertheless, sometimes a crisis causes a deficiency in the utility of the current knowledge regime. Then, society reshape their knowledge regime to provide sufficient answers to policy problems. However, this change is in such a way that the knowledge regime still fits in the political and economic institutions of a country (Campbell & Pedersen, 2015, p. 679). For example, in the 1980s, the knowledge regime in Germany changed. The knowledge regime was no longer capable to provide answers for policy issues, when Germany faced economic problems (Campbell & Pedersen, 2015, p. 692). The existing knowledge regime relying on corporatism was questioned. This resulted in more use of private advocacy organizations (Campbell & Pedersen, 2015, pp. 694-695). In sum, Campbell & Pedersen (2015) argue that the political and economic institutions in a country influence knowledge regime. A crisis can trigger a transformation of a knowledge regime (Campbell & Pedersen, 2015, p. 695). Thus, the political and economic institutions in a country also influence how policy-makers make use of expert knowledge that is provided for them.

2.3.2 Policy advisory system

The policy advisory system in a country matters to identify the influence that advisory councils have on policy. Many different sources of expertise can exist next to each other in policy advisory systems. Examples are scientific venues, think-tanks, interest groups and advisory councils. The advisory councils are often institutionalized in consensus-based neo-corporatist countries. They are a part of the policy-process because it is historically grown that way (Lembruch & Schmitter, 1977). The definition of a policy advisory system is “the complex system of actors who cooperate in various ways to provide the advice that helps decision makers shape policies. These actors can be based both within and outside of the government apparatus” (Berg, 2017, pp. 64-65). The actors in a policy advisory system can give advice when asked by the government, but also at their own initiative (Hustedt & Veit, 2017, p. 42).

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ESMEE BRAAM – S1276573 10 There are several arguments made for the existence of policy advisory systems. For example, Brans and Vancoppennolle (2005) argues that two developments explain the existence of policy advisory systems. The first development is the professionalization of policies. Better policies should improve the effectiveness of policies (Brans & Vancoppenolle, 2006, p. 164). Therefore, advice from experts about policy is needed. The second development is a demand for social responsiveness and societal support from the citizens for the policy (Brans & Vancoppenolle, 2006, p. 164). This should increase citizens’ willingness to comply with policy. Besides, involving citizens and interest groups can provide useful knowledge about policy, based on their experiences in the field (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 226). Additionally, Fobé et al. (2013) give two arguments for the existence of policy advisory systems. Firstly, the government increasingly demands evidence-based policy and the use of different sources of evidence in the policy advisory system, because the government is unable to provide these policy analyses themselves due to lack of capacity and rising complexity of policy issues (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 226). Secondly, policy advisory systems are a tool for the government to be perceived as open and democratic, which provides them with more policy support. As a bonus, policy advice provides them with more efficient and effective policies because of advice for better policy decisions (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 226)

2.3.3 Pluralist systems versus neo-corporatism

The political culture in a country has an effect on the influence of the advisory councils. Traditionally, a distinction is made between pluralist systems and neo-corporatism. In a pluralist system, there are many social movements and there is no settled amount. They often exist temporarily, and they are not institutionalized. In addition, social movements are frequently not recognized or funded by the government. Furthermore, they do not have any responsibilities to society. They exist purely to advocate their own ideas (Kickert, 1997, p. 741). This is in contrast with a corporatist system. In a neo-corporatist system there is a settled number of interest groups. They are ordered and institutionalized. Furthermore, interest groups are recognized and often funded by the government. Sometimes, the interest groups have public responsibilities, mandated by the state (Kickert, 1997, p. 741).

Likewise, Hustedt and Veit (2017) argue that the type of system matters for policy influence of interest groups. In an open corporatist policy advisory system, the system is complex and highly institutionalized. The knowledge of external actors is well represented (Hustedt & Veit, 2017: 45). This contradicts with pluralist systems. In a pluralist system the policy advisory system is not institutionalized. This causes a competition between advisory actors in pluralist systems (Hustedt & Veit, 2017: 45). It is important to classify the type of policy advisory system and policy advisory process to indicate a form of influence on policy output (Hustedt & Veit, 2017: 46).

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ESMEE BRAAM – S1276573 11 Furthermore, Weiss (1979) states that the interaction between rationalization and legitimization is especially important in neo-corporatist countries, because both mechanisms are institutionalized (Hustedt & Veit, 2017, p. 43; Berg, 2017). The mechanisms represent two demands for policy advisers and policy-makers and the actors can choose strategically on which mechanism they want to rely more (Hustedt & Veit, 2017, p. 43).

