nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒01‒09
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Trustful Voters, Trustworthy Politicians: A Survey Experiment on the Influence of Social Media in Politics By Aruguete, Natalia; Calvo, Ernesto; Scartascini, Carlos; Ventura, Tiago
  2. Climate Change and Political Participation: Evidence from India By Amirapu, Amrit; Clots-Figueras, Irma; Rud, Juan Pablo
  3. Elections hinder firms' access to credit By Léon, Florian; Weill, Laurent
  4. Voter Information and Distributive Politics By Blumenthal, Benjamin
  5. Post-2023 election scenarios in Turkey By Esen, Berk
  6. An Unrepresentative Democracy: How Disinformation and Online Abuse Hinder Women of Color Political Candidates in the United States By Thakur, Dhanaraj; Hankerson, DeVan L.; Luria, Michal; Savage, Saiph; Rodriguez, Maria; Valdovinos, Miriam G.
  7. The politics of bank failures in Russia By Fungáčová, Zuzana; Karas, Alexei; Solanko, Laura; Weill, Laurent
  8. The Political Economy of Regional Development:Evidence from the Cassa per il Mezzogiorno By Tancredi Buscemi; Giulia Romani
  9. Opinion Dynamics and Political Persuasion. By David Desmarchelier; Thomas Lanzi
  10. Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China By Hanming Fang; Ming Li; Zenan Wu
  11. New Forms of Democracy By Hans Gersbach
  12. From media-party linkages to ownership concentration causes of cross-national variation in media outlets' economic positioning By Neimanns, Erik; Blossey, Nils
  13. Education, fake news and the PBC By Fabio Padovano; Pauline Mille
  14. Influential News and Policy-making By Federico Vaccari
  15. Education Politics, Schooling Choice and Public School Quality: The Impact of Income Polarisation By Majda Benzidia; Michel Lubrano; Paolo Melindi-Ghidi
  16. More EU Decisions by qualified majority voting - but how? Legal and political options for extending qualified majority voting By Mintel, Julina; von Ondarza, Nicolai

  1. By: Aruguete, Natalia; Calvo, Ernesto; Scartascini, Carlos; Ventura, Tiago
    Abstract: Recent increases in political polarization in social media raise questions about the relationship between negative online messages and the decline in political trust around the world. To evaluate this claim causally, we implement a variant of the well-known trust game in a survey experiment with 4,800 respondents in Brazil and Mexico. Our design allows to test the effect of social media on trust and trustworthiness. Survey respondents alternate as agents (politicians) and principals (voters). Players can cast votes, trust others with their votes, and cast entrusted votes. The players rewards are contingent on their preferred “candidate” winning the election. We measure the extent to which voters place their trust in others and are themselves trustworthy, that is, willing to honor requests that may not benefit them. Treated respondents are exposed to messages from in-group or out-group politicians, and with positive or negative tone. Results provide robust support for a negative effect of uncivil partisan discourse on trust behavior and null results on trustworthiness. The negative effect on trust is considerably greater among randomly treated respondents who engage with social media messages. These results show that engaging with messages on social media can have a deleterious effect on trust, even when those messages are not relevant to the task at hand or not representative of the actions of the individuals involved in the game.
    Keywords: Trust;Social media;Trustworthiness;Political polarization
    JEL: D72 D83 D91
    Date: 2021–07
  2. By: Amirapu, Amrit (University of Kent); Clots-Figueras, Irma (University of Kent); Rud, Juan Pablo (Royal Holloway, University of London)
    Abstract: We study the effects of extreme temperature shocks on political participation using data from Indian elections between 2009 and 2017. Taking advantage of localized, high-frequency data on land surface temperatures, we find that areas with greater cumulative exposure to extreme temperatures experience an increase in voter turnout and a change in the composition of the pool of candidates who stand for election. As a consequence, electoral outcomes are affected. We provide evidence that our results are driven by the negative effect of climate change on agricultural productivity. First, we show that the results are strongest in areas with a larger rural population. Second, we show that there is a non-monotonic relationship between temperatures and turnout which closely mirrors the relationship between temperatures and agricultural productivity. We also find that, following temperature shocks, winning candidates are more likely to have an agricultural background. Finally, we show that politicians with an agricultural background invest more in irrigation, which mitigates the effects of high temperatures, on both agricultural production and on turnout. Our paper provides new evidence about the ways in which political agents in developing countries (including both voters and candidates) may respond to climate change via political channels.
