nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒02‒14
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Political Economy of Open Borders: Theory and Evidence on the role of Electoral Rules By Matteo Gamalerio; Massimo Morelli; Margherita Negri
  2. Corruption and Extremism By Attila Gaspar; Tommaso Giommoni; Massimo Morelli; Antonio Nicolò
  3. How Organizational Capacity Can Improve Electoral Accountability By Dana Foarta
  4. The Financial Drivers of Populism in Europe By Luigi Guiso; Massimo Morelli; Tommaso Sonno; Helios Herrera
  5. How does group identification affect redistribution in representative democracies? An Experiment By Shaun P. Hargreaves Heap; Emma Manifold; Konstantinos Matakos; Dimitrios Xefteris
  6. Political polarization and the impact of internet and social media use in Brazil By Giuberti Coutinho, Lorena
  7. Other-regarding Preferences and Redistributive Politics By Ernst Fehr; Thomas Epper; Julien Senn
  8. Ideological Spillovers Across the Atlantic? Evidence from Trump’s Presidential Election By Costa-Font, Joan; Ljunge, Martin
  9. Income Contingency and the Electorate’s Support for Tuition By Philipp Lergetporer; Ludger Woessmann
  10. The Backlash of Globalization By Italo Colantone; Gianmarco Ottaviano; Piero Stanig
  11. The politicized pandemic: Ideological polarization and the behavioral response to COVID-19 By Gianluca Grimalda; Fabrice Murtin; David Pipke; Louis Putterman; Matthias Sutter
  12. Electoral Cycles, Investment, and Institutional Constraints in Developing Democracies By Canes-Wrone, Brandice; Ponce de Leon, Christian; Thieme, Sebastian
  13. Political ideology predicts mood and emotion regulation. Examining potential pathways to key life outcomes. By David L. Dickinson
  14. New vs. Reelected Mayor: Who Is More Responsive to Disasters? By Mel Lorenzo Accad
  15. Political violence in Greece through the PVGR database: evidence from the far right and the far left By Lamprini Rori; Vasiliki Georgiadou; Costas Roumanias
  16. Who Cares? Measuring Preference Intensity in a Polarized Environment By Cavaillé, Charlotte; Chen, Daniel L.; Van Der Straeten, Karine

  1. By: Matteo Gamalerio; Massimo Morelli; Margherita Negri
    Abstract: Institutions matter for the political choice of policies, and hence the consideration of the median voter's preferences should not be considered sufficient. We study theoretically and empirically how different electoral systems affect the level of openness of a country or city, zooming on the labor market as the main source of heterogeneous economic preferences towards immigration. The general result is that a polity is more open to immigration the less likely it is that policy making can be supported by a plurality of voters who do not constitute the absolute majority. There is evidence for this result at all levels in terms of correlations, and we establish causality via regression discontinuity design for the Italian case.
    Keywords: Electoral Rules, Immigration, Occupational Choice
    JEL: D72 J24 J61 R23
    Date: 2021
  2. By: Attila Gaspar; Tommaso Giommoni; Massimo Morelli; Antonio Nicolò
    Abstract: This paper shows that corruption generates extremism, but almost exclusively on the opposition side. When the majority has greater ability to use corruption to obtain her favorite policy outcome from the minority, then the minority group has an incentive to select a more extreme representative because it is more unlikely that such a type will accept a bribe. On the majority side, on the other hand, the perception of more likely use of the corruption tool does not create any distortion in the choice of political representatives. We provide strong causal evidence for these novel predictions using two different types of corruption signals, in Indonesia and Brazil.
    Keywords: Corruption, Extremism, Delegation, elections
    JEL: D72 D73
    Date: 2021
  3. By: Dana Foarta
    Abstract: The organizational structure of the bureaucracy is a key determinant of policy outcomes. Bureaucratic agencies exhibit wide variation in their organizational capacity, which allows politicians to strategically shape policy implementation. This paper examines what bureaucratic structure implies for the ability of voters to hold politicians electorally accountable. It explicitly models di erences in organizational capacity across bureaucratic agencies and considers a problem where a politician must decide not only which policy to choose but which agency, or combination of agencies, will implement it. The choice of implementation feeds back into the choice of policy and this, in turn, a ects how voters perceive the performance of the incumbent. This creates a chain of interdependence from agency structure to policy choice and political accountability. The formal model shows that the variation in organizational capacity serves the interests of voters by improving electoral control of politicians.