2.3.4 Knowledge regime and policy advisory systems in the Netherlands,

Belgium and Ireland

Scholten (1981) defines neo-corporatism as an integrated structure and interaction system, where social-economic decisions about public policy are made by, or have direct influence from oligopolistic and centralized employer and employees labour unions (Scholten, 1981, p. 244). There are four forms of neo-corporatism. In practise, one country will have a combination of multiple forms. The first form is public-law corporations with some independent authority to regulate activities in the economic sector. The second form involves corporate representation patterns in the parliament, internal committees, and in the cabinet. The third form consists of more extensive commission structures with institutionalized functional representation. They give advice to the government and carryout some other tasks that are beneficial for the government. The final form contains institutionalized interaction with the state, the central employers and employees labour organization. They help with the implementation of social-economic policies (Scholten, 1981, p. 241).

Thus, in a neo-corporatist country, stakeholders are asked for formal advice and this is institutionalized in different advisory bodies. An advisory council is a form of an advisory body. They help to provide experience-based knowledge for policy. Experience-based knowledge is perceived as the experience stakeholders have. Policy-makers find this experience-based knowledge helpful to improve the efficiency and effectiveness of their policy (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 227). Furthermore, there is a preference for the representation of key stakeholders and interest groups that can formulate a consensus about policy solutions together. Often, the advice from key stakeholders is more important to policy-makers than advice originating from research. The advantage of policy advice given by advisory councils with high representation is that they have more impact. This is the result of a low probability of resistance when key stakeholders have agreed with the policy (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 230).

The knowledge regimes of the Netherlands, Belgium and Ireland rely on neo-corporatism (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 225; Lijphart, 1999; Roche & Cradden, 2003). Lijphart (1999) states that policy process in The Netherlands and Belgium have characteristics like consensuality and maximum-majority. Fobé et al. (2013) confirms this for Belgium and state that Belgium has a consensus-based political system with neo-corporatist features (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 225). There is a high level of rationalization through the access of expertise. This

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ESMEE BRAAM – S1276573 12 means that the experts provide rational arguments for policy evaluations and recommendations in their policy advice. Simultaneously, there is a high legitimization through the representation of different groups in society, mostly institutionalized in a neo-corporatist structure (Berg, 2017, p. 64). Because these countries have a strong corporatist tradition, an institutionalized involvement of non-government actors for policy advice was already present (Berg, 2017, p. 65).

Furthermore, the policy advisory system of Ireland is characterized as competitive corporatism (Roche & Cradden, 2003, p. 87). In 1990s, the neo-corporatist social pact became important again in Ireland. These social pacts consist of the classic neo-corporatist arrangement. Specially, agreements were conducted between three parties through negotiations. The three parties are unions, employers and governments (Roche & Cradden, 2003, pp. 72-73). The social partnerships are highly valued in Ireland due to the consensus they create for implementing new policies (Roche & Cradden, 2003, p. 80). In sum, the three countries have in common that their politicians want to achieve consensus through negotiation and deliberation. Consequently, minorities and multiple stakeholders are well represented in the system, where their role is often formal and institutionalized.

2.4 Knowledge utilization and organizational characteristics

There is a demand for policy advice in the policy process. However, knowledge provided by advisory councils is often not used. Koontz (2005) discusses the lack of knowledge utilization in policy advice. He argues that the influence of policy advice provided by (key) stakeholders is dependent on local contextual factors. Additionally, some scholars argue that the organizational characteristics of the advisory council and where the advice comes from matters. These are discussed below.

Organizational characteristics advisory councils

Locational model

Halligan (1995) argues that policy advisors inside the government have a different level of influence than policy advisors outside the government. He states that there are two dimensions of the policy advisory system. The first dimension is the location of the policy advice and the second dimension is the degree of control that a government has over a policy advice (Halligan, 1995, p. 140). The expectation is that insiders have a greater influence than outsiders on the policy outcomes. The argument is that insiders are more likely to produce advice that is congruent with the government's goals and ambitions and therefore is more likely to be adapted by the policy-makers (Craft & Howlett, 2012, p. 82). Adamo (2002) confirms this argument and states that the involvement of policy-makers or government officials in the policy advisory body influences the take up of advice into policy (Adamo, 2002, p. V).

Additionally, Craft and Howlett (2012) state that in contemporary policy advisory systems location models are still relevant but need some adjustment. They argue that the main point of analysis

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ESMEE BRAAM – S1276573 13 is the content of advice, since nowadays multiple forms of policy advisors exist (Craft & Howlett, 2012, p. 83). External sources of advice are often used by policy-makers and are even encouraged (Craft & Howlett, 2012, p. 87). The policy advisory system is more fluid and diverse than before. That is why the older locational model cannot hold on its own. The content in which advice is given should be considered as well (Craft & Howlett, 2012, p. 89). Craft and Howlett (2012) categorize different types of content of policy advice. This model can help to identify the kind of policy advice that is given. This gives insight in the degree of influence (Craft & Howlett, 2012, p. 91). They differentiate between procedural and substantive types of policy advice and between hot (short-term) and cold (long-term) types of policy advice (Craft & Howlett, 2012, p. 93).

