Muhammad Azmat Hayat
email: muhammad-azmat.hayat@ed.univ-lille1.fr

Etienne Farvaque
email: etienne.farvaque@univ-lehavre.fr.

Public Attitudes towards Central Bank Independence: Lessons From the Foundation of the ECB

Keywords: Central Bank Independence, Public Opinion, European Central Bank

This study examines public opinion in 15 European countries, on the proposal to establish an independent European Central Bank (ECB). Using data from Eurobarometer surveys for 1998 to 2000, which included a specific question on this issue, we show that inflation performance is not sufficient to explain people's preference for an independent central bank: personal characteristics and circumstances have a stronger impact, with gender, employment status, education level, income quartiles, and degree of information and civic concern showing particular relevance.

Introduction

In the most recent decades, academics and governments have endorsed central bank independence as a decisive feature in the achievement of lower, actual and expected, inflation rates. [START_REF] Crowe | The evolution of central bank governance around the world[END_REF], notably, observe that countries with higher levels of inflation in the past, have granted their central banks greater independence. On the one hand, independence implies that the central bank is insulated against influence and pressure from government officials, especially elected ones. On the other hand, the central bank has to shoulder the blame if its policy does not align with the needs of politicians or particular pressure groups. Central bank "bashing" might produce interesting pay offs for critical politicians [START_REF] Waller | Bashing and coercion in monetary policy[END_REF] unless the bank has the support of the population, in which case it may produce a backlash, and the politicians' political capital may be impaired, to the benefit of the central bank's credibility.

It is somewhat surprising, that public support for a central bank has not received much research attention, with the exceptions of [START_REF] Leertouwer | Who creates political business cycles: Should central banks be blamed?[END_REF], [START_REF] Maier | Political Pressure, Rhetoric and Monetary Policy: Lessons for the European Central Bank[END_REF], and [START_REF] Maier | Bashing and supporting central banks: The Bundesbank and the European central bank[END_REF], who focus on the Bundesbank and the European Central Bank and their policies, and rely mostly on media content analysis.

It could be argued that central bank would receive stronger support, and would be able to implement even restrictive policies if the pros and cons of these policies are understood by the general public, among which stand the foundations of its statutes, i.e. its independence.

Our aim in this paper is to analyze public attitudes to central bank independence. To do so, we make use of the case study provided by the foundation of the European Central Bank (ECB). This historic event received great official attention and provoked the inclusion in the Eurobarometer survey of a specific question in the period of its founding. Although some authors study inflation aversion [START_REF] Hayo | Knowledge and attitude towards European monetary union[END_REF] or support for the euro [START_REF] Gärtner | Who wants the Euro-and why? Economic explanations of public attitudes towards a single European currency[END_REF], the attitude of the general public towards central bank independence has been overlooked. We rely here on the Eurobarometer surveys conducted in 1998 to 2000, in 15 European countries to analyze opinions on central bank independence.

Using data on the socio-demographic profiles of respondents and on inflation, this paper examines the variation in the degree of support for an independent ECB and investigates the following questions. First, how much does inflation performance, and overall inflation history, influence public support for an independent central bank? Second, to what extent are public attitudes to central bank independence shaped by political ideology and demographic attributes?

Our results show that a country's inflation history cannot, by itself, explain variations in the preferences of its population in favor of an independent central bank, except if one considers that the current level of central bank independence reflects such an history. If not, then it appears that individual personal characteristics and circumstances have a much greater impact. Among those characteristics, gender, education, income, satisfaction with national democracy, interest in politics, level of knowledge about regional policies and institutions, importance given to EU Parliament, access and use of media, and employment status are shown to have the greatest relevance. The stakes are high because they involve the ECB's legitimacy (and, ultimately the Euro area's sustainability) and a lack of understanding may threaten the support for its degree of independence. This historical experience also offers lessons for building, or reinforcing, independent monetary institutions.

The paper is structured as follows: Section 2 reviews the background literature; Section 3 discusses the data and methodology; and Section 4 presents the results of the estimates. Section 5 concludes with some suggestions for further research.

Literature Review

Studying attitudes and values is now recognized as an important source of information for economists. For instance, [START_REF] Walstad | The effect of economic knowledge on public opinion of economic issues[END_REF] and [START_REF] Walstad | Assessing the economic knowledge and economic opinions of adults[END_REF] show that economic knowledge has a direct and significant effect on public viewpoints on many economic issues, and that this knowledge is affected by factors such as education, income, age, gender, race, and political party affiliation. [START_REF] Mayda | Why are some people (and countries) more protectionist than others?[END_REF] study attitudes to protectionism in a large set of countries and find that attitudes towards trade are shaped by a complex set of both economic and noneconomic determinants. They find that the latter (socio-demographic background, values, identities, attachments) play a very important role in explaining variations in attitudes to trade. In another study on attitudes to trade, [START_REF] Hainmueller | Learning to love globalization: Education and individual attitudes toward international trade[END_REF] examine the impact of education and find that individuals with college-level educations are far more likely than others to favor trade openness.

In macroeconomics more particularly, survey data has proved useful. [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF], for example, uses data on 20 advanced economies to examine public preferences about macroeconomic priorities, defined by inflation and unemployment performance. He finds that lower income earners and women are less inflation averse, while the politically conservative population is more inflation averse. Scheve also finds a substantial difference in inflation aversion across countries and an increased inflation aversion over time. Along similar lines, [START_REF] Jayadev | Differing preferences between anti-inflation and antiunemployment policy among the rich and the poor[END_REF] assesses the preferences of rich and poor towards anti-inflationary and anti-unemployment policy, using data from the 1996 wave of the ISSP (International Social Survey Program) survey. He finds that the poor are less likely than the rich to prioritize combating inflation rather than unemployment.

The Eurobarometer survey data has been given relevance in several contexts. For instance, [START_REF] Gabel | Public support for European integration: An empirical test of five theories[END_REF] analyzes the surveys conducted in the period 1978-1992 to assess the relative significance of five theories of European integration. He shows gender, age, and occupation to be relevant variables in explaining support for the European integration process. [START_REF] Guth | Exploring the gender gap: Women, men and public attitudes toward European integration[END_REF] analyze the attitudes of men and women to European integration. Based on data from Eurobarometer 42, they find that gender has a significant impact on attitudes to European integration across the European Union (EU) and Norway, with women showing less enthusiasm for the process than men. They show also that women's attitudes are influenced more by greater knowledge about the EU and economic pessimism; men's attitudes are determined more by an interest in politics and a working-class status. 1Some studies examine macroeconomic and specific monetary issues using such datasets. [START_REF] Hayo | Knowledge and attitude towards European monetary union[END_REF], for example, investigates public attitudes to European Monetary Union (EMU), making use of survey data from Eurobarometer 39 for the 12 original members of the EU. He concludes that a high level of knowledge about EMU positively influences people's opinions on monetary integration. [START_REF] Gärtner | Who wants the Euro-and why? Economic explanations of public attitudes towards a single European currency[END_REF] observes that public attitudes towards the euro as a single currency depend on the experience of past national monetary and fiscal policies and on the length of membership in the European Monetary System. People in countries that had experienced high inflation and looser fiscal policies in the past were more in favor of the euro.

In a study that is closer to our research, [START_REF] Hayo | Inflation culture, central bank independence and price stability[END_REF] finds that inflation is explained not just by central bank independence, and that public attitudes towards inflation exist and are interconnected with central bank independence.2 Based on Eurobarometer survey data for the period 1976-1993 for European Community members, Hayo finds evidence of a culture of stability in low-inflation countries whose populations are more sensitive to increases in inflation.

However, and whatever the respective merits of the cited studies, there are no existing ones on the determinants of support for central bank independence, and noone has exploited the responses to the specific questions on this which were included in the Eurobarometer survey during the time of the ECB's foundation. This paper contributes by filling this gap.

Data and Methodology

The creation of the ECB was a historic event in modern history that was observed with great attention, and the drafters of the constitution of the ECB made necessary decisions about its [future] independence. The ECB was established by the so-called Treaty of Maastricht (1992) and the Treaty of Amsterdam (1998). Both treaties contain all the conditions imposed by governments to gain access to the monetary union. It was stated that monetary union could not take place later than 1 January 1999, that the European Central Bank in charge of managing the single currency was to be created before that date, and that the work of its predecessor, the European Monetary Institute (EMI) had to be completed before. The independence of the ECB is ensured in its founding treaty. According to Article 108 of the Treaty establishing the European Community (EC):"Neither the European Central Bank (ECB), nor a national central bank (NCB), nor any member of their decision-making bodies may seek or take instructions from Community institutions or bodies, governments of the Member States or any other body". The institutional independence of the ECB is further strengthened by its financial independence, as the ECB has its own budget and cannot bail governments. Some other provisions are also held to ensure the independence of the ECB which include the security tenure of governors of the ECB. An extensive theoretical analysis and empirical evidence on central bank independence laid down the institutional framework of independence of the ECB. As a part of that process, a specific question was included in Eurobarometer surveys to ask Europeans about the independence of their [future] central bank.

