nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒09‒18
eleven papers chosen by
Eugene Beaulieu, University of Calgary

  2. Structural Shocks and Political Participation in the US By Marina Chugunova; Klaus Keller; Sampsa Samila
  3. Fear to Vote: Explosions, Salience, and Elections By Juan F. Vargas; Miguel E. Purroy; Felipe Coy; Sergio Perilla; Mounu Prem
  4. Politicians, Trust and Financial Literacy: When Do Politicians Care? By Donato Masciandaro
  5. Who are the Election Skeptics? Evidence from the 2022 Midterm Elections By Grimmer, Justin; Holliday, Derek; Lelkes, Yphtach; Westwood, Sean
  6. A Majority Rule Philosophy for Instant Runoff Voting By Ross Hyman; Deb Otis; Seamus Allen; Greg Dennis
  7. How Does Democracy Cause Growth? By Boese-Schlosser, Vanessa A.; Eberhardt, Markus
  8. Trading votes: what drives MEP support for trade liberalization? By Basedow, Robert; Hoerner, Julian
  9. Electoral Sentencing Cycles By David Abrams; Roberto Galbiati; Emeric Henry; Arnaud Philippe
  10. Income misperception and populism By Albers, Thilo N. H.; Kersting, Felix; Kosse, Fabian
  11. Does democracy make taller men? Cross-country European evidence By Batinti, Alberto; Costa-Font, Joan

  1. By: Iñigo Iturbe-Ormaetxe (: Departamento de Fundamentos del An·lisis EconÛmico (FAE), Universidad de Alicante.); Santiago Sanchez-Pages (King's College London.); Angel Solano-Garcia (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: We examine the redistributive effects of extending voting rights to non-citizens. Our hypothesis is that the impact of this reform depends on the political power wielded by new voters to change the status quo. Specifically, we anticipate a greater power when elections are more contested. To investigate this hypothesis, we analyze the 1975 Swedish electoral reform, which granted voting rights to non-citizens in local elections. Our findings reveal a significant and one-time increase in local taxes right after the reform. This tax hike was more pronounced in municipalities with a higher proportion of non-citizens. This effect was concentrated in municipalities where the size of the newly enfranchised electorate was substantial enough to potentially upturn the outcome of the previous election.
    Keywords: : Voting, Redistribution, Electoral reform, Immigration, Local elections.
    JEL: D72 D74 F22
    Date: 2023–09–05
  2. By: Marina Chugunova (MPI-IC); Klaus Keller (MPI-IC); Sampsa Samila (IESE Business School)
    Abstract: This paper examines the impact of the large structural shocks -- automation and import competition -- on voter turnout during US federal elections from 2000 to 2016. Although the negative income effect of both shocks is comparable, we find that political participation decreases significantly in counties more exposed to industrial robots. In contrast, the exposure to rising import competition does not reduce voter turnout. A survey experiment reveals that divergent beliefs about the effectiveness of government intervention drive this contrast. Our study highlights the role of beliefs in the political economy of technological change.
    Keywords: automation; trade; labor demand; voter turnout;
    JEL: D72 J23 F16
    Date: 2023–08–21
  3. By: Juan F. Vargas (Department of Economics, Universidad del Rosario); Miguel E. Purroy (Harvard Kennedy School); Felipe Coy (Princeton University); Sergio Perilla (Department of Economics, Universidad del Rosario); Mounu Prem (Einaudi Institute for Economics and Finance)
    Abstract: Criminal groups use violence strategically to manipulate the behavior of victims and bystanders. At the same time, violence is a stimulus that causes fear, which also shapes people’s reactions. Taking advantage of the randomness in the timing of antipersonnell and mine accidents in Colombia, as well as their coordinates relative to those of voting polls, we identify the effect of violence-induced fear (independent from intentions) on electoral behavior. Fortuitous landmine explosions reduce political participation. We further disentangle whether the type of fear caused by landmine explosions responds to an information channel (whereby people learn about the risk of future victimization) or by the salience of the explosion (which causes individuals to make impulsive decisions, driven by survival considerations), and show evidence in favor of the latter. While the turnout reduction takes place across the ideological spectrum, we document that the explosions induce a shift in the political preferences of individuals who do vote. These findings point to worrisome potential consequences for the consolidation of democracies in places affected by conflict.