Budget

Various scholars argue the importance of budget for the influence on policy. Firstly, Arnstein (1969) argues that the influence on policy up-take of an advisory council is dependent on the level of access to resources like funding and technical assistance (Koontz, 2005, p. 462). This result is also shown in the research of Fobé et al. (2013). They found that advisory councils with more budget also have better access in the policy-making process (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 230). Therefore, advisory councils that have more budget, have a higher influence on the policy than advisory councils with lower budget (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 236). In addition, Nelson (1990) underlines this importance of budget and use of resources for advisory councils to be influential (Koontz, 2005, p. 462). Finally, Kohler & Martinez (2015) found in their study about an advisory council that a lack of support from the government is one of the main reasons the council is not effective (Kohler & Martinez, 2015, p. 6). Members of the Council state that there was a lack of resources due to budget restraints. Consequently, the council could not fulfil all their tasks (Kohler & Martinez, 2015, p. 7).

Broad societal support for the advice

Two researches indicate broad societal support as a key factor for the influence of advisory councils. Firstly, Adamo (2002) found that a policy environment that is supportive of certain policy directions has a positive impact on the up take of policy advice (Adamo, 2002, p. V). A policy environment is supportive when the government is receptive for the advice of the council. He distinguishes three forms of a supportive policy environment. Firstly, the government is receptive when they ask the council for their advice on a policy issue. Additionally, the government is receptive when the government self, or other important stakeholders, are advocating a policy reform (Adamo, 2002, p. 37). Finally, the policy environment is supportive when government is convinced that the council has the capacity to provide relevant policy advice (Adamo, 2002, p. 38).

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ESMEE BRAAM – S1276573 14 Also, Busenberg (2000) found the importance of resources and broader political support when assessing the effectiveness of the advisory council. In his research, resources on itself are not enough to ensure policy influence. There is also the need for political support. Political support can be derived from the policy-makers or from the key stakeholders that have influence in the policy field (Busenberg, 2000, p. 585). Busenberg (2000) concludes that resources accommodate advisory councils to influence policy up-take of their advice. However, it is necessary that key stakeholders agree with the advice to ensure influence of the advisory council (Busenberg, 2000, p. 585).

Legacy of advisory council

Another important organizational characteristic is the legacy of the advisory council Advisory councils in the research of Fobé et al. (2013) that are of a younger age have less reputation, than advisory councils that were established longer ago. Recently created councils, like the Vlaamse Woonraad (Flemish Housing Council) , still need to establish a reputation as a good advisory body compared to older advisory councils (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 230). They found that the advisory councils that existed longer had more impact on policies, than the younger established advisory councils (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 236). Adamo (2002) confirms this in his research. He states that the reputation of policy advisory actors matters in terms of capability to influence policy (Adamo, 2002, p. V). A good reputation of an advisory council leads to more access and attention from policy-makers (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 230; Adamo, 2002).

In the same line of reasoning, Van Damme, Brans and Fobé (2011) state that multiple advisory sources fight for their relevance to contribute to legitimacy. Therefore, it is important for advisory councils to obtain a high-status level, for policy-makers to decide that they are the best suited actor to contribute to this legitimacy (Damme, Brans, & Fobé, 2011, p. 142). Van Damme, Brans et al. (2011) distinguish the input, output and process legitimacy of advisory councils. Input legitimacy concerns a better democracy, because the input from multiple stakeholders is provided. Output legitimacy concerns the efficiency and effectiveness of policy. Advisory councils ensure better policy decisions with their knowledge. Finally, process legitimacy concerns that the advice is established through transparency fairness and deliberation (Van Damme et al, 2011, p. 129).

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ESMEE BRAAM – S1276573 15 Staff support

Scholars also argue the importance of staff support for the influence on policy. Lynn (1987) states that the staff support is important for the effectiveness of policy advice for advisory council (Lynn, 1987, p. 358). Secondly, Fobé et al. (2013) argue that the secretariat of an advisory council is important for the council to operate well and do its job correctly. A good secretariat increases the changes of up-take of policy advice (Fobé, et al. 2013, p 234). Advisory councils with a larger staff can easily have more influence on policy than advisory councils with less support staff (Fobé, et al. 2013, p 236). Finally, Kohler & Martinez (2015) found in their study that a lack of government support, in the terms support staff, is problematic. (Kohler & Martinez, 2015, pp. 8-9)