We use these data from the Eurobarometer surveys. These surveys, on issues of general interest, have been conducted on behalf of the European Commission since 1973. The results are published in Eurobarometer and are available to researchers at the Gesis website. 3 We use information from Eurobarometer 49 to 53, covering the surveys conducted from May 1998 to April 2000. In 1998 and 1999, there were two surveys per year; in 2000 there was only one survey that included the question that we are interested in. We pooled data on these five waves. 4 The surveys were administered to citizens from Austria, Belgium, Denmark, Finland, France, Germany5 , Great Britain, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and Sweden. Tables 1 provides some descriptive statistics. Respondents from the representative samples in each country were asked to assess the following statement (Question n 25 in Eurobarometer 49) about the proposal for an independent European central bank:

"With the European currency, the Euro, there has to be a European Central Bank which is independent of the member states."

The responses are recorded as follows: 1 "in favor", 2 "against", 3 "don't know".6 We measure support or otherwise for the proposal for an independent European central bank based on "in favor" or "against" responses.7 Public attitudes in favor of an independent ECB during the three years are depicted in Figure 1. Support was strongest in Ireland and the Netherlands8 ; Great Britain's citizens -consistently over the three years -were the least supportive of an independent ECB. Countries belonging to the EMU and current non-EMU members show clear differences in their support for an independent ECB (see Figure 1). However, in both groups of In line with the literature investigating public preferences for economic issues, socio-demographic variables are considered to evaluate their influence on the opinions of individuals about the desirability of central bank independence. The role of individual characteristics and circumstances is measured through gender, age, education, income, employment status, political placement, level of knowledge about the EU, degree of political information and civic concern, and importance given to EU Parliament. Gender has been shown to be important in evaluations of individuals' responses, with [START_REF] Guth | Exploring the gender gap: Women, men and public attitudes toward European integration[END_REF] and [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF] indicating that women are less enthusiastic about economic issues.

Age can also be a decisive factor: [START_REF] Farvaque | Central bank independence and ageing[END_REF] show that the share of older people in the population acts as a strong weight against inflation, and Malmendier and Nagel (2009) show that individuals of different ages react differently to past inflation experience. [START_REF] Walstad | The effect of economic knowledge on public opinion of economic issues[END_REF] and [START_REF] Walstad | Assessing the economic knowledge and economic opinions of adults[END_REF] observe that education plays as a vital role in shaping an individual's preference for an economic issue, as in measuring labor market skills and cognitive abilities (a feature confirmed in, e.g., [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF]. But there is a lack of consensus about the effect of education on specific economic issues: for example, [START_REF] Hainmueller | Learning to love globalization: Education and individual attitudes toward international trade[END_REF] find that if people with college education are relatively pro-trade, other education degrees are not significant for evaluating trade policy. Here, the variable Education is the age of the respondent when full-time education was discontinued, and is an ordered categorical variable measured on a 1 to 4 scale where 1 is "up to 15 years", 2 is "still studying", 3 is "16 to 19 years", and 4 is "20+ years".

The income variable ranges from 1 to 4, and indicates whether the respondent is in the first, second, third, or fourth quartile of the income distribution in the respondent's country. As stated above, this variable proved influential in [START_REF] Jayadev | Differing preferences between anti-inflation and antiunemployment policy among the rich and the poor[END_REF] in terms of people's aversion to inflation and therefore might be relevant in terms of supporting the establishment of an independent central bank. [START_REF] Hudson | Institutional trust and subjective well-being across the EU[END_REF] presents evidence that personal circumstance have a strong impact on an individual's trust in institutions. Among these circumstances, employment status is of course important: unemployed people may be more averse to an independent (and thus more conservative) central bank since independence might lead to a distortion of the Phillips curve trade-off that can arise at very low levels of inflation (see [START_REF] Akerlof | The macroeconomics of low inflation[END_REF][START_REF] Stock | Modeling inflation after the crisis[END_REF]. This distortion can increase the sacrifice ratio, and may be perceived as costly by (part of) the electorate, notably the unemployed segment of the society.9

Political ideology is accounted for by a political placement indicator (i.e. the way people position themselves on the political axis from "left" to "right" through "center"). Political placement obviously can change peoples' attitudes to important economic issues, especially inflation. We add to this indicator others related to frequency of "discussion of political matters" and "satisfaction with democracy in [one's] country". These should reflect the degree of political information and civic concern of the individual. More precisely, frequency of the political discussions is indicative of the individual's interest in current politics.

Respondents that are more interested in political discussion and debate can be expected to be more informed about current political scenarios and affairs, and thus about the costs/benefits of central bank independence. The degree of satisfaction with national democracy captures the respondent's trust in the current national political system. As [START_REF] Anderson | When in doubt, use proxies: Attitudes toward domestic politics and support for European integration[END_REF] shows, a higher degree of satisfaction with domestic politics increases the support for European institutions. However, as [START_REF] Carey | Undivided loyalties: Is national identity an obstacle to European integration[END_REF] and [START_REF] Sánchez-Cuenca | The political basis of support for European integration[END_REF] claim, it might also be the case that people dissatisfied with national politics might support the EU because they see it as a remedy for unsatisfactory domestic politics. The sign of this relation (which can be understood as a matter of complementarity or substitutability between national and European institutions) therefore needs to be settled empirically in the case of the foundation of a European central bank.

We include two variables that measure the level of knowledge about the EU, its policies and institutions, and access to and use of information sources, in order to check the respondent's level of information and awareness.10 Knowledge about the EU and its policies is measured on a three point scale of low, good and very good, while access to and use of information sources is captured by a media use index. [START_REF] Nelson | Rational expectations and the predictive efficiency of economic models[END_REF] observes that newspapers are important in disseminating the knowledge that the individuals incorporate into their information set. The index of media use is constructed based on the frequency of watching the news on television, reading a daily newspaper, and listening to the news on the radio, in a week. This index is an ordered categorical variable with four categories: low, fair, frequent, and very frequent. The first category low (use of information sources) is based on the use of three media (television, newspapers, radio) no more than once or twice a week.

Fair captures one of the three media every day or several times a week, and the other two, not more than once or twice a week. Frequent is based on two media every day or several times a week, the third medium not more than once or twice a week. The last group, the more frequent users, are the respondents who follow news on TV, radio, and newspapers every day or several times a week. This index determines the information level of a respondent about current economic and political issues in the country. Unfortunately, this index is only available for three surveys, in 1998 and 1999.

To account for the general attitudes of the respondents towards the EU and its institutions, we include the responses for the question about the importance of the European Parliament. Euro-skeptics are probably much less likely to favor an independent European institution, if only because it is another European one. The importance of the European Parliament is asked to be judged on a four point scale: not at all, not very important, important and very important. Table 2 presents the descriptive statistics of variables while summary statistics in favor of central bank independence are presented Table 3.

As already stated, central bank independence and inflation are strongly (and negatively) correlated, a feature repeatedly evidenced in the literature (see e.g., [START_REF] Carlstrom | Central bank independence and inflation: A note[END_REF]. Also, inflation shapes public opinion on the policies of a central bank. To account for this, we include the current and historical inflation, and the maximum inflation that the respondent has known in her lifetime. We also consider the degree of central bank independence in the respondent's country (data taken from [START_REF] Polillo | Globalization pressures and the state: The worldwide spread of central bank independence[END_REF], which allows to have time-varying measures of central bank independence). These form the baseline variables in our estimates of public opinion on the desirability of central bank independence. Data on inflation come from the International Financial Statistics which measure inflation as the an- Introducing macroeconomic variables is standard in the type of research implemented here, and is even more pertinent to the questions in this study since macroeconomic experience can strongly shape people's preferences and thus their attitudes. This is even more important that De Haan and [START_REF] De Haan | Variation in central bank independence across countries: Some provisional empirical evidence[END_REF] and [START_REF] Vaubel | The future of the Euro: A public choice perspective[END_REF] show that the experience of hyperinflation since 1900 has a significantly positive effect on central bank independence. However, it also has to be acknowledged that the impact of such extreme experiences may decay, as shown by [START_REF] Ehrmann | Memories of high inflation[END_REF].12 Since our dependent variable is a binary variable that takes the values of one and zero depending on the respondent's opinion in favor or against the proposal of independence of ECB, we observe that

y ijt = 1 if y * ijt > 0 y ijt = 0 if y * ijt ≤ 0 where y * ijt = X ′ ijt β + ϕ j + τ t + ǫ ijt (1)
Equation ( 1) represents how an individual's support for central bank independence y * ijt depends on the vectors of the observed variables (X ijt ), unobserved country effects (ϕ j ) and time effects (τ t ) and a random error (ǫ ijt ). The probability of support can be written as

Pr (y ijt = 1 | X) = Pr y * ijt > 0 | X = Pr[ǫ ijt > -(X ′ ijt β+ϕ j +τ t ) | X] = F (X ′ ijt β+ϕ j +τ t )
So our regression equation takes the form

CBOP ijt = α + β ′ l Inf jt + γ ′ m CBI jt + λ ′ n D ijt + δ ′ v P ijt + η ′ u I ijt + ϕ j + τ t + ε ijt (2)
where CBOP ijt is the opinion of a respondent i in country j at the time of the survey, Inf jt is the inflation (historical inflation or maximum inflation experienced) at time of survey in the jth country, CBI jt is the central bank independence index in country j at the time of the survey, D ijt is a vector of "socio-demographic" characteristics such as gender, age, education, employment status and income, P ijt is the political ideology of the ith respondent at the time of the survey, I ijt is the level of information and civic concern of the respondent. Unobserved country effects and time effects are represented by ϕ j and τ t respectively whereas ε ijt is the error term.

