nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒11‒04
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Partisan Bias in Inflation Expectations By Oliver Bachmann; Klaus Gründler; Niklas Potrafke; Ruben Seiberlich
  2. The Politics of News Personalization By Lin Hu; Anqi Li; Ilya Segal
  3. I like, therefore I am. Predictive modeling to gain insights in political preference in a multi-party system By PRAET, Stiene; VAN AELST, Peter; MARTENS, David
  4. Electoral Competition with Fake News By Gene M. Grossman; Elhanan Helpman
  5. More Federal Legislators Lead to More Resources for Their Constituencies: Evidence from Exogenous Differences in Seat Allocations By Marco Franka; David Stadelmann
  6. Political Economy of Third Party Interventions By Sabyasachi Das; Souvik Dutta; Abhirup Sarkar
  7. Political Affections on Online Social Network: The Opinative Priority During the Presidential Campaigns By Aloha Boeck
  8. Political Alignment and Bureaucratic Pay By Jon H. Fiva; Benny Beys; Tom-Reiel Heggedal; Rune J. Sørensen
  9. MMP-elections and the assembly size By Stensholt, Eivind
  10. Neoliberalism and Negative Attitudes toward Immigrants By IGARASHI Akira; ONO Yoshikuni
  11. Revealed Political Favoritism: Evidence from the Allocation of State Lottery Grants in Israel By Momi Dahan; Itamar Yakir
  12. Voting after a major flood: Is there a link between democratic experience and retrospective voting? By Rode, Johannes; Neugart, Michael

  1. By: Oliver Bachmann; Klaus Gründler; Niklas Potrafke; Ruben Seiberlich
    Abstract: We examine partisan bias in inflation expectations. Our dataset includes inflation expectations of the New York Fed’s Survey of Consumer Expectations over the period June 2013 to June 2018. The results show that inflation expectations were 0.46 per centage points higher in Republican-dominated than in Democratic-dominated US states when Barack Obama was US president. Compared to inflation expectations in Democratic-dominated states, inflation expectations in Republican-dominated states declined by 0.73 percentage points when Donald Trump became president. We employ the Blinder-Oaxaca decomposition method to disentangle the extent to which political ideology and other individual characteristics predict inflation expectations: around 25% of the total difference between inflation expectations in Democratic-dominated versus Republican-dominated states is based on how partisans respond to changes in the White House’s occupant (partisan bias). The results also corroborate the belief that voters’ misperceptions of economic conditions decline when the president belongs to the party that voters support.
    JEL: C13 D72 E31 P44
    Date: 2019
  2. By: Lin Hu; Anqi Li; Ilya Segal
    Abstract: We study how news personalization affects policy polarization. In a two-candidate electoral competition model, an attention-maximizing infomediary aggregates information about candidate valence into news, whereas voters decide whether to consume news, trading off the expected utility gain from improved expressive voting against the attention cost. Broadcast news attracts a broad audience by offering a symmetric signal. Personalized news serves extreme voters with skewed signals featuring own-party bias and occasional big surprise. Rational news aggregation yields policy polarization even if candidates are office-motivated. Personalization makes extreme voters the disciplining entity for equilibrium polarization and increases polarization through occasional big surprise.
    Date: 2019–10
  3. By: PRAET, Stiene; VAN AELST, Peter; MARTENS, David
    Abstract: In political sciences there is a long tradition of trying to understand party preferences and voting behavior to explain political decisions. Traditionally, scholars relied on voting histories, religious affiliation, and socio-economic status to understand people’s vote. Today, thanks to the Internet and social media, an unseen amount and granularity of data is available. In this paper we show how political insights can be gained from high-dimensional and sparse Facebook data, by building and interpreting predictive models based on Facebook ‘like’ and survey data of more than 6.500 Flemish participants. First, we built several logistic regression models to show that it is possible to predict political leaning and party preference based on Facebook likes in a multi-party system, even when excluding the political Facebook likes. Secondly, by introducing several metrics that measure the association between Facebook likes and a certain political affiliation, we can describe voter profiles in terms of common interests. For example, left voters often like environmental organizations and alternative rock music, whereas right voters like Flemish nationalistic content and techno music. Lastly, we develop a method to measure ideological homogeneity, or to what extent do people that like the same products, movies, books, etc. have a similar political ideology. In the Flemish setting, the categories ‘politics’ and ‘civil society’ are most ideologically homogeneous whereas ‘TV shows’ and ‘sports’ are the most heterogeneous. The results show that our approach has the potential to help political scientists to gain insights into voter profiles and ideological homogeneity using Facebook likes.