2.5 The great financial crisis as focusing event

In this thesis, the influence of advisory councils is examined after 2008. In 2007, the financial crisis started in the United States. The housing market collapsed when housing prices stagnated and even declined (Bos & Michiel, 2011, p. 6). The American crisis became global with the fall of the Lehman brothers in 2008. This resulted in a financial and economic crisis in the EU (Bos & Michiel, 2011, pp. 4-6). In this thesis, the economic and financial crisis in the EU is seen as a focusing event, because it meets the five characteristics of Birkland (1998). Birkland (1998) addresses the importance of focusing events in the stage of agenda-setting. He defines focusing events with five characteristics. Focusing events happen suddenly, are uncommon and harmful, harms are concentrated and are known simultaneously to the public and the policy-makers (Birkland, 1997, p. 22). Focusing events can change which issue is dominant on the agenda of a policy domain and can mobilize groups who share the same beliefs (Birkland, 1998, p. 72). Additionally, Birkland (1998) argues that politics of a focusing events are different for a policy domain where the public interest is low, then in policy domains where the public interest is high. A policy change is mainly advocated by professionals when there is little public interest. However, policy change can cause group mobilization when public interest is high (Birkland, 1998, p. 73).

Similarly, Timmermans and Scholten (2006) state that the reliance on knowledge of experts can shift towards other sources of knowledge to facilitate support for the policy view of the policy-maker when a focusing event appears (Timmermans & Scholten, 2006, p. 1106). If policy-makers want to change a policy monopoly, they can seek for other scientific venues that support their beliefs. They might even try to break the existing relationships with scientific venues like experts (Timmermans & Scholten, 2006, pp. 1106-1107). Therefore, differences in what is important on the agenda can result in a shift from political-based arguments towards science-based arguments, or backwards towards political-based arguments depending what best reflects the policy view of the policy-makers. Consequently, a focusing event can result into strategic venue shopping of policy-makers between scientific venues who support their beliefs (Timmermans & Scholten, 2006, p. 1107).

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ESMEE BRAAM – S1276573 16 Based on these arguments, it is likely that after a focusing event the reliance on experts shifts to other experts or other scientific venues who support the beliefs of the policy-maker. This shift could either be towards less reliance on scientific arguments or towards less reliance on political-based arguments, depending on the starting point.

After 2008, there developed doubt about the value and usefulness of policy expertise (Hernando, Pautz, & stone, 2018, p. 125). The crisis led to a paradox for experts. On the one hand, society became doubtful about the authority of experts. Are they still able to provide the right policy answers? At the same time, the experts where expected to prevent a crisis like this from happening again (Hernando et al., 2018: 126). Likewise, Christensen (2018) found in his research that there is a growing reliance on expertise from academics when making economic policy. He calls this the scientization of policy advice (Christensen, 2018, p. 306).

Hernando et al. (2018) also argue the development for experts after a crisis. They state that experts have gained a reputation of untrustworthy and insufficient since the crisis. The reason for this reputation is they did not predict or solve the crisis sufficiently (Hernando et al., 2018: 128-129). There was, and might still be, a growing scepticism about the legitimacy of the expert elite (Hernando et al., 2018: 136). However, Hernando et al. (2018) also argue that despite the bad reputation of experts, policy advice is still seen as a necessary justification of policy choices (Hernando et al., 2018: 136).

In the same line of reasoning, Nispen and Scholten (2017) state that a crisis in a country gives opportunity to different agenda setting and windows of opportunity for policy changes (Nispen & Scholten, 2017, p. 82). The Dutch government needed to implement major retrenchments in order to decline the budget deficit in the economic and financial crisis of 2008 (Nispen & Scholten, 2017, p. 82). In the study of Nispen and Scholten (2017), advisory councils are displayed as boundary organizations “that operate on the boundaries of research and policy and often play an intermediary or brokerage role in mutual relations’ (Nispen & Scholten, 2017, pp. 85). The boundary organizations failed to influence policies, due to a misfit between focus of the policy report and politicians and issues around scientific credibility and authority (Nispen & Scholten, 2017, p. 93).

However, knowledge utilization did happen in political and symbolic forms. In a crisis, knowledge is highly valued for its policy coordination (Nispen & Scholten, 2017, p. 94). In both cases of Nispen & Scholten (2017) found that the knowledge provided by advisory bodies were important for policy direction and to legitimize policy decisions (Nispen & Scholten, 2017, p. 95).

2.6 Expectations

Based on the scholarship discussed above, we can formulate several empirical expectations regarding the correlation between organizational characteristics and the policy influence of advisory councils. Firstly, if the locational model of Halligan (1995) and the argument of Adamo (2002) holds, it is expected that advisory councils that have (some) members that meet the criteria insider have more

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ESMEE BRAAM – S1276573 17 instrumental influence on the policy up-take, than advisory councils who solely exist of members considered as outsiders.

Secondly, in consideration of the findings of Arnstein (1969), Fobé et al. (2013), Nelson (1990), Busenberg (2000), and Kohler & Martinez (2015), an important characteristic is the budget of an advisory council. Advisory councils that have more budget are expected to be more influential than advisory council with a lower budget.

Thirdly, in view of the arguments of Adamo (2002) and Busenberg (2000), the societal support for the policy advice is important as well. If these arguments hold, policy advice with societal support will be more influential than policy advice with little societal support.