We estimate the parameters of model (2) using logit regressions. Also, since

we are merging country level inflation with micro data, it is important to consider the possibility that disturbances will be correlated across countries. [START_REF] Moulton | An illustration of a pitfall in estimating the effects of aggregate variables on micro units[END_REF] shows that standard errors from a usual maximum likelihood estimation can be biased seriously downwards if the disturbances are correlated within the groupings that are used to merge aggregate with individual-level data. Hence, standard errors are clustered by country and require the much weaker assumption that errors are independent across countries but not necessarily across every survey respondent within a country. Another important issue in the analysis is the weighting of the survey data. We follow the suggestion of [START_REF] Dumouchel | Using sample survey weights in multiple regression analyses of stratified samples[END_REF] to include sampling weights and interaction terms between the weights and the independent variables in the regressions to detect possible misspecifications. In almost all cases, we cannot reject the hypothesis that the coefficients of the sampling weights and the interactions terms are equal to zero. This indicates that our results are not sensitive to the weighting and thus we base our results on unweighted data.

Finally, it has to be acknowledged that every econometric analysis of survey data, as in this study, has some intrinsic limitations. Firstly, much of the data is categorical in nature, even for the variables of continuous nature, like income. Secondly, as with any survey data, there is limited item non-responses for some variables. The large number of observations cannot fully offset these caveats: the statistical robustness of the results should not forbid one to consider them with a pinch of salt.

Empirical Evidence

We first present the baseline evidence on the influence of current and historical inflation experience and the level of central bank independence on public opinion for the establishment of an independent central bank. Historical inflation is successively defined by the one-year lagged, and the five-and ten-year average inflation experienced by each country prior to the survey and maximum inflation known in the respondent's lifetime. Results are reported in Table 4.

The estimated marginal effects for all inflation types (current inflation, lagged inflation and historical long-term inflations, measured by the five-and ten-year av-erages) are insignificant. The only significant measure related to inflation is the maximum inflation known in the respondent's lifetime. The negative sign however indicates that respondents consider that independence of the central bank may not by itself reduce the possibility of high or hyper-inflation in the future, except if the central bank of the respondent's country is already independent, as the level of current independence of the central bank is positive and significant, with a coefficient superior to the one on maximum inflation. Hence, all in all, our results suggests that inflation aversion may be mediated by central bank independence.

The results in Table 4 show important cross-country variations. If Germany is considered as the reference country, the coefficient estimates of each country indicate whether support for an independent ECB is lower or higher than in Germany holding all other variables at their mean. We see that respondents in Denmark, Great Britain, and Sweden show much lower degrees of support for an independent ECB. The substantial difference in the magnitudes of the coefficients is the highest for the marginal effects for estimate (1), with coefficients equal, for Great Britain, to -0.155, compared to 0.097, for the Netherlands. This means that, controlling for economic performance, the average UK citizen is estimated to have an expected probability of 0.58 in favor of an independent ECB, compared to 0.88 for the Netherlands and 0.76 for Germany. Hence, there are clear national differences in attitudes towards ECB independence, with an apparent cleavage between the prospective members of the (present) Euro area and the more reluctant candidates.

Table 5 details the results of an extended equation, adding individual respondent characteristics to maximum inflation and country and year effects. Note that the measure of maximum inflation also loses its significance when combined with individual characteristics. These attributes clearly dominate respondents' behavior, but it is not the case with central bank independence, which is generally significant and positive. Hence, living in a country with a high degree of independence of the central bank strongly impacts the support for a new independent central bank, which hints at a perception by the general public of the benefits of such an institutional Gender is significant across all the estimated models, and has a negative sign indicating that women, ceteris paribus, are less passionate about ECB independence. As already stated, this is be related to the more general trend in women's attitudes to economic issues, or to a more asserted knowledge by men [START_REF] Williamson | Lay people's cognitive models of the economy[END_REF]. In considering how the age of the respondent impacts on his or her support for the CBI, our estimates show that age reveals no significance on the support.

The most prominent impact, visible in nearly all the specifications, is related to education. Number of years of education has a positive influence on respondents' support for an independent ECB. Recall that the variable is defined as the age when the respondent finished full time education; note also that the reference category is those individuals who left full time education at age 15 or before. We can see then that respondents with the highest education levels are more supportive of an independent ECB. This is consistent with the literature on public opinions on economic issues. The coefficients of the people who left education at age 20 or over are nearly twice as high as the coefficients of those who left in their teenage years. This may also signal a knowledge of foreign languages, which could help to understand what is going on at the European level.

In comparing occupations, unemployed and retired respondents are less enthusiastic about central bank independence. The result for unemployment is consistent with the hypothesis of a higher concern for a worse unemployment-inflation trade-off at low levels of inflation. 14 Retired people are less negative about central bank independence than the unemployed, which may be a sign that they would be less affected by the existence of an independent central bank since their preferences intrinsically tend towards low inflation (if only because the degree of nominal indexation of pen-sions is generally lower than for wages, or because their accumulated assets may not be protected against inflation).15

The coefficients of income quartiles are positive, showing (with the first -lowestquartile as the reference) that support for an independent central bank is increasing with income. This result is consistent with those in [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF] and [START_REF] Jayadev | Differing preferences between anti-inflation and antiunemployment policy among the rich and the poor[END_REF] on inflation aversion. [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF] explains that all else being equal, lowincome groups have a higher probability of unemployment. Consequently lowerincome groups are more concerned about unemployment than inflation. This section of the population may be more fearful of the implications, in terms of a less active monetary policy for instance, of a more independent central bank. This result is also confirmed by the negative coefficient of Unemployed (the priorities of people on the dole will more likely be a greater concern for a less active monetary policy, see above), and a positive coefficient of the higher income quartiles, revealing that higher income individuals are more in favor of an independent central bank. [START_REF] Schneider | Politico-economic models of macroeconomic policy: A review of the empirical evidence[END_REF] also observe that high income recipients are more concerned about inflation because they are more seriously affected by it.

Affiliation to a political spectrum in the country has no effect on support for an independent central bank. These results on political orientation are in line with those in [START_REF] Kaltenthaler | Accountability and independent central banks: Europeans and distrust of the European central bank[END_REF] but contrast with those in [START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF]. However, although political affiliation does not seem to matter, knowledge about politics and intensity of political discussions have significant positive impacts for an independent ECB. Individuals who discuss politics occasionally or frequently place higher support for independence than people who never discuss political matters. These results tend to show that people with greater awareness and/or greater civic concern are more supportive of independence. This is confirmed by the result that better access and use of information (measured by the media use index) has a sizeable impact on people's opinions. The coefficients of the three categories are positive and significant (with lowest use of media as the reference level), and show that higher levels of media use promote higher support for an independent ECB. This result for the European population as a whole echoes a study by [START_REF] Van Der Cruijsen | How much does the public know about the ECB's monetary policy? Evidence from a survey of Dutch households[END_REF] on Dutch households, which shows that use of media correlates with knowledge and understanding of the ECB's monetary policy. Our results also show that more knowledge about regional politics and institutions has a positive impact on support for the independence of a ECB, as well as the perceived importance of the European Parliament . The latter shows that the higher the degree of perception of the importance of the European Parliament, the higher the support for the European central bank independence. 16Finally, satisfaction with national democracy is positive and significant. Individuals more satisfied with their national democracy are more supportive of the independence of the ECB, compared to the respondents with lower levels of satisfaction. The magnitudes of the coefficients of the 'fairly satisfied' and 'very satisfied' groups are nearly twice as high as those in the 'not very satisfied' category. This could mean that respondents consider that the national government was right to agree to an independent ECB. This provides another important insight, that people who tend to be satisfied with their national political system are more supportive of an independent ECB. This adds to the support for the now traditional view of the gains from delegating monetary policy to an independent institution [START_REF] Rogoff | The optimal degree of commitment to an intermediate monetary target[END_REF], and to the idea that national and European institutions are complementary more than substitutes (see, e.g., [START_REF] Anderson | When in doubt, use proxies: Attitudes toward domestic politics and support for European integration[END_REF], since dissatisfied populations think that upper-tier levels of government will help remedy the misery of national politics.

If the data were available, it would be interesting to compare our dataset on attitudes with data related to other periods and other continents; nevertheless, our results from the founding period of the ECB are important.

First, even though central bank independence is now recognized by pundits to be an important feature of any monetary institutional setting, our results tend to = All models were also re-estimated after imputing the missing observations using multiple imputation technique; results were qualitatively unchanged and are available on request. BL:Basline; * p < 0.1, ** p < 0.05, *** p < 0.01 show that the general public is able to endorse its importance. Second, for countries considering whether to establish a new central bank or to revise/amend central bank laws, our results show clearly that the general public can be driven to understand these reforms, and the window of opportunity for their introduction may be larger than had been assumed [START_REF] Acemoglu | When does policy reform work?: The case of central bank independence[END_REF]. Thirdly, our results have some implications for central bank policies and communication strategies. Although they indicate a fairly good support for their independence, they reveal that some parts of society are less enthusiastic. Central banks need to maintain communication and diffusion of information to the public generally and also focus on and provide more specific information to those groups that study has revealed as being less convinced.