    Keywords: organizational capacity, electoral accountability, bureaucratic politics
    JEL: D73
    Date: 2021
  4. By: Luigi Guiso; Massimo Morelli; Tommaso Sonno; Helios Herrera
    Abstract: This paper argues that the financial crisis was a watershed in the burst of populism both on the demand side (voters behaviour) and on the supply side (political parties behaviour). On the demand side, we provide novel results on the causal effect of the financial crisis on trust, turnout and voting choices via its effects on voters economic insecurity. Economic insecurity peaks during the financial crisis and extends to segments of the population untouched by the globalization and robotization shocks. To establish causality, we use a pseudo-panel analysis and instrument the economic insecurity of different cohorts leveraging on a new methodology designed to highlight the different sensitivity to financial constraints for people in different occupations. On the supply side, we trace from manifestos the policy positions of old and new parties showing that the supply of populism had the largest jump right after the financial crisis. The size of the jump is largest in countries with low fiscal space and for parties on the left of the political spectrum. We provide a formal rationalization for the key role of fiscal space, showing how the pre-financial crisis shocks enter the picture as sources of a shrinking fiscal space.
    Keywords: Demand and Supply of Populism; Financial Crisis; Fiscal Space; Age-Earning Profiles
    JEL: D72 D78 D14 H30
    Date: 2021
  5. By: Shaun P. Hargreaves Heap; Emma Manifold; Konstantinos Matakos; Dimitrios Xefteris
    Abstract: We test in the laboratory four mechanisms whereby group identification might affect redistribution in representative democracies. For voters, group identification can give rise to a preference for own-group payoffs, for electing an own-group candidate, and could be used to assess candidate-sincerity. For candidates, identity might affect the optimal campaign platform. There is evidence to support all four. The influence of own-group pay-offs has been studied before, but the other mechanisms have not. These new mechanisms combine to make redistribution depend on a hitherto unrecognized factor: the political representation of the minority group.
    Keywords: Identity; Inequality; Redistribution; Minority Representation; Representative Democracy; Voting Experiment
    JEL: C91 D63 D72 D90
    Date: 2022–02–02
  6. By: Giuberti Coutinho, Lorena (UNU-MERIT, Maastricht)
    Abstract: Influential scholars have pointed to the Internet and social media as a reason for the recent political divide in many countries. Greater exposure to imbalanced information in these environments would reinforce previous political positions leading voters to develop more extreme positions or greater animosity towards candidates of the opposing political group, a phenomenon known as affective polarization. This study investigates the impact of Internet and social media use on Brazil's recent affective polarization, exploring the historical peculiarities in the layout of pre-existing infrastructure that causes exogenous variation in Internet and social media usage. There is no empirical evidence that access to this new media environment explains affective polarization within the population under this study. Findings are consistent with the strand of literature suggesting that the recent phenomena of political polarization in some countries cannot be attributed to Internet and social media use
    Keywords: political polarization, broadband internet, Brazil
    JEL: D12 D72 L82 L86
    Date: 2021–08–30
  7. By: Ernst Fehr; Thomas Epper (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique, IÉSEG School Of Management [Puteaux]); Julien Senn
    Abstract: Increasing inequality and associated egalitarian sentiments have again put redistribution on the political agenda. Other-regarding preferences may also affect support for redistribution, but knowledge about their distribution in the broader population and how they are associated with political support for redistributive policies is still scarce. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between other-regarding preferences and support for redistribution in a broad sample of the Swiss population. We document that inequality aversion and altruistic concerns play a quantitatively large positive role in the support for redistribution, in particular for more affluent individuals. In addition, previously identified key motives underlying opposition to redistribution-such as the belief that effort is an important driver of individual success-play no role for selfish individuals but are highly relevant for altruistic and egalitarian individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim at reducing the incomes of the rich, altruistic individuals are considerably less supportive of such policies. Thus, knowledge about the fundamental properties and the distribution of individuals' other-regarding preferences provides a deeper understanding about who is likely to support specific redistributive policies.
