nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒05‒01
five papers chosen by
Eugene Beaulieu
University of Calgary

  1. Rooting for the Same Team: On the Interplay between Political and Social Identities in the Formation of Social Ties By Nicolás Ajzenman; Bruno Ferman; Pedro C. Sant’Anna
  2. Megastudy identifying effective interventions to strengthen Americans’ democratic attitudes By Voelkel, Jan G.; Stagnaro, Michael; Chu, James; Pink, Sophia Lerner; Mernyk, Joseph S.; Redekopp, Chrystal; Ghezae, Isaias; Cashman, Matthew; Adjodah, Dhaval; Allen, Levi
  3. The Role of Political Stability in the Context of ESG Models at World Level By Costantiello, Alberto; Leogrande, Angelo
  4. Election-Day Market Reactions to Tax Proposals: Evidence from a Close Vote By Masanori Orihara
  5. Environmentally-Inclined Politicians and Local Environmental Performance: Evidence from Publicly Listed Firms in China By Hanming Fang; Honglin Ren; Danwen Song; Nianhang Xu

  1. By: Nicolás Ajzenman (McGill University); Bruno Ferman (São Paulo School of Economics - FGV); Pedro C. Sant’Anna (São Paulo School of Economics - FGV)
    Abstract: We study the interplay between political and other social identities in the formation of social ties in a setting of intense affective polarization. We created fictional accounts on Twitter that signaled their political preference for one of the two leading candidates in the Brazilian 2022 Presidential election, their preference for a Brazilian football club, or both. We interpret preference for a football club as an affective dimension of identity. The bots randomly followed Twitter accounts with congruent and incongruent identities across these two dimensions, and we computed the proportion of follow-backs and blocks they received. Both dimensions of identity are relevant in forming ties, but the effect of sharing a political identity is significantly greater. Moreover, affective identity becomes substantially less relevant when information about political identity is available, indicating that political identity can overshadow other dimensions of identity. Still, shared affective identity has a positive effect in fostering ties even among politically opposite individuals. This result suggests that shared identities such as preference for a football club have the potential to reduce politically induced societal divides, despite the evidence that affective polarization may diminish this effect.
    Keywords: Social Identity; Affective Polarization; Brazilian Elections; Social Media.
    JEL: D72 D91 C93 Z20
    Date: 2023–04
  2. By: Voelkel, Jan G.; Stagnaro, Michael; Chu, James (Columbia University); Pink, Sophia Lerner; Mernyk, Joseph S. (Stanford University); Redekopp, Chrystal; Ghezae, Isaias (Stanford University); Cashman, Matthew (Massachusetts Institute of Technology); Adjodah, Dhaval; Allen, Levi
    Abstract: Deep partisan conflict in the mass public threatens the stability of American democracy. We conducted a megastudy (n=32, 059) testing 25 interventions designed by academics and practitioners to reduce Americans’ partisan animosity and anti-democratic attitudes. We find nearly every intervention reduced partisan animosity, most strongly by highlighting sympathetic and relatable individuals with different political beliefs. We also identify several interventions that reduced support for undemocratic practices and partisan violence, most strongly by correcting misperceptions of outpartisans’ views – showing that anti-democratic attitudes, although difficult to move, are not intractable. Furthermore, both factor analysis and patterns of intervention effect sizes provide convergent evidence for limited overlap between these sets of outcomes, suggesting that, contrary to popular belief, different strategies are most effective for reducing partisan animosity versus anti-democratic attitudes. Taken together, our findings provide a toolkit of promising strategies for practitioners and shed new theoretical light on challenges facing American democracy.
    Date: 2023–03–20
  3. By: Costantiello, Alberto; Leogrande, Angelo
    Abstract: In this article, we estimate the role of Political Stability and Absence of Violence and Terrorism-PS in the context of Environmental, Social and Governance-ESG data at world level. We analyse data from 193 countries in the period 2011-2020. We apply Panel Data with Fixed Effects, Panel Data with Random Effects and Pooled Ordinary Least Square-OLS. We found that PS is positively associated, among others, to Population Density and Government Effectiveness, and negatively associated, among others, to Research and Development Expenditure and Maximum 5-day Rainfall. Furthermore, we apply the k-Means algorithm optimized with the application of the Elbow Method and we find the presence of four clusters. Finally, we propose a confrontation among eight different machine-learning algorithms for the prediction of PS and we find that the Polynomial Regression shows the higher performance. The Polynomial Regression predicts an increase in the level of PS of 0.25% on average for the analysed countries.
    Keywords: Analysis of Collective Decision-Making; General; Political Processes: Rent-Seeking; Lobbying; Elections; Legislatures; and Voting Behaviour; Bureaucracy; Administrative Processes in Public Organizations; Corruption; Positive Analysis of Policy Formulation; Implementation
    JEL: D7 D70 D72 D73 D78
    Date: 2023–04–02
  4. By: Masanori Orihara (Department of Policy and Planning Sciences, Faculty of Engineering, Information and Systems, University of Tsukuba)
    Abstract: We ask whether the stock market immediately reacts to the underlying will of political leaders to tax shareholders from the moment of their election, much earlier than previously documented. Our natural laboratory is the surprising outcome of the September 2021 Japanese Prime Ministerial election: whereby the winning candidate secured a narrow victory of just one vote and thus promoted a second “runoff” election. The eventual election victor—Fumio Kishida—proposed increasing taxes on shareholders, leading to a market drop referred to as “Kishida Shock” by news outlets such as the Financial Times and The Wall Street Journal. Using an event study approach, we find firms that were vulnerable to a potential tax increase, such as dividend payers, experienced lower stock returns. As predicted by financial constraints theory, smaller firms with more cash holdings could lessen their losses. Likewise, larger firms could reduce the severity of their negative stock returns via bond market access. As a direct target of the potential tax increase, it appears that domestic individual investors sold their highdividend yield stocks while foreign investors in fact purchased shares of the same.
    Keywords: Taxation, Election, Financing, Ownership Structure, Dividend, Japan
    JEL: G32 G35 G38 H24 H25
    Date: 2023–03
  5. By: Hanming Fang; Honglin Ren; Danwen Song; Nianhang Xu
    Abstract: We study how environmentally-inclined politicians (EIPs), i.e., politicians with prior environment-related working experience, affect local environmental performance in China. Firms located in cities with EIPs have lower levels of sulfur dioxide (SO2) emissions. The effect is attenuated when the politician is in his/her second term and among firms that are economically important. Firms in cities with EIPs commit less environmental violations, receive more green subsidies from the local government, and choose to establish new polluting subsidiaries in cities without EIPs. Furthermore, these EIPs do not have inferior economic performance and their promotion likelihood is negatively related to local emission levels. The findings overall suggest that local officials strategically leverage their expertise in environment protection to allocate more effort on environmental causes.
    JEL: D72 G38 H75 Q53
    Date: 2023–03

This nep-pol issue is ©2023 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.