Fourthly, the legacy of an advisory council is also important regarding of the theories of Fobé et al. (2013), Adamo (2002) and Van Damme et al. (2011). Younger advisory councils have less legacy than older advisory councils. This impacts the influence an advisory council has on policy. Older councils with are considered more influential than younger councils.

The final characteristic that matters following Lynn (1987), Fobé et al. (2013) and Kohler & Martinez (2015) arguments is the staff support. If these arguments hold, advisory councils with a larger secretariat are more influential than advisory councils with a smaller secretariat.

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Chapter 3. Methodology

This chapter elaborates on the methodology of this thesis. The chapter starts with an operationalization of the variables. This entails setting indicators for the independent variables and the measurement of the dependent variable. The second section clarifies the case selection of the Sociaal-Economische Raad (Social Economic Council), Vlaamse Woonraad (Flemish Housing Council) and National Economic and Social Council. After that, a discussion of method of data collection follows. The fourth section explains the method of analysis. The final section discusses the validity and reliability of in this thesis.

3.1 Operationalization of variables

As stated in the introduction, the thesis tries to answer this research question: Is there a relationship between the organizational characteristics of advisory councils and their influence on policy? After defining the research question, expectations were derived from general theories. These expectations helped to describe the relationship between the organizational characteristics of advisory councils and their influence on policies regarding the financing of house ownership.

This thesis investigates the relationship between the organizational characteristics of advisory councils (x, independent variable) and influence of policy advice (y, dependent variable). The dependent variable is the influence of the policy advise for any policy that provides guidance for the financing of home ownership to a household. This thesis uses instrumental influence to indicate whether an advisory council has influenced the policy. This type of influence is understood as advice from the advisory council that is directly used by the policy-makers (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 235). Thus, instrumental influence occurs when policy recommendations or directions from an advisory council are reflected in the policy established after the advice. This is measured in the coalition agreements of the government in the Netherland. In Belgium, this is measured in the reaction of the Flemish Parliament on the advice and in actual policy changes. In Ireland, this is measured in the yearly budget changes. Advice from of other important actors are also discussed. This includes possible other influences as well.

The measurement of the independent variables is as follows:

- The insider/outsider variable is measured by identifying members in the advisory council as either policy-makers or government officials. High means that the majority of the advisory council consist of insiders. Medium means that a minority of the advisory council consist of insiders and low means that there are only outsiders in the advisory council.

- The budget variable is measured as the yearly budget that advisory councils have. High is an advisory council with a yearly budget higher than ten million euros. Medium is an advisory council with a yearly budget between ten million euros and one million euro. Low is an advisory council with a yearly budget beneath one million euro.

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ESMEE BRAAM – S1276573 19 - The societal support variable is conceived as the supportive policy environment of the advisory

councils. This is measured in two ways. Firstly, by considering whether other important stakeholders in the policy field address the policy advice positively. Secondly, whether the advice is solicited from the government or unsolicited.

- The years of existence variable is measured from the date the advisory council is founded. High is an advisory council with more than 50 years of existence. Medium is an advisory council that exists between 40 and ten years. Low an advisory council with less than ten years of existence. - The size of support staff variable is measured by the size of the secretariat. High is an advisory

council with more than 75 employees. Medium is an advisory council that has between 75 and ten employees. And low is an advisory council with less than ten employees.

3.2 Case selection

This thesis is a comparative case study over the period 2008-2018. A comparative case study measures the impact of certain variables and keep other variables constant. Therefore, it is necessary that the cases have variation in the variables of interest (Blatter & Haverland, Case Studies and (Causal-) Process, 2014, p. 60). The variable of interest is the organizational characteristics of the advisory council. Thus, the selection of the cases is based on variation in the organizational characteristics of advisory councils.

The spatial boundaries are that only advisory councils within a country in the EU with a relatively small population are part of this thesis. Thus, results cannot be generalised to countries outside of the EU, or larger countries in terms of population. Besides, the temporal boundary is that this thesis only investigates the period 2008-2018. So, result cannot be generalised to periods outside this year period.

The selected cases are most similar cases (Blatter & Haverland, Case Studies and (Causal-) Process, 2014, pp. 60-61). The context of the countries is the same. They are small corporatist countries in the European Union and have policies regarding financializing of house ownership. There cannot be a selection on the independent variable societal support, because this information is not known yet. However, there is variation in the other characteristics of the advisory councils. The chosen advisory councils are Sociaal-Economische Raad (Social Economic Council) (SER) for The Netherlands, the Vlaamse Woonraad (Flemish Housing Council) (VW) for Belgium and the National Economic and Social Council (NESC) for Ireland.