    Date: 2018–12
  4. By: Gene M. Grossman; Elhanan Helpman
    Abstract: Misinformation pervades political competition. We introduce opportunities for political candidates and their media supporters to spread fake news about the policy environment and perhaps about parties' positions into a familiar model of electoral competition. In the baseline model with full information, the parties' positions converge to those that maximize aggregate welfare. When parties can broadcast fake news to audiences that disproportionately include their partisans, policy divergence and suboptimal outcomes can result. We study a sequence of models that impose progressively tighter constraints on false reporting and characterize situations that lead to divergence and a polarized electorate.
    JEL: D72 D78
    Date: 2019–10
  5. By: Marco Franka; David Stadelmann
    Abstract: Electoral district magnitude varies across German electoral constituencies and over legislative periods due to Germany’s electoral system. The number of seats in parliament per constituency is effectively random. This setting permits us to investigate exogenous variations in district magnitude on federal resource allocation. We analyse the effect of having more than one federal legislator per constituency on federal government resources by exploiting information from 1,375 German constituencies from 1998 to 2017. More federal legislators per constituency lead to statistically significantly more employment of federal civil servants in the respective constituencies. The size of the effect corresponds to about 37 additional federal civil servants (3.4% of average employment) once a constituency is represented by additional legislators from party lists. Numerous robustness tests support our results. Further evidence points to some heterogeneity of the effect. In particular, constituencies represented by additional legislators who are experienced and who are members of larger, competing parties obtain more federal resources.
    Keywords: District magnitude; political processes; redistribution mixed- member system
    JEL: D72 F50 H41
    Date: 2019–10
  6. By: Sabyasachi Das (Department of Economics, Ashoka University); Souvik Dutta (Economics Department, Indian Institute of Management, Bangalore); Abhirup Sarkar (Economics Research Unit, Indian Statistical Institute, Kolkata)
    Abstract: The paper examines political economy consequences of a third party (World Bank) intervention in India. The intervention was a capacity building initiative that trained local politicians in various governance procedures in a sample of villages. We show that the state government reacted to the intervention by allocating additional resources to program villages with aligned incumbents while reducing allocation in program villages with rival incumbents. Consequently, party switching by opposition incumbents went up in program villages. Moreover, the reelection rate of incumbents went down due to the intervention, especially in GPs where no incumbents switched their party affiliations. The results highlight the importance of considering political economy consequences of such interventions, even in countries not heavily reliant on foreign assistance, to better understand its overall welfare effects.
    Keywords: Policy Evaluation, Party Switching, Reelection, Gram Panchayat
    Date: 2019–09
  7. By: Aloha Boeck (The Lutheran University of Brazil, Canoas, Brazil)
    Abstract: How does the urgency on publicizing opinions was expressed in the uses of an online social network during a conflicted period of time like the Presidential Campaign in countries such as Brazil and United States? In these scenarios, it seems that it is not enough to simply reflect on certain relevant topics; it seems essential to externalize opinions that seek to establish an intransigent position. To understand this phenomenon, possible evidence can be found in the way communities of fans are organized, guided by the regulation of affections in the media and in education. Thus, the concept of "opinionative priority" is proposed to understand the disputes about the meaning of democracy that emerge in online social networks, being the attempt to corroborate, counter or refute a statement, in a power dispute. It is the tensioning itself resulting from the need to belong, caused by social networks, and participatory culture, because it is not enough to be and be seen, it is necessary to be part of the discussions, or to initiate a new one. These disputes treat diverse opinions as enemies to be exterminated, obliterating the pluralistic democratic condition, supported by the fundamental right of freedom of speech. Therefore, it is understood that the "opinionative priority" is more than a communication process, since it promotes a pedagogical action in which opinion is formed from absence of moderation, once there is no time for considerations; there is only the urgency to defend a point of view in social networks.