To check for the robustness of our results, we have run several other estimates. First, even though the surveys we make use of do not include the specific inflation perceptions or expectations, they however include an "Economic expectations" variable. Even though this variable (asking respondents if they think that future economic situation will be worse, better or if they expect no change) is not available for all the surveys, we have run estimates that provide for a robustness check of our result with regard to the inclusion of specific economic perceptions from the respondents. Our results are basically identical and including this variable, although estimates are based on a much smaller number of observations, are fully supportive of our baseline estimates. Second, we have computed respondents' maximum adult lifetime inflation rates ("maximum inflation experienced after the age of 15"). This variable is also insignificant and our results are in conformity with the previous ones with the maximum inflation experienced. 17

Conclusion

This study examines public opinion in Europe on the proposal to establish an independent European Central Bank (ECB). The benefits of central bank independence have been extensively examined and are no longer disputed since there is 17 The results are available from the authors upon request.

ample empirical evidence that it results in lower inflation and ensures a more stable economic environment. As a consequence, central bank independence has increased since the 1990s. Yet, there has been no comprehensive analysis of public preferences for central bank independence. This paper provides such an investigation, based on Eurobarometer opinion surveys in 15 European countries over the period 1998 to 2000, building on the historical event of the foundation of the European Central Bank.

We study individual level characteristics and inflation factors that shape mass opinion in favor of central bank independence. Our logistic regression estimates demonstrate that inflation by itself is not sufficient to explain peoples' support for an independent central bank in Europe. Individual characteristics and circumstances play a bigger role in shaping preferences for central bank independence. Significant features include gender (women are less supportive), education (support increases with education), income (higher income means higher support), satisfaction with national democracy (greater satisfaction increases support), frequent discussion of politics (more frequent discussion results in more support), knowledge about the EU (higher level of information leads to higher support), importance given to EU Parliament (higher importance given leads to higher support), use of media (more regular news consumption translates into more support) and employment status (unemployed and retired are less supportive). Moreover, our results show that current level of central bank independence strongly impacts public opinion in favor of establishing an independent central bank.

Figure 1 :

 1 Figure 1: Support of an independent ECB-by Country

Table 1 :

 1 Support for Central Bank Independence in 15 EU countries

	Countries	Code		1998		1999		2000
			For	Against	For	Against	For	Against
	France	FRA	1,485	302	1,406	373	693	195
	Belgium	BEL	1,354	255	1,547	275	787	164
	Netherlands	NLD	1,754	179	1,680	159	808	79
	Germany Ω	DEU	2,722	595	2,868	641	1,335	417
	Italy	ITA	1,419	185	1,464	199	732	124
	Luxembourg LUX	963	147	940	112	461	76
	Denmark	DNK	1,323	470	1,303	487	631	269
	Ireland	IRL	1,346	155	1,509	138	694	108
	Great Britain GBR	1,150	510	969	587	420	363
	Greece	GRC	1,384	300	1,303	379	612	178
	Spain	ESP	1,248	216	1,242	243	700	118
	Portugal	PRT	1,106	186	1,285	207	672	109
	Finland	FIN	1,481	290	1,486	333	668	189
	Sweden	SWE	1,348	365	1,365	350	605	285
	Austria	AUT	1,289	288	1,314	289	635	163
	Total		21,372	4,443	21,681	4,772	10,453	2,837
	Ω East+West

Table 2 :

 2 Descriptive Statistics

	Variables	Mean	Std.	Min	Max
	Gender	0.52	0.5	0	1
	Age (Exact)	43.87	17.87	15	99
	Age (categories)	2.45	0.95	1	4
	Age Education (categories)	2.19	0.96	1	4
	Income Quartiles	2.47	1.11	1	4
	Unemployed	0.06	0.23	1	0
	Retired	0.2	0.41	1	0
	Political Ideology	1.93	0.76	1	3
	Political Discussion	1.83	0.63	1	3
	Democracy Satisfaction	2.62	0.79	1	4
	EU Parliament Importance	3.09	0.79	1	4
	EU Knowledge	1.52	0.62	1	3
	Use of Media	3.14	0.9	1	4
	Inflation(t)	1.79	1.12	-0.27	5.56
	Inflation (t-1)	1.74	1.11	-0.27	5.54
	5 years average Inflation	2.57	1.70	0.77	9.60
	10 years average Inflation	3.89	2.58	1.88	13.09
	Maximum Inflation	16.48	7.12	3.18	30.0
	CBI Index	0.81	0.14	0.47	0.92
	nual percentage change in the consumer price index. 11

Table 3 :

 3 Summary Statistics for the Opinion in Favor of an Independent ECB

	Variables	Mean	Std.	Observations
	Full Sample	0.82	0.39	65,558
	Breakdown by:
	Gender
	Male	0.83	0.38	33,105
	Female	0.81	0.40	32,453
	Age
	15-24 years	0.83	0.38	10,755
	25-44 years	0.82	0.38	25,678
	45-64 years	0.82	0.39	19,387
	65+ years	0.78	0.42	9,730
	Education
	Less than 15 years	0.77	0.42	15,968
	16-19 years	0.81	0.39	24,876
	20+ years	0.85	0.35	17,290
	Still Studying	0.84	0.37	7,350
	Occupation
	Unemployed	0.78	0.41	3,680
	Retired	0.78	0.41	13,005
	Income Quartiles
	Q1	0.76	0.43	10,907
	Q2	0.8	0.40	11,815
	Q3	0.83	0.37	12,450
	Q4	0.86	0.35	11,990
	Political Ideology
	Left	0.81	0.39	17,827
	Center	0.82	0.38	23,232
	Right	0.83	0.38	14,212
	Political Discussion
	Never	0.78	0.42	17,354
	Occasional	0.83	0.38	38,663
	Frequent	0.83	0.38	9,162
	Democracy Satisfaction
	Not at all satisfied	0.69	0.46	4,634
	Not very satisfied	0.78	0.42	14,531
	Fairly satisfied	0.85	0.36	26,595
	Very satisfied	0.85	0.36	5,318
	EU Parliament Importance
	Not at all important	0.59	0.49	1,740
	Not very important	0.77	0.42	9,454
	Important	0.85	0.36	27,701
	Very important	0.85	0.36	19,071
	EU Knowledge
	Low	0.79	0.41	32,367
	Good	0.85	0.36	27,336
	Very good	0.85	0.36	4,881
	Use of Media
	Low use	0.76	0.43	1,663
	Fair use	0.81	0.39	7,106
	Frequent use	0.82	0.38	12,589
	More frequent use	0.84	0.36	17,988

Table 4 :

 4 Impact of Current and Historical Inflation Experience

	Regressors	(1)	(2)	(3)	(4)	(5)
	Inflation(t)	0.008
		(0.006)
	Inflation(t-1)		0.005
			(0.007)
	5-Years Average Inflation			-0.003
				(0.008)
	10-Years Average Inflation				0.01
					(0.012)
	Maximum Inflation					-0.002***
						(0.001)
	CBI Index	0.056*** 0.063*** 0.060***	0.052**	0.061***
		(0.016)	(0.022)	(0.021)	(0.025)	(0.022)
	France	0.005**	0.007**	0.005*	0.009**	0.002
		(0.002)	(0.003)	(0.003)	(0.004)	(0.003)
	Belgium	0.032*** 0.036*** 0.038*** 0.038***	0.030***
		(0.004)	(0.003)	(0.002)	(0.001)	(0.003)
	The Netherlands	0.097*** 0.102*** 0.109*** 0.102***	0.101***
		(0.007)	(0.007)	(0.006)	(0.005)	(0.002)
	Italy	0.062*** 0.067*** 0.077***	0.053**	0.076***
		(0.007)	(0.007)	(0.013)	(0.022)	(0.002)
	Luxembourg	0.065*** 0.070*** 0.072*** 0.069***	0.063***
		(0.004)	(0.003)	(0.002)	(0.003)	(0.003)
	Denmark	-0.065*** -0.054*** -0.049*** -0.049***	-0.054***
		(0.010)	(0.014)	(0.012)	(0.011)	(0.011)
	Ireland	0.084*** 0.093*** 0.099*** 0.092***	0.100***
		(0.009)	(0.007)	(0.005)	(0.006)	(0.003)
	Great Britain	-0.155*** -0.144*** -0.131*** -0.159***	-0.119***
		(0.013)	(0.022)	(0.019)	(0.033)	(0.016)
	Greece	-0.037**	-0.032	0.01	-0.135	0.005
		(0.018)	(0.029)	(0.055)	(0.165)	(0.006)
	Spain	0.032*** 0.040*** 0.050***	0.024	0.053***
		(0.009)	(0.008)	(0.014)	(0.025)	(0.004)
	Portugal	0.043*** 0.050*** 0.062***	0.015	0.071***
		(0.010)	(0.010)	(0.015)	(0.052)	(0.006)
	Finland	0.012** 0.019*** 0.019*** 0.017***	0.020***
		(0.005)	(0.004)	(0.005)	(0.006)	(0.004)
	Sweden	-0.023*** -0.023*** -0.029*** -0.044**	-0.032***
		(0.006)	(0.007)	(0.005)	(0.020)	(0.004)
	Austria	0.012*** 0.016*** 0.016*** 0.014***	0.007*
		(0.002)	(0.003)	(0.004)	(0.004)	(0.004)
	Observations	65,558	65,558	65,558	65,558	65,558
	Pseudo R-Sq	0.03	0.03	0.03	0.03	0.03
	Notes: The table reports estimated average marginal effects with robust standard errors
	clustered by country in parentheses. All models are estimated using time fixed effects.
	Germany is the reference country. ** p < 0.1, ** p < 0.05, *** p < 0.01

Table 5 :

 5 Socio-demographic Factors and Political Ideology The table reports estimated average marginal effect.All regressions include country and year dummy variables. Robust standard errors clustered by country are presented under each marginal effect. ξ Not available for 2000.