    Keywords: climate change, political economy, voter turnout
    JEL: O13 P48 Q54
    Date: 2022–11
  3. By: Léon, Florian; Weill, Laurent
    Abstract: To analyze whether the occurrence of elections affects access to credit for firms, we perform an investigation using firm-level data covering 44 developed and developing countries. The results show that elections impair access to credit. Specifically, firms are more credit-constrained in election years and pre-election years as elections exacerbate political uncertainty. While lower credit demand is a tangible negative effect of elections, their occurrece per se does not seem to affect credit supply. We further establish that the design of political and financial systems affects how elections influence access to credit.
    Keywords: elections,access to credit,credit constraints
    JEL: G21 D72 O16
    Date: 2022
  4. By: Blumenthal, Benjamin
    Abstract: I consider a series of models of political agency with moral hazard and adverse selection, in which politicians allocate resources to voters. Within these models combining electoral accountability and distributive politics, I ask: is more information good for voters? With homogeneously informed electorates, I first show how and when less information can benefit voters, through the interaction of both partial control and partial screening effects. Building on this mechanism, I subsequently consider heterogeneously informed electorates and ask: how can voters’ welfare be affected by the informational advantage of a few voters? Is it better to be among the more informed few or the less informed many? I show that the ability of more informed voters to communicate with less informed voters and the nature of their informational advantage can play a significant role in affecting voters’ welfare by influencing politicians’ incentives to allocate resources to specific voters
    Date: 2022–12–10
  5. By: Esen, Berk
    Abstract: Millions of Turkish voters are geared up for the twin (parliamentary and presidential) elections that are scheduled to take place in June 2023 at the latest. After nearly 20 years in power, Recep Tayyip Erdoğan's rule may seem unassailable to many observers of Turkish politics. However, owing to the economic downturn and rifts in his ruling party, this will be the first election in which Erdoğan is not the clear favourite. Six opposition parties of different ideological origins have come together to pick a joint presidential candidate to stand against Erdoğan and to offer a common platform for restoring parliamentary democracy. Although the opposition alliance has reasonable chances of defeating Erdoğan's ruling bloc, their victory would not guarantee a smooth process of transition to parliamentary democracy. If the opposition can defeat Erdoğan, the new government would need to undertake the arduous tasks of establishing a meritocratic bureaucracy, restructuring Turkey's diplomatic course and economic policy, and switching back to parliamentary rule. Due to the opposition alliance's diverse composition, accomplishing these goals may be as difficult as winning the elections.
    Keywords: Turkey,parliamentary and presidential elections,Recep Tayyip Erdoğan,Justice and Development Party (AKP),Nationalist Movement Party (MHP),Nation Alliance,Future Party (GP),Ahmet Davutoğlu,Democracy and Progress Party (DEVA),Ali Babacan
    Date: 2022
  6. By: Thakur, Dhanaraj; Hankerson, DeVan L.; Luria, Michal; Savage, Saiph; Rodriguez, Maria; Valdovinos, Miriam G.
    Abstract: As more women have sought political representation by running for elected office, we have seen demonstrated increases in online harassment and abuse, including targeted mis- and disinformation campaigns. Researchers argue that these attacks are attempts to limit women’s ability to participate in electoral politics and suppress their voices in a variety of settings. While women in general may be subject to significant mis- and disinformation and abuse online, an intersectional approach which recognizes that women of color have to contend with multiple sources of oppression at the same time and that this impact is unique, can better illuminate the additional challenges faced by women of color in general and women of color political candidates specifically. We identified two key research questions: (1) Are women of color political candidates more likely to be subject to mis- and disinformation and online abuse compared to other types of candidates? (2) What are the impacts of mis- and disinformation and online abuse of women of color political candidates? We focus on both mis- and disinformation and online abuse because they are part of the larger problem of violence against women in politics and both are often aimed at undermining the political efficacy of women in public spaces.
    Date: 2022–10–27
  7. By: Fungáčová, Zuzana; Karas, Alexei; Solanko, Laura; Weill, Laurent
    Abstract: Russia has witnessed a high number of bank failures over the last two decades. Using monthly data for 2002-2020, spanning four election cycles, we test the hypothesis that bank failures are less likely before presidential elections. We find that bank failures are less likely to occur in the twelve months leading up to an election. However, we do not observe election cycles in bank failures are more pronounced for banks associated with greater political costs. Overall, our results provide mixed evidence that political cycles matter for the occurrence of bank failures in Russia.