    Keywords: Conflict, fear, Landmine explosions, salience, voting
    JEL: D72 D74 P48
    Date: 2023–08
  4. By: Donato Masciandaro
    Abstract: Politicians can be more or less active in pursuing financial-literacy policies. This paper explores the role of financial-literacy policy in modifying the financial-trust endowment of a given population taking the political cost-benefit analysis into account. As, in any period, each incumbent government can design and implement its own financial-literacy policy and as financial-literacy deficits are more likely in a period of financial innovation, we assume that constituencies more or less in favour of such policies are present in a given country. If this is the case, we can show that, in a democracy with political competition, the level of activism in implementing financial-literacy policies is positively associated with financial-instability risks, literacy benefits, and illiteracy costs. Moreover, preferences and constraints motivate the politician in charge. More specifically, a more longer time horizons, lower psychological attitudes towards the status quo, and a higher probability of re-election can increase financial-literacy efforts.
    Keywords: financial literacy, financial trust, fintech, financial crisis, loss aversion, political competition
    JEL: D72 G28 G53 H10 K00
    Date: 2023
  5. By: Grimmer, Justin; Holliday, Derek (Stanford University); Lelkes, Yphtach; Westwood, Sean
    Abstract: Faith in American elections is eroding, with politicians frequently questioning the legitimacy of election results and spreading misinformation about voter fraud. Substantial work has been done to refute misinformation and increase confidence in elections, but often without a clear picture of who skeptics are and why they are skeptical. Using extensive polling data from around the 2022 midterm election (N=5, 244), we provide a comprehensive profile of election skeptics: their prevalence, views, and justification. We rely on a large nationally-representative survey and use a mix of quantitative and qualitative data. We find that while skepticism is widespread in the American electorate, its underpinnings are not necessarily deep-seated. Over half of skeptics claim they are skeptical because of how elections are run and nearly one-in-five skeptics claim they are skeptical because of the other party's performance in recent elections, which we corroborate through an event study of the 2022 election.
    Date: 2023–08–04
  6. By: Ross Hyman; Deb Otis; Seamus Allen; Greg Dennis
    Abstract: We present the concept of ordered majority rule, a property of Instant Runoff Voting, and compare it to the familiar concept of pairwise majority rule of Condorcet methods. Ordered majority rule establishes a social order among the candidates such that that relative order between any two candidates is determined by voters who do not prefer another major candidate. It ensures the election of a candidate from the majority party or coalition while preventing an antagonistic opposition party or coalition from influencing which candidate that may be. We show how IRV is the only voting method to satisfy ordered majority rule, for a self-consistently determined distinction between major and minor candidates, and that ordered majority rule is incompatible with the properties of Condorcet compliance, independence of irrelevant alternatives, and monotonicity. Finally, we present some arguments as to why ordered majority rule may be preferable to pairwise majority rule, using the 2022 Alaska special congressional election as a case study.
    Date: 2023–08
  7. By: Boese-Schlosser, Vanessa A.; Eberhardt, Markus
    Abstract: Recent empirical work has established that 'democracy causes growth'. In this paper, we determine the underlying institutions which drive this relationship using data from the Varieties of Democracy project. We sketch how incentives and opportunities as well as the distribution of political power shaped by underlying institutions, in combination with the extent of the market, endogenously form an 'economic blueprint for growth', which likely differs across countries. We take our model to the data by adopting novel heterogeneous treatment effects estimators, which allow for non-parallel trends and selection into institutional change, and run horse races between underlying institutions. We find that freedom of expression, clean elections, and legislative executive constraints are the foremost drivers of long-run development. Erosion of these institutions, as witnessed recently in many countries, may jeopardise the perpetual growth effect of becoming a liberal democracy we establish for the post-WWII period.