	Regressors	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
	Maximum Inflation	-0.001	-0.001	0.000	0.000	-0.001	0.000	-0.001	0.000	-0.001
		(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
	CBI Index	0.059***	-0.013 0.068*** 0.074***	0.086**	0.022	-0.039 0.092***	1.328***
		(0.023)	(0.019)	(0.024)	(0.024)	(0.034)	(0.020)	(0.030)	(0.021)	(0.133)
	Gender	-0.019*** -0.018*** -0.018*** -0.015** -0.016*** -0.015** -0.016*** -0.013**	-0.011
		(0.006)	(0.006)	(0.006)	(0.007)	(0.006)	(0.006)	(0.005)	(0.007)	(0.007)
	Unemployed	-0.032***	-0.013 -0.032*** -0.031*** -0.021*** -0.029***	0.001 -0.033***	-0.014
		(0.006)	(0.009)	(0.007)	(0.007)	(0.006)	(0.008)	(0.010)	(0.009)	(0.011)
	Retired	-0.015**	-0.004 -0.017** -0.016**	-0.013*	-0.014*	-0.002 -0.019**	-0.011
		(0.006)	(0.005)	(0.007)	(0.007)	(0.008)	(0.008)	(0.008)	(0.007)	(0.008)
	Age (BL:65+ years)
	15-24 years	-0.006	-0.023	-0.003	0.003	-0.01	-0.011 -0.034**	0.012	-0.027
		(0.017)	(0.016)	(0.016)	(0.016)	(0.015)	(0.016)	(0.016)	(0.022)	(0.027)
	25-44 years	0.002	-0.006	0.004	0.004	0.006	-0.006	-0.008	0.008	-0.006
		(0.011)	(0.012)	(0.010)	(0.011)	(0.012)	(0.011)	(0.013)	(0.013)	(0.014)
	45-64 years	0.013	0.003	0.013*	0.012	0.013	0.005	-0.004	0.016	-0.003
		(0.008)	(0.009)	(0.008)	(0.008)	(0.009)	(0.008)	(0.008)	(0.011)	(0.011)
	Education (BL:Up to 15 years)
	Still studying	0.068*** 0.067*** 0.065*** 0.059*** 0.060*** 0.052*** 0.051*** 0.059***	0.048**
		(0.012)	(0.015)	(0.013)	(0.013)	(0.014)	(0.012)	(0.016)	(0.014)	(0.020)
	16-19 years	0.043*** 0.027*** 0.042*** 0.038*** 0.035*** 0.034***	0.017* 0.035***	0.008
		(0.009)	(0.008)	(0.009)	(0.009)	(0.011)	(0.009)	(0.010)	(0.008)	(0.013)
	20 and above	0.093*** 0.071*** 0.088*** 0.081*** 0.075*** 0.073*** 0.052*** 0.081***	0.046***
		(0.010)	(0.010)	(0.010)	(0.010)	(0.012)	(0.010)	(0.013)	(0.009)	(0.015)
	Income Quartiles (BL:Q1)
	Q2		0.032***					0.012		0.016*
			(0.007)					(0.009)		(0.009)
	Q3		0.056***					0.040***		0.043***
			(0.009)					(0.011)		(0.012)
	Q4		0.079***					0.056***		0.051***
			(0.007)					(0.009)		(0.012)
	Political Ideology (BL:Centre)
	Left			-0.013	-0.016	-0.013		-0.012		-0.02
				(0.010)	(0.010)	(0.009)		(0.009)		(0.013)
	Right			0.006	0.005	0.01		0.012		0.012
				(0.012)	(0.012)	(0.013)		(0.013)		(0.012)
	Political Discussion (BL:Never)
	Occasionally				0.044*** 0.041***		0.019***		0.014*
					(0.007)	(0.006)		(0.005)		(0.008)
	Frequently				0.041*** 0.047***		0.016**		0.007
					(0.011)	(0.011)		(0.008)		(0.012)
	Satisfaction with Democracy
	(BL:Not at all satisfied)
	Not very satisfied					0.090***		0.082***		0.065***
						(0.009)		(0.009)		(0.013)
	Fairly satisfied					0.156***		0.134***		0.106***
						(0.011)		(0.011)		(0.013)
	Very satisfied					0.170***		0.155***		0.123***
						(0.013)		(0.013)		(0.017)
	EU Knowledge (BL:Low)
	Good						0.029*** 0.028***		0.030***
							(0.007)	(0.008)		(0.009)
	Very good						0.035*** 0.031***		0.027***
							(0.009)	(0.011)		(0.010)
	EU Parliament Importance
	(BL:Not at all important)
	Not very important						0.182*** 0.143***		0.159***
							(0.019)	(0.024)		(0.023)
	Important						0.268*** 0.224***		0.252***
							(0.031)	(0.029)		(0.033)
	Very important						0.315*** 0.275***		0.299***
							(0.036)	(0.031)		(0.030)
	Media use Index(BL:Low use) ξ
	Fair use								0.060***	0.070***
									(0.009)	(0.016)
	Frequent Use								0.070***	0.061***
									(0.016)	(0.019)
	More Frequent Use								0.092***	0.072***
									(0.015)	(0.019)
	Observations =	65,476	47,118	55,207	54,934	42,923	57,156	29,195	39,310	14,656
	Adjusted Pseudo R-Sq	0.04	0.04	0.04	0.04	0.06	0.06	0.08	0.04	0.08
	Notes:

Preprint submitted to European Journal of Political EconomyDecember 5, 2011

In terms of European integration where heterogeneities inside countries can also be a concern for the sustainability of the process, variations in domestic attitudes have been scrutinized. For example,[START_REF] Méon | Distributive consequences of a monetary union: What can we learn from a referendum?[END_REF] studies approval rates during the referendum on the Maastricht Treaty in France in 1992. His results show that approval rates were higher in departments where unemployment, long-term unemployment and past geographical mobility were low and social mobility was high.

Results in Vaubel (2003) also point to the fact that the sensitivity of the general public to inflation is more significant than central bank independence to explain inflation performance.

http://zacat.gesis.org/webview/index.jsp

We also estimated the regressions using data from only three surveys conducted in the same period of time over three years; the results (available on request from the authors) do not differ significantly.

East and West.

The respondents in this category were imputed using multiple imputation technique and all equations were re-estimated to check the robustness of our results, without any qualitative modifications of the results. Moreover, as one cannot reject the possibility that respondents first decide to have an opinion and then decide which opinion to have, we run a Heckman selection model. However we conclude in favor of the absence of a selection bias. Full results are available upon request.

As in every survey, the framing of the question may suffer from interpretative biases from the respondents, which cannot be avoided. Among these, the possibility that respondents answer while having in mind the independence of any central bank (i.e. not the particular case of the ECB) figures out prominently, as will become apparent below in our results. Also, if one assumes that the general public does not know much about monetary policy, the importance of the independence from the member states may be misunderstood. As a consequence, all our conclusions have to be read with this cautionary note in mind.

Of course, one reason for the relatively strong support for the ECB observed in the Netherlands may be the fact that Wim Duisenberg was the first president of the ECB.

Even though the precise mechanism may not be fully understood by laypeople, the results of the literature (see for example[START_REF] Scheve | Public inflation aversion and the political economy of macroeconomic policymaking[END_REF][START_REF] Van Lelyveld | Inflation or unemployment? Who cares?[END_REF] can be understood as a confirming such an interpretation.

[START_REF] Blinder | What does the public know about economic policy, and how does it know it?[END_REF] observe that a majority of respondents in a representative sample of America show a strong desire to be well informed about major economic policy issues and that the main sources of information they consider are television and newspapers.

Data on maximum inflation for Germany before 1992 is obtained from[START_REF] Reinhart | From financial crash to debt crisis[END_REF].

Note however that the analysis in[START_REF] Vaubel | The future of the Euro: A public choice perspective[END_REF] does not only indicate that central bank independence is less significant than sensitivity to inflation in explaining inflation, but that central bank independence drops out if sensitivity to inflation is included.

Such a result qualifies Van Lelyveld (1999), who could not find a relation between historical inflation experience and survey respondents degree of inflation aversion. This relation could be mediated by the independence the central bank has received[START_REF] Farvaque | Intergenerational transmission of inflation aversion: Theory and evidence[END_REF].