    Keywords: bank failure,election,Russia
    JEL: G21 D72 P34
    Date: 2022
  8. By: Tancredi Buscemi (University of Siena); Giulia Romani
    Abstract: Institutional design can influence the efficacy of public investment programmes. Specifically, devolution of authority may trigger tactical redistribution between different tiers of government and facilitate patronage dynamics at local level. We test this hypothesis in the context of the Cassa per il Mezzogiorno (Cas-Mez): a massive investment programme for the development of Southern Italy (1950-1984). By 1971, a radical institutional reform modified the CasMez’s governance: the authority over funds allocation was transferred from a centralised and technical committee to the newborn Regional governments. This paper investigates how the reform affected the CasMez’s distributive politics. We focus on the period 1960-1984 and study whether municipalities aligned with the Regional government (i.e controlled by the same party) received more funds compared to unaligned ones. We combine unique historical data on local administrators with detailed information on projects approval and financing, and implement a Two-Way-Fixed-Effects strategy. Our results suggest that aligned municipalities were assigned a higher number of projects and received larger per-capita amounts, without producing any positive impact on long-run economic outcomes. The effect is driven by subsidies to local firms. This evidence supports our claim that the institutional reform of 1971 distorted funds allocation, and possibly paved the way for rent-seeking pressures by local lobbies and patronage dynamics.
    Keywords: institutional design, distributive politics, devolution, Cassa per il Mezzogiorno
    JEL: H11 H77 N94
    Date: 2022
  9. By: David Desmarchelier; Thomas Lanzi
    Abstract: This paper proposes to adapt a simple disease spread model for political persuasion. More precisely, we observe how a policy presented by a leader prevails into a population divided in two groups: subscribers and resistants. At each date, agents from the two groups meet and influence each other due to the leaderís persuasion force. If the leader's persuasion force dominates (is dominated), then some resistants (subscribers) become subscribers (resistants). Moreover, agents can also change their opinions simply because of the attractive force of each groups (intrinsic attraction). In the long run, it appears that a high attractive force can compensate a lack of persuasion force to ensure that more than half members subscribe to the policy presented by the leader. Such a situation is stable. Conversely, a high persuasion force, when the attractive force of the leader's group is relatively low, can generate the occurrence of a two-period cycle through a flip bifurcation such that the leader looses the majority from a period to another.
    Keywords: Flip bifurcation, Opinion dynamics, Political persuasion, SIS models.
    JEL: C61 D72
    Date: 2022
  10. By: Hanming Fang (University of Pennsylvania); Ming Li (Chinese University of Hong Kong); Zenan Wu (Peking University)
    Abstract: We argue that inter-jurisdictional competition in a regionally decentralized authoritarian regime distorts local politicians’ incentives in resource allocation among firms from their own city and a competing city. We develop a tournament model of project selection that captures the driving forces of local protectionism. The model robustly predicts that the joint presence of regional spillover and the incentive for political competition leads to biased resource allocations against the competing regions. Combining several unique data sets, we test our model predictions in the context of government procurement allocation and firms’ equity investment across Chinese cities. We find that, first, when local politicians are in more intensive political competition, they allocate less government procurement contracts to firms in the competing city; second, local firms, especially local SOEs, internalize the local politicians’ career concerns and invest less in the competing cities. Our paper provides a political economy explanation for inefficient local protectionism in an autocracy incentivized by tournament-style political competition.
    Keywords: Political Competition; Local Protectionism; Government Procurement; Firm Investment
    JEL: H11 H70 P30
    Date: 2022–12–12
  11. By: Hans Gersbach
    Abstract: In the third decade of the 21st century, digitization, global events, challenges from authoritarian states, and difficulties of particular democracies to function properly confront democracy with a new series of challenges and opportunities that will force it to reinvent itself. The last decades have produced an accelerating flow of ideas for new forms of democracy. We survey a long period in the quest for such new forms and point to next inventions for such forms. We suggest to experiment with new ways for democracy to extend the choice of democratic processes that can be implemented in real-life situations, with the beneficial side-effect that democracy might remain the only sustainable structure for self-governing societies.
    Keywords: democracy, new forms, voting, elections, social innovations, public policy
    JEL: D02 D70 D82 D83
    Date: 2022
  12. By: Neimanns, Erik; Blossey, Nils
    Abstract: A sizable literature on media bias suggests that media coverage is frequently biased towards certain political and economic positions. However, we know little about what drives variation in political and ideological bias in news coverage across countries. In this paper, we argue that increasingly commercialized and concentrated media markets are likely to be associated with media coverage leaning more favorably towards economically more right-wing positions. Media bias should reflect the preferences of media owners and should be a result of a reduced diversity of news media content. In contrast, where media outlets continue to be oriented more closely along partisan lines, often referred to as political parallelism, bias on economic issues should be more likely to cancel out at the aggregate level. To test these claims, we combine expert survey data on partisan attachments of media outlets, party ideologies, and media ownership concentration for twenty-four European countries. Results from multilevel regression models support our theoretical expectations. With media framing potentially affecting individual-level preferences and perceptions, high and rising levels of media ownership concentration may help to explain why governments in the affluent Western democracies often do remarkably little to counter trends of rising income inequality.