The first advisory council is the SER. This is an advisory and consultative body about social-economic policy issues. After WOII, society demanded that the government intervenes with issues regarding economic growth. In doing so, they should involve representatives of employer and employees. For that reason, the SER was founded by law in 1950 through Wet op de Sociaal-Economische Raad (Sociaal-Economische Raad, 2018a, p. 8). It is therefore an organization with a long existence. Its main goals are achieving sustainable economic growth, high labour participation and reasonable income

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ESMEE BRAAM – S1276573 20 redistribution (Sociaal-Economische Raad, 2018a, p. 9). It aims to achieve this by creating consensus about social-economic policy issues through combining a high level of expertise and support from society (Sociaal-Economische Raad, 2018c, p. 6). The SER also has some managerial duties, like executing the Wet op de ondernemingsraden (Law on work councils) (Sociaal-Economische Raad, 2018a, p. 5). However, this thesis focuses on the SER as an advisory council only and therefore this function is not further elaborated.

Furthermore, the SER consist of eleven employer representatives, eleven employee representatives and eleven independent experts, who are members of the crown. The council members are appointed for two years. For the employer representatives, the seats are divided based on size between VNO-NCW (7 seats), MKB (3 seats) and LTO Nederland (1 seat). The VNO-NCW is an entrepreneurial organization who advocates for an excellent enterprise and business climate in the Netherlands and internationally (VNO-NCW, 2019). The MKB advocates the interests of medium-sized and small-sized business in the Netherlands (MKB Nederland, 2019). The LTO Nederland represents the interests of agricultural entrepreneurs (LTO Nederland, 2019). Secondly, the employee representative’s seats are divided based on size between FNV (7 seats), CNV (2 seats) and VCP (2 seats). The FNV is the biggest labour union in the Netherlands and represents employees from fourteen different sectors (FNV, 2019). The CNV is a labour union with social Christian features (CNV, 2019). The VCP represents the interests of professionals in particular (VCP, 2019). The organization can choose which member they want to fulfil their seat(s). Lastly, the members of the crown are nominated by the cabinet and appointed by the King. They have academic expertise and advocate the common interest (Sociaal-Economische Raad, 2018a, p. 13). There are zero policy-makers or government insiders in the Council, which means that the insider/outsider composition is low. The annual budget is around fifteen million euro, making it a high budget. The size of the secretariat is 100, making it of a high size. The second advisory council is the Vlaamse Woonraad (Flemish Housing Council). In 2008, the VW was established. It is therefore an organization with a low existence. The Vlaamse Woonraad (Flemish Housing Council) is the strategic advisory council in the policy field housing. The legal foundation for this advisory board origins from regeling van de strategische adviesraden (regulation of the strategic advisory boards) and De Vlaamse Wooncode (The Flemish living code). The VW can act independently and autonomously (Vlaamse Woonraad, 2017, p. 2). The VW have six tasks. Firstly, to give solicited and unsolicited advice about main lines of policies regarding general housing and social housing. The second task is to contribute to the policy vision about housing. The third task is to follow and interpret social developments in the field. Fourthly, the VW has the task to give advice about draft laws of housing policies. Additionally, they give advice about proposals and designs of housing policies laws and decisions of the Flemish government. The final task is to reflect on policy documents and policy letters regarding housing policies (Vlaamse Woonraad, 2017xx, p. 4). The VW also has a secretariat to support the council. This secretariat has two employees (Vlaamse Woonraad, 2017, p. 6).

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ESMEE BRAAM – S1276573 21 The financing of the council is a donation. This is established in the law regeling van de strategische adviesraden (regulation of the strategic advisory councils). This donation is not always sufficient to cover the expenses of the VW. For example, in 2012 the shortage was 7.500 euros (Vlaamse Woonraad, 2012a, p. 8).

The advice is formulated by representatives of civil society, independent experts and representatives of local boards from cities, municipalities and provinces (Vlaamse Woonraad, 2017xx, p. 2). The VW exists of twenty members: Five independent experts, twelve representatives from the civil society1_{, two representatives of cities and municipalities and one representatives of the provinces} (Vlaamse Woonraad, 2018). The Flemish government appoints the members for a period of four years (Vlaamse Woonraad, 2017, p. 2). In sum, there are three policy-makers or government insiders in the Council, which means that the insider/outsider composition is medium. The annual budget is around 247.000 euro (Fobé, Brans, Vancoppenolle, & Van Damme, 2013, p. 231), making it a low budget. The size of the secretariat is two, making it of a size low.

The third advisory council is the NESC. In 1973, the National Economic and Social Council was established. It is therefore an organization with a long existence. Its main task is to give advice to the Taoiseach on strategic policy issues regarding economic, social and environmental development in Ireland (National Economic and Social Council, 2018a). The Taoiseach appoint the 28 members of the council, for a period of three years (National Economic and Social Council, 2018a). The Council exists of representatives from three business and employers’ organizations2_{, three Irish Congress of Trade} unions3_{, three agricultural and farming organizations}4_{, three community and voluntary organizations}5_, three environmental organizations6_{, four members from the public service}7_{, seven independent experts} and two chairpersons from the department of the Taoiseach (Head of the government) (National Economic and Social Council, 2019). There are six policy-makers or government insiders in the Council, which means that the insider/outsider composition is medium. The annual budget is around two million euro (National Economic & Social Development Office, 2015, p. 17), making it a medium budget. The size of the secretariat is seventeen (National Economic and Social Council, 2018c), making it of a medium size.