In such a situation, the unemployment rate in the country may appear as a natural macroeconomic determinant, but due to a strong degree of correlation between inflation and unemployment rates, we are unable to introduce it at this stage.

Note that the retirement variable is potentially picking up the age effect.

Note that, in line with the potential interpretative biases we mentioned above, the respondents who know more about the EU and the European Parliament may also be more supportive of a European Central Bank, whatever its degree of independence.

Acknowledgement

We would like to thank the referees of this journal, Jakob de Haan, Antonio Farfán-Vallespìn and Roland Vaubel for useful comments, as well as participants to the EPCS 2011 (Rennes) and Warsaw International Economic Meeting 2010. The first author gratefully acknowledges financial support from the Higher Education Commission (HEC) of Pakistan and Sfere. The usual disclaimer applies, and the views expressed do not represent the opinions of the State Bank of Pakistan.


M Klasing Chen

B. Segrestin S Hooge

A Hatchuel

MOTIVATIONS FOR INNOVATION IN PUBLIC TRANSPORT: THE BENEFITS OF A LOW COST PERSPECTIVE

Keywords: public transport, innovation, low cost

Introduction

Urban public transport is an old industry; the first system, a horse-drawn bus, was organized in 1662 in Paris by Blaise Pascal and closed down shortly after, probably in 1667 [Costa and Fernandes, 2012]. Although there have been some major changes since this early start (notably due to the vehicle change, traction systems optimization and to the adoption of new modes, fare collection systems and organizations), public transport can hardly be classified as one of the most innovative industries. Thus, transport operators do not figure in strategic consulting firms' rankings as the top 100 global innovators 2012 of Thomson Reuters, or in the 50 most innovative companies 2012 by the Boston Consulting Group. Nevertheless, innovation seems to be present in urban public transport. There are currently three main paths for innovation motivation that can be clearly identified in the literature on urban public transport, as well as in the calls for projects by financing organizations such as the World Bank: innovation motivated by the environmental and sustainability questions, such as climate change and resources depletion; innovation motivated by policy making; and innovation fueled by technology changes (mainly Information and Communication Technologies (ICT)) and their applications. Due to the raise in worldwide public transport demand, linked to increased urbanization and growing demands of environmentally friendlier and less expensive transport than private cars, as well as limited funding (e.g. Pucher et al., 2005), a low cost approach of transport systems can be observed in some countries. A clear example of this approach can be found in some recent light rail projects in France, also called tramways. A growing focus on reducing the project costs can be found, today mainly achieved by the use of standardization (like for example in the case of the Besançon tramway, that uses standard material from a Spanish producer called CAF, the only personalized feature being the color of the trains, with estimated savings of 9.5 million euros when compared to personalized material as used in other networks) or by economies of scale achieved through grouped purchases (the French cities of Brest and Dijon estimated the grouped purchase of their trains allowed them to save 20 million euros). Decision makers and financers, often represented by national transit authorities, are the main actors asking for these changes. Another example of the same trend can be observed in the 2008-2012 World Bank transport business strategy, that includes 'affordability' as one of the main goals [The World Bank, 2008]. In this context of contemporary evolutions of public transportation systems led by specific motivations for innovation, this article aims to contribute to public transportation management, more specifically to the benefit of low cost approach as innovation driver in the sector. First, it aims to identify the main urban public transport innovation motivations developed in scientific literature. Second, it shows how researchers have integrated the recent trend of developing low cost public transport in their works. It furthermore tries to evaluate if the applications in the field are coherent with literature, by analyzing the research and innovation program of a French public transport operator around low cost. We conclude that achieving low cost is a motivation for innovation, and should not be treated separately as only a productivity tool. And even more than a mere motivation for innovation, low cost can also be a catalyzer to innovate in other motivational fields for public transport operators, where they would otherwise have trouble justifying their investments. This article starts by giving the main motivations for this study through a state of the art in innovation and low cost (section 2). In section 3, we describe the method used to locate and select the relevant literature and, we present a field application in a French public transport operator. Next, we will present the results of the systematic literature analysis and the field application (section 5). Section 6 discusses these results and we will finish with the main conclusions and implications for managers, researchers and policy makers.

Innovation and low cost, two under-linked concepts: a state of the art and how these relate to public transport

Innovation is acknowledged today as one of the key sources of competitive advantage [OECD, 1997]. This leads several companies to invest in innovation, but with very different returns on investment. One of the reasons for this is that although the importance of innovating has been established, the "how to do it" seems to be less discussed in literature. In public transport, innovation has been discussed with different meanings attached. In some cases, innovation is still a synonym for technical innovation [Delle Site et al., 2011], whereas [Hyrad, 2013] classifies innovations into two different areas: technical and non-technical innovations. In a similar logic of innovation meaning enrichment, [Ongkittikul and Geerlings, 2006] classified innovation into three areas, namely: technical innovation, competence development and service innovation. Innovation and innovativeness are not yet stable concepts and are difficult to evaluate, several authors having their own criteria [Garcia and Calantone, 2002]. Cost reduction is often one of them and is discussed in the strategy literature by [Porter, 1996] as achievable by two different paths. The first path consists on achieving cost reductions through operational effectiveness: the same client utility is still delivered, but at a lower cost. This can be achieved through a process innovation, but the final product or service is supposed to remain unchanged. This path is considered essential for company's survival, but not as a strategy, and therefore not a way to achieve competitive advantage. The second path is the cost leadership positioning: a change is operated in the client utility, as in the case of low cost airlines. Cost leadership is linked to a standard or no-frills product, and therefore not often linked to innovation. Innovation has in this view rather been associated to the differentiation strategy, by opposition to the cost leadership strategy, and the development of products with price premium. Despite this first contradictory positioning of low cost and innovation, other ways to achieve cost reductions and low cost have been discussed in literature. Thus [Christensen, 1997] sees low cost as a possible component of disruptive innovations. Disruptive innovations start off with a worse performance in some criteria, but a better performance in other criteria (for example unitary cost), and since incremental innovation and the search for more 'premium' markets tend to create products that overshoot the client's need, they are attractive for a part of the market. Another way of combining the two concepts is seen in frugal innovations: these are defined as cheap, tough, easy to use and developed with minimal amounts of raw materials [Rao, 2013]. That is also the case of 'jugaad innovation', a concept developed in India that aims to 'do more with less', by integrating constraints existing in the developing countries as opportunities to innovate [Radjou et al., 2012]. Another point that seems unclear is if the innovations should be looked at from a macro-or a microlevel. Should only new to the world, market or industry innovations be considered as such, or should innovations that are new for a firm or a customer be considered too? Public transport is often put forward as the low cost alternative to private car ownership and its negative externalities [START_REF] Badami | An analysis of public bus transit performance in Indian cities[END_REF]. However increasing pressure on transport budgets has been the main motivator to look into cost reductions in this sector too. Since public transport has a strong path dependency and is planed on the long term, two different types of reductions can be found.

Cost reductions in investments of the construction of new systems, which is one of competitive tendering's goals; and cost reductions in operations, for example through organizational restructuring and cutting underutilized routes and services. Both of these approaches are strongly linked to operational effectiveness logics.

Methodology: Facing a systematic literature review to a field application

Two different methods were used jointly in this research. First, a systematic literature review was used as the method is known for its relevancy "to identify key scientific contributions to a field or question and its results are often descriptively presented and discussed." [Becheikh et al, 2006, p645] According to [Tranfield et al. 2003], traditional 'narrative' literature reviews are frequently biased by the authors and do not capture the collective meaning of research done in a field. This can be a source of problems when inadequate or incomplete studies are used as a basis for decision-making. Systematic review allows to reduce the bias and to provide more reliable results for taking decisions. Afterwards, we conducted an action research [Coughlan and Coghlan, 2002] in a public transport operator, which launched a research program in developing low cost solutions for public transport. Finally, we compare the first results from this program to the scientific literature analysis.

Building a systematic literature review

To identify the main innovation motivations in public transport in the last years, a systematic literature review was conducted. It was based on the search-terms "public transport" AND "innovation", in three databases -"ScienceDirect", "Web of knowledge" and "Transport Research Board", from 2006 to mid-2013. These three databases were chosen as they allowed to systematically cover the main public transport journals. Only scientific articles were taken into account, to facilitate comparison. The year 2006 was chosen as the first year of study because of the article by [Ongkittikul and Geerlings, 2006], where authors stated that "there is a lack of interest in the issue of innovation in the public transport sector" [ibid, p283], although according to the authors the term innovation has come into popular use in some public sector areas, including the transport sector. This article gives a review of areas in which innovation exists in public transport and "attempts to explain how the innovation in public transport takes place and what the important factors are" [ibid, 2006, p291]. The goal of choosing this starting point was to see how the interest in innovation in transport evolved from a moment where it was stated that it was very low. To be part of our database, the articles should treat an innovation in public transport. Innovativeness was assessed based on the authors' self-evaluation. Articles that included the word 'innovation(s)' or 'innovativeness' in their title, keywords and abstract were included. Furthermore, articles that contained 'technological change', 'technical change' and 'organizational change' in their title, keywords and abstract were also included. The rejection criteria used for our systematic review were:

1. Since the goal of this study is to evaluate the main areas in which urban public transport has seen significant innovations, the papers that were mainly about air transport and long distance trains were eliminated. 2. The papers that were only about a new technology, for example fuel cells, but did not cite a possible use of this technology for public transport were also eliminated. 3. The papers that were only about private transport modes, like cars or bikes owned by the user and used only for personal transport, were also eliminated. There still seems to be a shady zone around car-and bike-sharing systems, which have been, at some times classified as "new public transport systems" [Kaltenbrunner et al., 2010] or "innovative transportation modes that complement public transport" [Huwer, 2004], as a hybrid, a "public-private transportation modes" [Firnkorn and Müller, 2011] and at other times were seen only as a shift from ownership to service, but remained an individual, private transport mode. In this classification car and bike-sharing systems were considered as part of the public transport system, and were not excluded from the study. The identified articles were screened twice, once only using the titles and keywords, and afterwards by reading the abstracts, to eliminate all articles that fulfill the rejection criteria.