    Keywords: Social Preferences,Altruism,Inequality Aversion,Preference Heterogeneity,Demand for Redistribution
    Date: 2022–01–02
  8. By: Costa-Font, Joan (London School of Economics and Political Science (LSE)); Ljunge, Martin (Research Institute of Industrial Economics (IFN))
    Abstract: Ideological spillovers refer to the modification of an individual’s core beliefs after learning about other people's beliefs. We study one specific international ideological spillover, namely, the effect of the unexpected election of a United States (US) president (Donald Trump on the 9th of November 2016), who openly questioned the so-called ‘core liberal consensuses, on European’s core political beliefs. Using a regression discontinuity design (RDD) around the election event, we show that the Trump presidential election (TPE) gave rise to a ‘backlash effect’. That is, it steered core European beliefs in two specific domains, making Europeans more favourable to globalisation and international mobility (about 10% change in the overall Likert scale range of the statement that immigrants contribute to a country). Contrasting with the hypotheses of 'belief contagion’, we do not find evidence that TPE steered illiberal beliefs. Furthermore, TPE improved (reduced) the view Europeans have of their own country (the United States).
    Keywords: Political shocks; Belief formation; Information spillovers; Backlash effect; Pluralistic ignorance; Trump presidential election; Political beliefs; The social formation of beliefs
    JEL: D72 F50 P16 Z10
    Date: 2022–01–19
  9. By: Philipp Lergetporer (Technical University of Munich and ifo Institute; CESifo); Ludger Woessmann (University of Munich and ifo Institute; Hoover Institution, Stanford University; CESifo, IZA, and CAGE)
    Abstract: We show that the electorate’s preferences for using tuition to finance higher education strongly depend on the design of the payment scheme. In representative surveys of the German electorate (N>18,000), experimentally replacing regular upfront by deferred income-contingent payments increases public support for tuition by 18 percentage points. The treatment turns a plurality opposed to tuition into a strong majority of 62 percent in favor. Additional experiments reveal that the treatment effect similarly shows when framed as loan repayments, when answers carry political consequences, and in a survey of adolescents. Reduced fairness concerns and improved student situations act as strong mediators.
    Keywords: tuition; higher education finance; income-contingent loans; voting.
    JEL: H52 I22 D72
    Date: 2022–02
  10. By: Italo Colantone; Gianmarco Ottaviano; Piero Stanig
    Abstract: We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments’ leaning and enacted policies. Using newly assembled data for 23 advanced democracies, we document a protectionist and isolationist shift in electorates, legislatures, and executives from the mid-1990s onwards. This is associated with a noticeable protectionist shift in trade policy –although with some notable nuances– especially since the financial crisis of 2008. We discuss the economics of the backlash. From a theoretical perspective, we highlight how the backlash may arise within standard trade models when taking into account the ‘social footprint’ of globalization. Then, we review the empirical literature on the drivers of the backlash. Two main messages emerge from our analysis: (1) globalization is a significant driver of the backlash, by means of the distributional consequences entailed by rising trade exposure; yet (2) the backlash is only partly determined by trade. Technological change, crisis-driven fiscal austerity, immigration, and cultural concerns are found to play an important role in creating politically consequential cleavages. Looking ahead, we discuss possible future developments, with specific focus on the issue of social mobility
    Keywords: Globalization, Social Footprint, Backlash
    Date: 2021
  11. By: Gianluca Grimalda (Kiel Institute for the World Economy; Centre for Global Cooperation Research, University of Duisburg-Essen; Jaume I University); Fabrice Murtin (Organization for Economic Co-Operation and Development (OECD)); David Pipke (Kiel Institute for the World Economy); Louis Putterman (Brown University); Matthias Sutter (Max Planck Institute for Research on Collective Goods, University of Cologne, University of Innsbruck, IZA, and CESifo)
    Abstract: We investigate the relationship between political attitudes and prosociality in a survey of a representative sample of the U.S. population during the first summer of the COVID-19 pandemic. We find that an experimental measure of prosociality correlates positively with adherence to protective behaviors. Liberal political ideology predicts higher levels of protective behavior than conservative ideology, independently of the differences in prosociality across the two groups. Differences between liberals and conservatives are up to 4.4 times smaller in their behavior than in judging the government’s crisis management. This result suggests that U.S. Americans are more polarized on ideological than behavioral grounds.
    Keywords: Polarization, Ideology, Trust in politicians, COVID-19, Prosociality, Health behavior, Worries
    JEL: D01 D72 D91 I12 I18 H11 H12
    Date: 2022–01–20
  12. By: Canes-Wrone, Brandice; Ponce de Leon, Christian; Thieme, Sebastian
    Abstract: A longstanding question is whether policy uncertainty reduces private fixed investment in developing democracies. Yet studying the question empirically has proven challenging given that economic activity can cause as well as result from policy uncertainty. We investigate this issue within the context of electoral business cycles, building on research that suggests elections provide an exogenous source of policy uncertainty. As a central part of this analysis, which involves four decades of data from 57 developing democracies, we examine how institutional constraints moderate the relationship. Three main findings emerge. First, on average, elections are associated with a decline in private fixed investment. Second, however, this effect varies according to the level of institutional constraints; as they increase, the electoral cycle becomes less pronounced, including in specifications that account for the potential endogeneity of the institutions. Third, the effects are larger and more robust in systems with fixed elections.