    Keywords: Democracy, Growth, Institutions, Interactive Fixed Effects, Difference-in-Difference
    JEL: O10 P16 C23
    Date: 2023
  8. By: Basedow, Robert; Hoerner, Julian
    Abstract: Which factors drive support of Members of the European Parliament (MEPs) for trade liberalisation? The literature suggests that economic factors, ideology, and politicization shape MEP voting behaviour. Drawing on a new dataset encompassing all trade-related MEP votes (2009-2019), this study offers a quantitative assessment of the determinants of MEP support for trade liberalisation. It finds that ideological factors have the strongest and most persistent effect on MEP support for trade liberalisation. The economic competitiveness of MEPs’ home regions, in turn, has only a limited effect. Politicization, lastly, has an unclear effect on its own and mostly influences MEP voting behaviour through interactions with ideological and economic factors. The study offers the first comprehensive assessment of the determinants of MEP voting on trade liberalisation and contributes to political economy research on electoral institutions and trade, the European Parliament’s role in trade policy and the effects of politicization on policy-making.
    Keywords: trade; European Parliament; voting; politicization; T&F deal
    JEL: L81
    Date: 2023–08–11
  9. By: David Abrams (University of Pennsylvania); Roberto Galbiati (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (Sciences Po - Sciences Po); Arnaud Philippe (University of Bristol [Bristol])
    Abstract: We add to our understanding of the optimal method of judicial selection by exploiting an unusual feature in North Carolina: judges rotate location every six months. This allows us to identify the existence and source of sentencing variation over the electoral cycle. We show that when elections approach, felony sentences rise. This increase is found exclusively when judges are sentencing in their district of election, and only when elections are contested. When judges hear cases outside their home district, sentences do not significantly vary over the electoral cycle. Our results show that electoral sentencing cycles can be explained by strategic sentencing by judges in an attempt to please voters. The unique setting allows us to reject alternative behavioral or contextual explanations for the rise in sentences as elections approach. (JEL K42)
    Date: 2023–07
  10. By: Albers, Thilo N. H.; Kersting, Felix; Kosse, Fabian
    Abstract: We propose that false beliefs about own current economic status are an important factor for explaining populist attitudes. Eliciting subjects' receptiveness to rightwing populism and their perceived relative income positions in a representative survey of German households, we find that people with pessimistic beliefs about their income position are more attuned to populist statements. Key to understanding the misperception-populism relationship are strong gender differences in the mechanism: men are much more likely to channel their discontent into affection for populist ideas. A simple information provision does neither sustainably reduce misperception nor curb populism.
    Keywords: Perception, Income, Populism
    JEL: D63 D72 D91 P16
    Date: 2023
  11. By: Batinti, Alberto; Costa-Font, Joan
    Abstract: We study whether a democracy improves a measure of individual wellbeing: human heights. Drawing on individual-level datasets, we test the democracy and height hypothesis using a battery of eight different measures of democracy and we account for several potential confounders, regional and cohort fixed effects. We document that democracy – or its quality during early childhood – shows a strong and positive conditional correlation with male, but not female, adult stature. Our preferred estimates suggest that being born in a democracy increases average male stature from a minimum of 1.33 to a maximum of 2.4 cm. We also show a positive association when democracy increases from childhood to adolescence, and when we adopt measures of existing democratic capital before birth, and at the end of height plasticity in early adulthood. We also document that democracy is associated with a reduction in inequality of heights distribution. Our estimates are driven by period-specific heterogeneity, namely, early democratizations are associated with taller people more than later ones. Results are robust to the inclusion of countries exposed to communism.
    Keywords: democracy; wellbeing; human heights; waves of democratisation; communism; Europe; survey data
    JEL: I18 P20
    Date: 2022–04–01

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