    Keywords: opinion; online social network; community of fans; democracy, affect
    Date: 2019–08
  8. By: Jon H. Fiva; Benny Beys; Tom-Reiel Heggedal; Rune J. Sørensen
    Abstract: We study the private gains to bureaucrats from their political alignment with elected politicians. Whereas existing studies generally rely on proxies for politician-bureaucrat political alignment, a rare feature of our data allows measuring it directly since 27% of bureaucrats ran for political office. We focus explicitly on individuals at the very top of the administrative hierarchy, and are able to separate the intensive margin (i.e. wage increases) from any additional effects at the extensive margin (i.e. new appointments). Using close elections for inference, we find that politician-bureaucrat alignment significantly increases top bureaucrats’ wage even in the Norwegian civil service system. Our results go against predictions from models with policy-motivated bureaucrats, but are consistent with politically aligned principal-agent matches being more productive.
    Keywords: bureaucracy, civil service, remuneration, principal-agent, ally principle
    JEL: D73 H70 J41
    Date: 2019
  9. By: Stensholt, Eivind (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: MMP (Mixed Member Proportional) elections for legislatures have ballots with one vote in a local single seat tally and one vote for a party list in a multi-seat tally. In Germany, the multi-seat tally occasionally violated a Participation axiom. The federal Constitutional Court declared this unconstitutional in 2008. Rules were changed. In 2017, the result was a Bundestag with 709 members, 111 of them in extra-ordinary party seats. The paper considers two remedies against excessive assembly size. One is “faithful accounting” of ballot data in each local tally, another a change from Plurality to a Majority method. For this use, we consider IRV, i.e. Instant Runoff Voting, in combination with a 3-candidate Condorcet method. The mayoral IRV election in Burlington 2009 serves as an example, here in the special context of MMP. Violations of the Participation criterion occur also in the usual Majority methods for single seat elections. The legal adoption of a mathematical axiom from election theory have consequences seen in the context of established impossibility theorems.
    Keywords: Mixed Member Proportional; Instant Runoff Voting; Participation criterion; legality; legitimacy; Burlington election 2009
    JEL: D72
    Date: 2019–10–30
  10. By: IGARASHI Akira; ONO Yoshikuni
    Abstract: Existing studies emphasize that the neoliberal ideology creates anti-immigrant attitudes. They attribute this to the influence of radical right-wing parties, which combine a pro-market ideology with authoritarian social conservatism. However, this claim has not been fully tested. To understand the mechanisms behind this association, our study analyzes data drawn from a representative survey and an online survey experiment conducted in Japan. Our results demonstrate that an association between neoliberalism and anti-immigrant attitudes exists even where radical right-wing parties are absent. Furthermore, the results of our experiment, where immigrants' skill levels and country of origin are varied in the vignette, show that respondents espousing neoliberal ideology are sensitive to the skill level of immigrants in that they strongly oppose low-skilled immigrants, while welcoming high-skilled immigrants. These results suggest that the association between neoliberalism and anti-immigrant attitudes is not simply a result of the influence of radical right-wing parties but rather stems from concerns over their future welfare burden.
    Date: 2019–10
  11. By: Momi Dahan; Itamar Yakir
    Abstract: This paper offers a complementary empirical approach that might be better suited to identify the extent of political favoritism in a multi-decision-maker institution than the standard identification strategy. The typical diff-in-diff identification strategy to estimate political favoritism, which rests on a comparison of two decision makers that allocate public funds to two groups, seems inadequate in a multi-player setting due to the multiple and conflicting political interests and social affiliations. To illustrate how our approach uncovers the degree of political favoritism, we use a policy change in allocating state lottery revenues to Israeli municipalities from discretion-based allocation to rules-based allocation. We find significant political favoritism under the old regime relative to the new one toward Jewish (versus Arab) and affluent (versus less affluent) municipalities. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism.
    Keywords: political favoritism, grant allocation, local government, rules vs. discretion
    Date: 2019
  12. By: Rode, Johannes; Neugart, Michael
    JEL: D72 D78 H84
    Date: 2019

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