    Date: 2022–01–27
  13. By: David L. Dickinson
    Abstract: Previous research has identified importance differences in key life outcomes between political conservatives and liberals (e.g., happiness, academic success, involvement in crime). Potential mechanisms suggested in the literature have included self-control or personality traits that may systematically differ by political ideology. We preregistered plans to test for “dark” personality trait and self-control differences in political conservatives and liberals, with aims to replicate previously reported findings. We also examined differences in cognitive reflection style and emotion regulation. Three survey waves were obtained from an initial pool of U.S. participants (n=650 initial respondents, n=498 in Wave 2, n=402 in Wave 3) split roughly equally across political conservatives and liberals. We report a consistent null effect of political ideology on selfcontrol, and dark personality traits, in contrast to previous studies. Our data show higher cognitive reflection tendencies among those who are more politically liberal, consistent with past research. However, we report a previously unidentified difference emotional regulation styles, with conservatives reporting a healthier approach to emotion regulation via cognitive reappraisal strategies. Finally, a common mood elicitation in each of the three studies consistently reveals significantly more negative mood states among political liberals. Together, these findings suggest that mood and mood regulation may be a more important mechanism towards understanding preferred outcome differences in conservatives compared to liberals. Key Words: self-control, political ideology, individual differences, mood regulation, dark personality
    Date: 2022
  14. By: Mel Lorenzo Accad (University of Hawaii at Manoa)
    Abstract: Are new mayors more responsive to disasters than their reelected counterparts? The identification strategy is based on slim vote margin in which new and reelected mayors are found to be as if randomly assigned. We find that with greater storm exposure: new mayors spend more on health sector than reelected mayors. We don’t find stable and statistically significant result in other sectors and in total municipal income or expenditure.
    Keywords: election; accountability; disaster response
    JEL: D72 D73 H84 O17
    Date: 2020–03
  15. By: Lamprini Rori; Vasiliki Georgiadou; Costas Roumanias
    Abstract: The paper presents a new database (PVGR) on political violence in Greece from 2008 to 2019. PVGR monitors violent episodes reported mainly in online and printed media, stemming both from the far right and the far left. It provides the first existing measure of political violence in Greece for a timespan of eleven years. The uniqueness of our database is two-fold: first, it covers both ideological kinds of extremism: right wing and left wind; second, it registers the whole stairway of low-intensity violent escalation, from physical attacks to terrorism. We gather data on all the internal-supply aspects of political violence: we identify its size, the actors involved and their ideological background, the targets. We further provide measures of frequency, intensity, escalation and geographical distribution, which permit us to configure political violence in crisis-ridden Greece. We find an important increase in political violence in the period under study. We contribute to the literature of political violence in several ways. First, we offer the first comprehensive database of political violence in Greece. Second, we typologize evidence in analytical categories and measures, thus contributing to the classification of the phenomenon beyond ideological doctrines. Third, we clarify similarities and differences between the two kinds of violence, which implies specific policy implications.
    Keywords: Intensity Violence, political extremism, radical right, radical left
    Date: 2022–01
  16. By: Cavaillé, Charlotte; Chen, Daniel L.; Van Der Straeten, Karine
    Abstract: Many questions in political science require knowing not only what voters want (pref-erence orientation) but also how much they want it (preference intensity). In this paper, we assess two methods for measuring individual differences in preference intensity. One method — issue importance items — asks respondents to self-report how important a given set of policy proposals is to them personally. Another — Quadratic Voting for Survey Research (QVSR) — gives respondents a fixed budget to ‘buy’ votes in favor of (against) these policy proposals, with the price for each vote increasing quadratically. We provide theoretical arguments explaining why, in a polarized environment where some respondents may feel pressured to pay lip service to the party norms, one should expect QVSR to offer a better measure of preference intensity. Using Likert items as the benchmark, we find that QVSR more consistently differentiates between intense and weak preferences, as proxied by respondents’ behavior on simplified real-world tasks. Revisiting debates on the determinants of policy preferences, or the congruence between mass opinions and the policy status quo, we show that conclusions reached when using Likert items alone change once differences in preference intensity are bet-ter accounted for.
    Date: 2022–02–01

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