nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒10‒19
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Incomplete Political Contracts with Secret Ballots: Reciprocity as a Force to Enforce Sustainable Clientelistic Relationships By Kenju Kamei
  2. Party Preference Representation By André Blais; Eric Guntermann; Vincent Arel-Bundock; Ruth Dassonneville; Jean-François Laslier; Gabrielle Péloquin-Skulski
  3. War, Socialism and the Rise of Fascism: An Empirical Exploration By Daron Acemoglu; Giuseppe De Feo; Giacomo De Luca; Gianluca Russo
  4. Lending Cycles and Real Outcomes: Costs of Political Misalignment By Çağatay Bircan; Saka Orkun
  5. Ethical Voting in Heterogenous Groups By Alberto Grillo
  6. Information Versus Control: The Electoral Consequences of Polling Place Creation By Bowles, Jeremy; Larreguy, Horacio; Woller, Anders
  7. Public Policy and Participation in Political Interest Groups: An Analysis of Minimum Wages, Labor Unions, and Effective Advocacy By Jeffrey Clemens; Michael R. Strain
  8. Political Favoritism by Powerful Politicians: Evidence from Chief Ministers in India By Umair Khalil; Mandar Oak; Sundar Ponnusamy
  9. Who Debates, Who Wins? At-Scale Experimental Evidence on the Supply of Policy Information in a Liberian Election By Bowles, Jeremy; Larreguy, Horacio
  10. Populism Amidst Prosperity: Poland's Growth Model and its Socio-Political Outcomes By Nina Lopez Uroz
  11. Shipwrecked by Rents By Arteaga, Fernando; Desierto, Desiree; Koyama, Mark
  12. The epistemics of populism and the politics of uncertainty By Richard Bronk; Wade Jacoby

  1. By: Kenju Kamei (Durham University Business School)
    Abstract: Clientelism is frequently observed in our societies. Various mechanisms that help sustain incomplete political contracts (e.g., monitoring and punishment) have been studied in the literature to date. However, do such contracts emerge in elections with secret ballots when the interactions are one-shot? How does repetition affect the evolution of incomplete political contracts? Using an incentivized experiment, this paper finds that even during one-shot interactions where monitoring is not possible, candidates form incomplete contracts through vote buying and promise-making. The candidates’ clientelistic behaviors are heterogeneous: some target swing voters, whereas others offer the most to loyal voters, or even opposition voters. These tactics distort voting behaviors as well as election outcomes. Repeated interactions significantly magnify candidates’ offers and deepen clientelistic relationships. These results underscore the possibility that clientelism evolves due to people’s strategic behaviors and interdependent preferences, without relying on alternative mechanism
    Keywords: experiment, cooperation, vote buying, election, clientelism
    JEL: C92 D72
    Date: 2020–09
  2. By: André Blais (UdeM - Université de Montréal); Eric Guntermann (UC BERKELEY - Berkeley University of California); Vincent Arel-Bundock (UdeM - Université de Montréal); Ruth Dassonneville (UdeM - Université de Montréal); Jean-François Laslier (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics); Gabrielle Péloquin-Skulski (UdeM - Université de Montréal)
    Abstract: Political parties are key actors in electoral democracies: they organize the legislature, form governments, and citizens choose their representatives by voting for them. How citizens evaluate political parties and how well the parties that citizens evaluate positively perform thus provide useful tools to estimate the quality of representation from the individual's perspective. We propose a measure that can be used to assess party preference representation at both the individual and aggregate levels, both in government and in parliament. We calculate the measure for over 160,000 survey respondents following 111 legislative elections held in 38 countries. We find little evidence that the party preferences of different socio-economic groups are systematically over or underrepresented. However, we show that citizens on the right tend to have higher representation scores than their left-wing counterparts. We also find that whereas proportional systems do not produce higher levels of representation on average, they reduce variance in representation across citizens.
