Prof. Dr. Jan Riepe on the behavioural effects of budgeting in Der Neue Kämmerer
Municipal budget planning is much more than a purely number-based decision - psychological effects also play a major role. In a news article for Der Neue Kämmerer, Prof. Dr. Jan Riepe and Master's student Philipp Hofmann analyse the behavioural effects of different budgeting approaches and show how these affect decision-making in municipal politics.
The article makes it clear that the choice between a top-down or bottom-up approach has far-reaching consequences for budget design. While the greater involvement of specialist departments in the bottom-up approach can promote motivation, there is also a risk of inefficient budget requests. At the same time, centralised control mechanisms in the top-down approach can lead to valuable specialist knowledge not being sufficiently taken into account. In addition, cognitive biases such as the overconfidence bias, the illusion of control or the confirmation bias play a decisive role in municipal financial planning. They influence the assessment of financial requirements, the distribution of resources and the perception of budgetary decisions. Another key point is communication: the way in which savings measures or investments are formulated can be decisive in determining whether they meet with acceptance or resistance.
The article provides exciting insights into the challenges and potential of municipal budgeting and shows that a hybrid approach that combines strategic management with decentralised expertise can be a promising solution.
The full article in Der Neue Kämmerer can be viewed after free registration: https://www.derneuekaemmerer.de/zeitung/e-paper/aermel-hochkrempeln-und-los-gehts-012025/