The systematic literature review was then repeated using the keywords "public transport" AND "low cost" in the same three scientific databases, and using the same timeframe, from 2006 to mid-2013. The rejection criteria used for this second review were the same as the ones used previously, but with a different inclusion criteria: to be part of this database the articles should be on low cost or cost reduction. Once again this was assessed by author self-evaluation and we included articles that contained the words 'low(er) cost', 'cost reduction', 'cost efficiency', 'cost minimization', 'cost savings' or 'affordable costs'.

The field application: Screening innovation initiatives for low cost public transport in a

French public transport operator Public transport operators often face difficulties to create innovative solutions, which are often justified by the lack of incentive in public services to innovate, the great number of actors in this industry, amongst others. This was also the case of RATP, a French public transport operator, who wanted to renew its offers and propose a new "low cost" or entry product that would allow it to be competitive outside its current market. To do so, they launched a research program on low cost products that is composed of three different phases:

• A benchmark on existing low cost product and services;

• An oriented creativity method, the KCP method [Elmquist and Segrestin, 2008], composed of three phases itself: a Knowledge sharing phase (K), a Conceptual exploration phase (C) and a Prototype and proposition phase (P). This method supported coordination of a transversal group of 25 employees of different departments, who participated in the K and C phase, and a smaller group of experts who participated in the P phase. • A project development phase, during which the propositions from the P phase of the oriented creativity method were elaborated and developed by the different departments concerned, having as goal to create low cost offers. At the time of this writing, the project development phase is still in progress, so the final results of the projects could not be discussed here. Nevertheless, the motivations for innovation, which are the focus of this article, are already well-known, and will be discussed further on for each one of the five propositions that were made at the end of the oriented creativity phase. The method used here was an action research [Coughlan and Coghlan, 2002]: the authors participated in all these research phases, contributing to the benchmark, as well as to the animation of the KCP and to the development of the projects.

Data Analysis

The main innovation motivations identified in the systematic analysis

This search allowed us to find 1594 articles in the ScienceDirect database, 96 additional articles in the Web of Knowledge database and 26 others in the TRB database (the decreasing number of articles is a consequence of the large similarity of rough results between the databases and of the decreasing number of journals in each base). By applying our rejection criteria and excluding identical articles, we were able to reduce the number of articles to 94 (67 from the ScienceDirect database, 18 from the Web of Knowledge and 9 from the TRB database). The articles were catalogued in a unique database and classified according to their motivations for innovation. We identified 16 motivation categories, sometimes used in combinations (see occurrences in table 1), which are described in table 2.

Motivation for innovation Description Occurrences

Environment/sustainabilityclimate change and pollution

Encompasses the fight against climate change and reducing greenhouse gas emissions and/or reducing pollution, as well as the dwindling resources problem.

46

Policymaking and legislation

The public transport sector is highly affected by public policies and legislations, since it's a public service, often receiving high levels of subsidies.

Technology change

Several technological developments linked to public transport can be observed, ex: energy recuperation from braking. This theme does not take into account the new information and communication technologies.

ICT

Contains the works about innovations in information and communication technologies. 12

Organisation and management

The way transport operators and transport networks are organised differs from city to city and has a clear impact on the effectiveness of the transport system.

Modelling and methodologies

In order to better design new transport networks or to evaluate the impact of changes on existing networks, these must be modelled or tested. Considerable efforts are put into improving these models 5

Service quality and client satisfaction

This group contains those studies motivated by improving service quality and client satisfaction. 3

Social inclusion

Social inclusion and giving access to services is one of the main goals of public transport. 3

Physical accessibility and universal design

As most services, public transport has a physical accessibility issue, which is widely discussed. The distance between public transport stops, as well as vehicle and station design to allow the use by the broadest variety of client profiles is taken into account here.

Improving transport safety

The passengers and operators safety is a major concern in public transport. 2

Pricing strategies

Public transport is often seen as a public service. The price therefore does not, in many cases, reflect the real cost of the service produced. However, different pricing strategies (like different pricing for certain hours) can be used to shift demand or to increase ridership.

Improving public health

A series of public health issues are linked to public transport or could be improved by the use of public transport, like traffic accidents, stress-related diseases due to the crowding, or diseases linked to the pollution.

Travel Information

Travel information has been identified as one aspect that increases public transport ridership. 2

Table 2 lists the number of times each motivation occurred. Each article had one or more motivations cited in the title, abstract and keywords. Providing a unique motivation was the most common configuration, but two motivations were also very common (see table 1). Only 10 articles (11% of our sample) did not use one of the five main motivations.

The main cost reduction paths identified by researchers

The scientist databases search on "low cost" and "public transport" allowed us to find 1059 articles in the ScienceDirect base, 13 additional papers in the Web of Knowledge base and 30 in the TRB base. Of these, 408 had also been identified in the first systematic review. When applying the rejection criteria, the number of articles was reduced to 49 (46 issued from 1 from the Web of Knowledge and 2 from the TRB database). Table 3 shows the different motivations for cost reduction. In frequently served transport routes, users are more concerned by regularity than by punctuality at a stop.

1

In this sample of articles, 18 different motivations were identified, 13 of these had already been identified in the motivations on innovation. The five additional motivations are: Benchmarking and comparing networks, socio-economical advantages, combining transport modes, reliability, and improving regularity. Table 4 underlines the number of motivation besides low cost and cost reduction cited. The five main motivations besides low cost are not used in 10 (22%) of the articles. The systematic review also allows confirming the gain in importance of low cost during the studied period, with a significant increase in number of publications from 2011 (see Figure 1).

The public transport operators projects analysed through the framework of scholars' motivations

As mentioned in section 3, the oriented creativity method resulted in five internal propositions within the French public transport operator. Each proposition was composed of a concept addressing a specific innovation path within the low cost field, and a set of studies, projects and trials that had been identified to develop and achieve the exploration of the concept. One of the developed propositions consists of replicating the learning of low cost airlines model to the public transport. As was done by the low cost airlines, this consists of re-evaluating the client satisfaction and the service quality, to allow the removal of all product aspects considered by the client as adding poor value compared to their cost. The different motivations for this proposition (listed in table 5 as proposition 2) are: 1. Low cost, cost reduction and effectiveness, since the main initiative's aim is to reduce costs; 2. Service quality and client satisfaction, since the goal is to better adapt the transport to the client's expectations; 3. Social inclusion, because the new offers should allow access to the service for non-customers; 4. Benchmark and compare networks, since the service quality is different according to the network and the comparison is important.

Year

It appeared that all propositions tackled both motivations for cost reduction and motivations for innovation. Table 5 shows the number of motivations that will be combined in each of the propositions made. The various combinations of multiple motivations are really interesting for the firm as it allowed both dedicated and original strategies of learning, and to adapt activities to stakeholders' interests in order to support their involvement. Moreover, the coverage of motivations tackled by the French operator was surprisingly broad: 15 of the 21 motivations identified through the two systematic reviews will be taken into account in the propositions. Table 6 recapitulates the different motivations addressed by these five propositions.

Findings

This study allowed us to identify the main innovation motivators in urban public transport through a double validation of scientists' works predominance and an industrial case analysis. The three main innovation motivations that were expected by doing a narrative literature review -environment and sustainability, policy making and legislation, technology change -were confirmed by the systematic review of the main scholars database for public transportation research, however this study also underlines that they are not the only ones: 13 other innovation motivations exist, which are usually tacit or undervalued.

Although the studies on low cost public transport are rarely linked to innovation (only 5 of the articles appeared in both of the systematic reviews after the application of the rejection criteria), the motivations in both studies are rather similar: a common core of 13 motivations exists. This extended list of common motivation is a significant result to improve strategic exploration of innovation within a low cost paradigm. Moreover, five motivations linked specifically to low cost were also identified, that could also enrich the innovation quest. As they are of common knowledge, the three main innovation motivations had already been identified as important innovation paths by the public transport operator, and numerous activities already existed in those paths before the oriented creative method: projects aimed at improving the environmental performance and sustainability of the transport system were previously underway, and there is even a sustainable development department in the company. Technology change and ICT were also wellknown paths for practitioners as major motivations for innovation. At the opposite, Innovative policymaking and legislation was identified by the French firm as being a risk outside the companies boundaries, and therefore to be followed carefully, but they did not consider it as a potential innovation source. Similarly, cost reduction efforts existed throughout the whole company, but they were most of the time not linked by decision-makers to innovation and therefore carried out by each department, often without the possibility to influence the others. The fact that low cost was inscribed in the innovation agenda allowed the operator not only to gather the different departments and to create a coherent cost reduction agenda for the whole company, but also to work on a series of combinations of motivations that are broader than those seen in our systematic research. This had a twofold managerial implication: (1) to treat innovation paths that were today unexplored and hard for the company to justify by other means;

(2) to cover a maximum of identified innovation motivations.