    Keywords: party preference representation,party like/dislike,elections,cabinet,legislature
    Date: 2020–09
  3. By: Daron Acemoglu; Giuseppe De Feo; Giacomo De Luca; Gianluca Russo
    Abstract: The recent ascent of right-wing populist movements in many countries has rekindled interest in understanding the causes of the rise of Fascism in inter-war years. In this paper, we argue that there was a strong link between the surge of support for the Socialist Party after World War I (WWI) and the subsequent emergence of Fascism in Italy. We first develop a source of variation in Socialist support across Italian municipalities in the 1919 election based on war casualties from the area. We show that these casualties are unrelated to a battery of political, economic and social variables before the war and had a major impact on Socialist support (partly because the Socialists were the main anti-war political movement). Our main result is that this boost to Socialist support (that is “exogenous” to the prior political leaning of the municipality) led to greater local Fascist activity as measured by local party branches and Fascist political violence (squadrismo), and to significantly larger vote share of the Fascist Party in the 1924 election. We document that the increase in the vote share of the Fascist Party was not at the expense of the Socialist Party and instead came from right-wing parties, thus supporting our interpretation that center-right and right-wing voters coalesced around the Fascist Party because of the “red scare”. We also show that the veterans did not consistently support the Fascist Party and there is no evidence for greater nationalist sentiment in areas with more casualties. We provide evidence that landowner associations and greater presence of local elites played an important role in the rise of Fascism. Finally, we find greater likelihood of Jewish deportations in 1943-45 and lower vote share for Christian Democrats after World War II in areas with greater early Fascist activity.
    JEL: D72
    Date: 2020–09
  4. By: Çağatay Bircan; Saka Orkun
    Abstract: We document a strong political cycle in bank credit and industry outcomes in Turkey. In line with theories of tactical redistribution, state-owned banks systematically adjust their lending around local elections compared with private banks in the same province based on electoral competition and political alignment of incumbent mayors. This effect only exists in corporate lending as opposed to consumer loans. It creates credit constraints for firms in opposition areas, which suffer drops in employment and sales but not firm entry. There is substantial misallocation of financial resources as provinces and industries with high initial efficiency suffer the greatest constraints.
    Keywords: Bank credit; Electoral cycle; State-owned banks; Credit misallocation
    Date: 2018–12
  5. By: Alberto Grillo (Aix Marseille Univ, CNRS, AMSE, Marseille, France)
    Abstract: Voting in large elections appears to be both ethically motivated and influenced by strategic considerations. One way to capture this interplay postulates a rule-utilitarian calculus, which abstracts away from heterogeneity in the intensity of support (Feddersen and Sandroni 2006, Coate and Conlin 2004). I argue that this approach is unsatisfactory when such heterogeneity is considered, since it implies that idiosyncratic preferences are irrelevant for participation, in contrast to the empirical evidence. A model of Kantian optimizationà la Roemer (2019), based on the maximization of individual utility under a universalization principle, predicts instead differential participation and links ethical motivation to the spatial theory of voting.
    Keywords: voting, turnout, ethical voter, rule-utilitarian, kantian optimization
    JEL: D72
    Date: 2020–10
  6. By: Bowles, Jeremy; Larreguy, Horacio; Woller, Anders
    Abstract: We examine the incentives incumbents face when creating new polling places. First, doing so improves incumbents’ ability to monitor brokers and voters by reducing the number of registered voters per polling station. Second, it reduces the distance traveled by citizens to vote, which undercuts incumbents’ ability to control the electorate via turnout buying. We evaluate this trade-off in the context of Uganda, where the incumbent significantly influences electoral administration. Drawing on rich administrative data, we leverage discontinuities in the creation of polling places to causally identify the independent effects of the number of voters per polling station and distance to vote on electoral outcomes. We find that decreasing improves incumbent electoral outcomes, while reducing worsens them. The benefits for incumbent outweigh the costs, which rationalizes recent developments to expand polling infrastructure in Uganda and elsewhere.
    Keywords: electoral administration manipulation, turnout buying
    Date: 2020–09
  7. By: Jeffrey Clemens; Michael R. Strain
    Abstract: Why do individuals join interest groups? Through what channels do interest groups and public policy affect one another? We study these questions by analyzing the interplay among labor unions, minimum wages, news coverage, and public opinion. Over the past decade, labor unions have played a significant role in advocating for state and federal minimum wage increases. Over this period, we find that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the union membership rate among individuals age 16–40. We document four additional facts that shed light on the mechanisms that may underlie this finding. First, while we find increases overall in union membership, we find declines among the minimum wage’s most direct beneficiaries. This is consistent with a classic “free-riding” hypothesis. Second, we find increases in union membership among much broader groups that are not directly affected by the minimum wage. Third, we find that minimum wage increases predict increases in unions’ favorability ratings among the public. Fourth, we find that events in the legislative histories of minimum wage increases predict increases in counts of newspaper articles that simultaneously discuss the minimum wage and key players in the labor movement. Overall coverage of organized labor shifts towards articles that discuss the minimum wage. These facts are consistent with models in which a desire to affiliate with “effective advocacy” is an important driver of the decision to participate in unions and other politically oriented groups.