Table 1 below lists the variation in organizational characteristics between the

advisory councils.

1_{The member from civil society are representatives from organizations in the midfield. These are}

Beroepsvereniging van de vastgoedsector, Vereniging Vlaamse Huisvestingsmaatschappijen, Huurpunt, Vlaams Huurdersplatform, Beweging.net, Gezinsbond, Verenigde Eigenaars, Bouwunie, Confederatie

Immobiliënberoepen Vlaanderen, Vlaamse Confederatie Bouw, Vlaamse Architectenorganisatie, Samenlevingsopbouw (Vlaamse Woonraad, 2017, p. 3).

2_{IBEC, Chambers Ireland and Construction Industry Federation.} 3_{Fórsa, ICTU and SIPTU.}

4_{IFA, Macra na Feirme and Irish Creamery Milk Suppliers Association.} 5_{Social Justice Ireland, INOU and National Youth Council of Ireland.} 6_{The Environmental Pillar, Friends of the Earth and Birdwatch Ireland.}

7_{Department of Finance, Department of Public Expenditure and Reform, Department of Jobs, enterprise &}

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TABLE 1

Variation in organizational characteristics of advisory council

Kind of

variation

Sociaal-Economische Raad (Social Economic

Council) (SER)

Vlaamse Woonraad (Flemish Housing Council) (VW)

National Economic and Social Council (NESC)

Composition insider/outsider Low (Sociaal-Economische Raad, 2018c) Medium (Vlaamse Woonraad, 2017) Medium (National Economic and Social Council, 2018a)

Budget High (Sociaal-Economische Raad, 2017)

Low (Fobé, Brans, Vancoppenolle, & Van Damme, 2013)

Medium (National Economic & Social Development Office, 2015, p. 17) Years of existence High (Sociaal-Economische Raad, 2018c) Low (Vlaamse Woonraad, 2017)

High (National Economic and Social Council, 2018a) Size of secretariat High (Sociaal-Economische Raad, 2018c) Low (Vlaamse Woonraad, 2017) Medium (National Economic and Social Council, 2018c)

3.3 Method of data collection

The empirical data is collected by documents from the government, documents from the advisory councils and newspapers. The selection of the documents from the governments is based on formal documents of legislation and debates within the government about the regulation. These documents are obtained via the official website from the government8_{and are analysed by searching terms. Secondly,} documents from advisory councils consist of policy advice reports regarding financialization of housing. These documents are retrieved via the website of the advisory council9_{itself and any related document} to housing policies are analysed. Additionally, more general information about the advisory councils and its context are based on the website of the advisory council and news articles. Lastly, the categorization of the news articles happens by using the four biggest newspapers in the country with the highest print out. The newspaper Metroniews is excluded, due to the small articles in this newspaper.

8_{The Netherlands:}_{https://www.rijksoverheid.nl/documenten}_{, Belgium:}

https://www.vlaamsparlement.be/dossiers/wonen and Ireland: http://www.citizensinformation.ie/en/

9_{Sociaal-Economische Raad:}_{https://www.ser.nl/}_{, Vlaamse Woonraad:}

https://www.wonenvlaanderen.be/sociale-woonactoren/vlaamse-woonraad and National Economic & Social Council: https://www.nesc.ie/

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ESMEE BRAAM – S1276573 23 The searching words are the same in every country, however searching words are adjusted to the language of the country. An overview is listed in table 2 below.

TABLE 2

The Netherlands Belgium Ireland

Searching engine

Lexis nexis

Newspapers Telegraaf, Algemeen dagblad, Volkskrant, NRC Handelsblad (Bakker, 2018).

Het laatste nieuws, Het Nieuwsblad, De Standaard, HBvL (Eeckhout, 2016).

Irish Independent (ABC, 2018a), The Irish Times (ABC, 2018b), The Irish Daily star (Ilevel, 2017), The Herald (ABC, 2018c).

Searching words

Gevolgen crisis financiering huis,

gevolgen financiële crisis 2008 Europa, gevolgen crisis Nederland. Veranderingen hypotheekrenteaftrek, huizencrisis, Nederlandse huizenmarkt. Gevolgen crisis financiering huis, gevolgen financiële crisis 2008 Europa, gevolgen crisis België. Veranderingen woonbonus. Belgische huizenmarkt.