The fact that several different motivations were targeted through a same proposition, also made it easier to interest different departments in the projects. A greater number of departments was for example willing to work in the projects issued from the first initiative, which had 9 different motivations, than in the projects issued from the fourth, that only had 3 motivations. And all the initiatives had more interested departments than is usually the case in the innovation and cost reduction projects suggested by the individual departments. Since resources are limited, treating all the innovation and cost reduction motivations was impossible. The environmental and sustainability motivation was willingly left out, since the company through its dedicated department already treated it. The other five innovation motivations that were not investigated by the propositions have now been identified, and their integration into the research and innovation program might be the object of further propositions.

Conclusion, managerial implications and further research

The first conclusion that can be drawn from this work is that a large framework of innovation motivations exists in public transport, not only the three most discussed in literature. This structured study explicit them and it might support decision makers and managers in this sector to decide which motivations for innovation are most important to them. Doing so, this research addresses the key issue of the lack of innovation in the sector and provides relevant data on what really counts to drive public transport innovations. A better understanding of these points is a first step to tackle this problem.

Secondly, an increase in concerns with low cost and cost reduction can be observed in this sector. However cost reduction still seems to be reached only by productivity and operational effectiveness. Consequently, a potential of cost reduction linked to innovation (and not opposed to it) is underexplored in this domain. One of the few examples of successful cost reduction linked to innovation in public transport is the Bus Rapid Transit (BRT). This study shows that linking innovation and low cost can increase efficiently the available options to achieve the so needed low cost public transport. Furthermore, not only can low cost innovations allow a wider number of cost reductions, but they can also serve as a powerful catalyst to innovate in other domains. As was the case of the French public transport operator we studied, who launched projects with several innovation motivations, other actors in this sector could also combine efficiently the low cost and innovation motivations. This would allow to explore domains that are interesting for them but whose exploration might be hard to justify in the company or to other stakeholders. Nevertheless, several limitations to this study exist. In systematic literature reviews there are two essential points, they are the strategy of locating and selecting the potential studies and the inclusion / rejection criteria. The first limitation of this study is linked to the way the articles were chosen. Since public transport, innovation and cost reduction are subjects discussed in a very transversal literature (including transport revues, economy revues, management revues, policy revues…) and the searched databases were chosen to cover the main important transport revues, some sources have surely been left out. The study could be broadened by including other data sources, also covering the main revues in innovation and in management. The second limitation of this study is linked to the inclusion criteria.

The criterion for selecting studies on innovation was the authors' self-declaration. As discussed in section 2, different definitions and usages of the word innovation exist. To be sure that the greatest number of innovative public transport systems are taken into account, it would be interesting to rescreen the articles by verifying the innovativeness of all the products and services proposed through the same framework. Finally, transport operators are only one type of actors in the domain of urban public transport. Looking into field cases of other actors, like vehicle manufacturers, infrastructure builders or legislators, would also be an interesting way to broaden this study.

12

  Users Behaviour changeThe adoption of innovations in the public transport sector can often only be achieved by making the customers and users adopt new behaviours. 11 Public-Private-Partnerships (PPP), contracts, tendering and financing Different contracting and financing schemes emerged recently, and collaboration between the public and the private sector are multiplying in this sector. Treats aspects linked to how public and private sector interact. 6 Low cost, cost reduction and cost effectiveness Cost reduction is a rising concern in all public services. 5

Figure 1 .

 1 Figure 1. Publication trend for articles on low cost public transport

Table 1 . Number of different motivations indicated by authors in each article

 1

	Number of motivations	Occurrences	% of the panel
	1	40	43%
	2	37	39%
	3	13	14%
	4	2	2%
	5	1	1%

Table 2 . Motivations for innovation in public transport from 2006 to mid-2013

 2

Table 3 . Motivations for cost reduction in public transport from 2006 to mid-2013

 3

	Motivation for cost reduction	Additional motivation description	Occurrences
	Low cost, cost reduction and cost effectiveness		49
	Modelling and methodologies		15
	Policymaking and legislation		11
		Some cost reductions are linked to easily replicable
	Benchmarking and comparing networks	productivity efforts. Best practices and comparisons between networks are therefore an important part of	9
		the cost reduction effort.
	Environment/sustainability -climate change and pollution		9
	Organisation and management		9
		As a public service, the benefits of public transport
		are not only measured by financial criteria. In the
	Socio-economical advantages	interest of winning tenders or increasing the	6
		satisfaction with the current government other socio-
		economical advantages are often important.
	Technology change		6
	PPP, contracts and financing		5
	Social inclusion		3
	Behaviour change		3
	Improving transport safety		3
	ICT		2
		A transport mode is defined by a vehicle, an
	Combining transport modes	infrastructure and a specific operation. Combining modes consist of trying to assemble parts of two	1
		different modes.
	Travel information		1
	Physical accessibility and universal design		1
		Unreliable services (experienced by users mostly by
		lack of punctuality and inconsistency of time travel)
	Reliability	are less attractive for users, leading to decreased ridership by unsatisfied users. A level of reliability	1
		can also be part of the transport contract, and fines
		for unreliability can increase costs for operators.
	Improving regularity

Table 4 . Number of different motivations besides "low cost" cited by article

 4

	Number of motivations	Occurrences	%
	1	26	53%
	2	13	27%
	3	7	14%
	4	2	4%
	5	1	2%

Table 5 . Number of different motivations by proposition

 5

	Proposition	Number of motivations
	1	9
	2	4
	3	5
	4	3
	5	5

Table 6 . Coverage of RATP's propositions by motivations

 6

	Motivation	Propositions
	Low cost, cost reduction and cost effectiveness	1,2,3,4,5
	ICT	1,3,4,5
	Service quality and client satisfaction	1,2
	Social inclusion	1,2
	Benchmark and compare networks	2,3
	PPP, contracts, tendering and financing	4,5
	Technology change	3
	Behaviour change	1
	Policymaking and legislation	5
	Travel Information	1
	Modelling and methodologies	1
	Organisation and management	5
	Pricing strategies	1
	Reliability	1
	Combine modes	3

systematic review of the literature from 1993-2003", Technovation, Vol. 26, 2006, pp 644 -664. Christensen, C., "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail", Harvard Business School Press, 1997. Costa, A., Fernandes, R., "Urban public transport in Europe: Technology diffusion and market organisation", Transportation Research Part A: Policy and Practice, Vol.46, 2012, pp 269 -284. Coughlan, P., Coghlan, D., "Action research for operations management", International Journal of Operations & Production Management, Vol. 22, 2002, pp 220 -240. Delle Site, P., Filippi, F., Giustiniani, G., "Users' preferences towards innovative and conventional public transport", Procedia -Social and Behavioral Sciences, Volume 20, 2011, pp 906-915. Firnkorn, J., Müller, M., "What will be the environmental effects of new free-floating car-sharing systems? The case of car2go in Ulm", Ecological Economics, Vol. 70, 2011, pp 1519 -1528. Garcia, R., Calantone, R., "A critical look at technological innovation typology and innovativeness terminology: a literature review", Journal of Product Innovation Management, Blackwell Pub., Vol. 19, 2002, pp 110-132. Hyard, A., "Non-technological innovations for sustainable transport", Technological Forecasting and Social Change, Vol. 80, 2013, pp 1375-1386. Huwer, U., "Public transport and car-sharing -benefits and effects of combined services", Transport Policy, Vol. 11, 2004, pp 77 -87. Kaltenbrunner, A., Meza, R., Grivolla, J., Codina, J., Banchs, R., "Urban cycles and mobility patterns: Exploring and predicting trends in a bicycle-based public transport system", Pervasive and Mobile Computing, Vol. 6, Issue 4,. OECD, "Proposed guidelines for collecting and interpreting technological innovation data: Oslo manual", OECD, Paris (Second (revised) Edition) , 1997. Ongkittikul, S., Geerlings, H., "Opportunities for innovation in public transport: Effects of regulatory reforms on innovative capabilities ", Transport Policy, Vol.13, 2006, pp 283 -293. Porter, M., "What is strategy?", Harvard Business Review, November-December, 1996, pp 61 -78. Pucher, J.; Park, H. & Kim, M. H. "Public Transport Reforms in Seoul: Innovations Motivated by Funding Crisis Journal of Public Transportation", Vol. 8, 2005, pp 41 -62. Radjou, N., Prabhu, J., Ahuja, S., Roberts, K., "Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth", John Wiley & Sons, 2012. The World Bank, "Safe, Clean, and Affordable… Transport for Developpement -The World Bank Group's Transport Business Strategy for 2008-2012", Washington, DC, 2008.