    JEL: D71 J08 J51
    Date: 2020–10
  8. By: Umair Khalil (School of Economics, University of Adelaide); Mandar Oak (School of Economics, University of Adelaide); Sundar Ponnusamy (School of Economics, University of Adelaide)
    Abstract: We study whether in single-member-district legislative systems, powerful politicians engage in political favoritism towards their constituents. The focus is on the chief ministers of Indian state governments. Using night light intensity as a measure of economic activity, we find that a constituency represented by a sitting chief minister exhibits about 13 percentage increase in luminosity relative to all other constituencies. The effect comes predominantly from the cases where the chief minister’s constituency lies outside their birth region. Neighboring constituencies, particularly those with strategic political value, also benefit from this windfall, suggesting the mechanism at play is likely to be political expediency rather than in-group favoritism.
    Keywords: Distributive Politics, Ethnic Favoritism, Rent-seeking
    JEL: D72 R11
    Date: 2020–10
  9. By: Bowles, Jeremy; Larreguy, Horacio
    Abstract: We examine how candidate selection into the supply of policy information determines its electoral effects. In a nationwide debate initiative designed to solicit and rebroadcast policy promises from Liberian legislative candidates, we randomized the encouragement of debate participation across districts. The intervention substantially increased the debate participation of leading candidates but led to uneven electoral returns for these candidates, with incumbents benefiting at the expense of challengers. These results are driven by differences in compliance: complying incumbents, but not challengers, positively selected into debate participation based on the alignment of their policy priorities with those of their constituents.
    Keywords: accountability, information, selection
    JEL: D72 O12
    Date: 2020–10
  10. By: Nina Lopez Uroz
    Abstract: Poland is an example of both successful economic transition from communism and democratic backsliding. By applying the crucial case study method, this paper explores how the Polish version of the dependent market economy has led to relative deprivation and political instability. The distributional consequences of this growth model are analysed by looking at three indicators, namely wages, income inequality and temporary employment. While it seems at first that the electoral results of the radical-right populist Law and Justice party cannot be explained by socio-economic factors, this paper argues that distributional outcomes have acted as a deeper variable for the party’s success. Growing discontent stemmed from gradually deteriorating economic perspectives for key social blocs. More broadly, in combination with a supply-side analysis of party system change, this paper seeks to identify the socioeconomic conditions under which a populist party can thrive and questions the political viability of the dependent market economy.
    Keywords: growth model, Poland, relative deprivation, labour market segmentation, populism
    Date: 2020–09
  11. By: Arteaga, Fernando; Desierto, Desiree; Koyama, Mark
    Abstract: The trade route between Manila and Mexico was a monopoly of the Spanish Crown for more than 250 years. The Manila Galleons were “the richest ships in all the oceans”, but much of the wealth sank at sea and remain undiscovered. We introduce a newly constructed dataset of all of the ships that travelled this route. We show formally how monopoly rents that allowed widespread bribe-taking would have led to overloading and late ship departure, thereby increasing the probability of shipwreck. Empirically, we demonstrate not only that these late and overloaded ships were more likely to experience shipwrecks or to return to port, but that such effect is stronger for galleons carrying more valuable, higher-rent, cargo. This sheds new light on the costs of rent-seeking in European colonial empires.
    Keywords: Corruption, Rent-seeking, Bribery, Shipwrecks
    JEL: K00 N00 N13
    Date: 2020–09–16
  12. By: Richard Bronk; Wade Jacoby
    Abstract: This paper discusses epistemic aspects of populism – especially its link with radical uncertainty and the tribal construction of facts – that have so far received relatively little attention. We argue that populism is less a backward-looking phenomenon feeding off existing grievances than a narrative-based reaction to an increasingly unsettled future. Many economic factors isolated as causes of populism – especially rapid technological innovation, deregulation, and the globalisation of networks – entail a high degree of indeterminacy in social systems; and the corresponding uncertainty facing voters is a catalyst for many of the pathologies of populism isolated in the literature. In particular, uncertainty undermines the credibility of experts, while the disorientation and anxiety it induces increase reliance on simple narratives to structure expectations. The paper explores the role of narrative entrepreneurs, the relationship between narratives and power, and the dynamics of narrative coups designed to create alternative facts and perform a new reality.
    Keywords: Uncertainty, narrative coups, tribal construction of facts, distrust of experts, populist turn
    Date: 2020–02

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