Consequences financial crisis for financing house ownership, consequences financial crisis 2008 Europe, consequences financial crisis Ireland. Changes in mortgage tax relief. Irish housing crisis, Irish house market.

Periodization 2008-2018 2008-2018 2008-2018

3.4 Method of analysis

This thesis uses a deductive method, where expectations follow from general theories. It is a qualitative research based on documents. A co-variation analysis is used to answer the research question. In this approach, the causal relationship is identified based on co-variation among the variables in the cases (Blatter & Haverland, Case Studies and (Causal-) Process, 2014, p. 80). This methodology provides empirical evidence of the existence of co-variation between the independent and dependent variables to infer causality (Blatter & Haverland, 2012, p. 33).

It is important to state the underlying assumption of causality in a co-variation analysis. The factor of interest, the dependent variable, is necessary and sufficient for the outcome. The expectations are deterministic (Blatter & Haverland, 2012, pp. 39-39). Thus, if an advisory council has a specific characteristic, the influence the advisory council must be accordingly to the expected influence of that characteristic. Based on the variation in the characteristics from table 1, it is expected that SER has the most influence. After SER, it is expected that the NESC has the most influence and it is expected that VW has the least influence of the advisory councils.

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3.5 Validity and reliability

3.5.1 Validity

The external validity is low, because the research is an intensive small-N comparison over a time period in three cases. The selection of cases is not a good representation of countries in the world and neither of the EU. The results can be generalised to countries with the same control variables as these cases based on this research design. The control variables are small corporatist countries in the EU. Thus, the results cannot be generalized to countries with different institutional contexts.

However, the internal validity is high, because each case is researched in detail with small-n comparisons. Therefore, the relationship between empirical observations and expectation are investigated more precisely. This enables a better accuracy of measurement (Blatter & Haverland, 2012, p. 20). Besides, small-N comparisons give a good understanding of the mechanism and the context in the individual cases. This research design gives the possibility to add context-specific indicators (Blatter & Haverland, 2012, p. 20).

3.5.2 Reliability

The research is reliable if there are no random errors. The results of this research should not be the result of accidents and the same results should appear when this research is repeated. The research steps are described in detail, to enhance this reliability. It is documented where the information comes from and with which searching terms it was found.

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Chapter 4. Empirical evidence in the Netherlands

4.1 Impact of the financial and economic crisis

After the fall of the Lehman brothers in 2008, the financial and economic crisis extended to Europe (NOS, 2017). At first, many European governments tried to save their own banks with state aid. This caused a high rise of government debt (Bos & Michiel, 2011, p. 6). These individual attempts to resolve the crisis did not work, because the problems are interrelated. A solution in one country influences the others. For example, Ireland decided to guarantee deposit on Irish banks. Causing other EU-countries to higher their guarantees as well (Bos & Michiel, 2011, p. 22).

The crisis resulted in a huge economic decline in all three countries. In the Netherlands, there was a decline of 12,2 % in GDP in the first quarter of 2008. Moreover, several banks in the Netherlands needed saving by the Dutch government (NRC, 2018a). Another effect was that citizens started to save more due to a low consumer’s confidence in the economy. This caused profit losses for stores. People moved less, so the housing market stagnated. Furthermore, citizens preferred their savings on the bank account instead of investment their money (Tamminga, 2012).

In 2018, the Dutch economy seems to be recovered. Employment opportunities have grown, and unemployment rates have declined (NRC, 2018b). In 2015 the NVM, a real estate association, stated that the housing crisis in the Netherlands was over. The house prices did not lower anymore. Yet, this development is fragile, since the Dutch government decreases some incentives to stimulate the housing market. For example, the budget for first-time buyers is almost up and will not be supplemented (NRC, 2015).

In the Dutch housing market, about 60% of the homes are privately owned. The demand for new houses keeps rising due to a continuous increase in number of households. However, partly due to the crisis, the building market for new houses has slowed down. It is expected that in 2020 there will be a shortage of 290.000 houses in the Netherland (Investing in dutch housing, 2019b).

4.2 Tax measures to finance house ownership

In the Netherlands, there are several fiscal regulations regarding house ownership like notional rental value, real estate tax and mortgage tax relief (Smits, 2018). The paragraph below list some of the main regulation in the Netherlands that are discussed in this chapter. Firstly, from 1 January of 2018, the mortgage cannot be higher than the value of the property. Additional costs like advice-, notary- or valuation costs cannot be included. (Rijksoverheid, 2018a). This is called the Loan-To-Value (LTV). To illustrate, if there is a LTV of 100%, the maximum amount a first-time buyer wants to loan for their mortgage must not exceed the value of the house. There are also constrictions on the Loan-to-income (LTI). This means the maximum amount a person can loan in comparison with their income. In the Netherlands, LTI depend on the income of the household and is determined individually by the National Institute for Family Finance Information (Investing in dutch housing, 2019a).

Influence of advisory councils

1/11/2019