    Keywords: media bias,media framing,media ownership concentration,political parallelism,Medienbias,Medieneigentümerkonzentration,Medienframing,politischer Parallelismus
    Date: 2022
  13. By: Fabio Padovano (CREM-CNRS, Condorcet Center for Political Economy, University of Rennes 1 and DSP, Università Roma Tre, Italy); Pauline Mille (University of Rennes 1, CNRS, CREM-UMR 62 11)
    Abstract: This paper empirically verifies whether education, used as an indicator of voters’ ability to process information, constrains political budget cycles (PBC). The spread of fake news and of over-information calls into question the previous results of the conditional PBC literature on the spread of information as a factor that improves the principal-agent relationship between voters and representatives. Education and schooling quality are proxied by a variety of indicators: PISA scores, percentage of pupils completing secondary and tertiary education and the Shanghai Ranking to measure the quality of university education. On a sample of 46 countries between developed and developing countries over the period 2000-2019, the estimates show that higher levels of education reduce the magnitude of PBC. When standard proxies for information - such as media and internet penetration - are added results do not change, showing that education matters more than information, and that more educated people react better to an overload of information and fake news. The analysis also shows that higher degrees of democracy reduce the education levels needed to control PBC. All the other findings of the literature appear confirmed.
    Keywords: Democracy, Political Budget Cycles, education, information processing, fake news
    Date: 2022–12
  14. By: Federico Vaccari (Laboratory for the Analysis of Complex Economic Systems, IMT School of Advanced Studies)
    Abstract: This paper analyzes the implications of those types of interventions that affect misreporting costs. I study a model of communication between an uninformed voter and a media outlet that knows the quality of two competing candidates. The alternatives available to the voter are endogenously championed by the two candidates. I show that higher costs may lead to more misreporting and persuasion, whereas low costs result in full revelation. Yet, interventions that increase misreporting costs never directly harm the voter, but those that do so slightly can be wasteful of public resources. Regulation produced by politicians leads to suboptimal interventions.
    Keywords: Fake news, Misreporting, Media, Policy-making, Regulation, Disinformation
    JEL: D72 D82 D83 L51
    Date: 2022–12
  15. By: Majda Benzidia (Aix Marseille Univ, CNRS, AMSE, Marseille, France.); Michel Lubrano (School of economics, Jiangxi University of Finance and Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Paolo Melindi-Ghidi (EconomiX, UPL-CNRS, Paris Nanterre University & Aix Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: What is the role of income polarisation for explaining differentials in public funding of education? To answer this question, we provide anew theoretical modelling for the income distribution that can directly monitor income polarisation. It leads to a new income polarisationindex where the middle class is represented by an interval. We implement this distribution in a political economy model with endogenousfertility and public/private educational choices. We show that when households vote on public schooling expenditures, polarisation mattersfor explaining disparities in public education funding across communities. Using micro-data covering two groups of school districts, wefind that both income polarisation and income inequality affect public school funding with opposite signs whether there exist a Tax Limitation Expenditure (TLE) or not.
    Keywords: education politics, schooling choice, income polarisation, probabilistic voting, Bayesian inference
    JEL: I24 D31 D72 H52 C11
    Date: 2022–12
  16. By: Mintel, Julina; von Ondarza, Nicolai
    Abstract: In the debate on how to strengthen the European Union's (EU) capacity to act, calls for an extension of qualified majority voting (QMV) are growing louder. The Council of the EU is currently discussing using the so-called passerelle clauses in the Treaty on European Union (TEU). With these clauses, more decisions by QMV could be introduced without a major treaty change or a convention. However, abolishing national vetoes in this way would first require unanimity as well as, in some cases, additional national approval procedures. Such unanimity is currently not in sight, as resistance is prevailing in smaller and medium-sized member states, which fear that they could be regularly outvoted. What is needed, therefore, is an institutional reform package in which decisions by QMV are extended with the aim of facilitating further enlargement of the EU and are accompanied by emergency clauses to protect core national interests.
    Keywords: EU decisions,qualified majority voting (QMV),passerelle clause,Treaty on European Union (TEU),EU Commission,Common Foreign and Security Policy (CFSP)
    Date: 2022

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