nep-pol New Economics Papers
on Positive Political Economics
Issue of 2024‒05‒06
twelve papers chosen by
Eugene Beaulieu, University of Calgary

  1. Beyond selfishness: the interaction of income and human values in shaping Europeans’ ideology By Fernando, Bruna
  2. Ideology, Incidence and the Political Economy of Fuel Taxes: Evidence from the California 2018 Proposition 6 By Lucas Epstein; Erich Muehlegger
  3. Local far-right demonstrations and nationwide public attitudes toward migration By Freitas Monteiro, Teresa; Prömel, Christopher
  4. Banking Behaviour and Political Business Cycle in Africa: The Role of Independent Regulatory Policies of the Central Bank By Daniel Ofori-Sasu; Elikplimi Komla Agbloyor; Dennis Nsafoah; Simplice A. Asongu
  5. To Russia with Love? The Impact of Sanctions on Regime Support By Robert Gold; Julian Hinz; Michele Valsecchi
  6. Inequality and Racial Backlash: Evidence from the Reconstruction Era and the Freedmen’s Bureau By Eric Chyn; Kareem Haggag; Bryan A. Stuart
  7. Red herrings: A model of attention-hijacking by politicians By Margot Belguise
  8. Who wants descriptive representation, and why? By Claudia Landwehr; Armin Schäfer
  9. Industrial democracy between neocapitalism and postfordism. The political and intellectual trajectory of Bruno Trentin (1926-2007) By Francesco Sabato Massimo
  10. The Demand for News: Accuracy Concerns versus Belief Confirmation Motives By Felix Chopra; Ingar Haaland; Christopher Roth
  11. Local Crime and Prosocial Attitudes : Evidence from Charitable Donations By Perroni, Carlo; Scharf, Kimberley; Smith, Sarah; Talavera, Oleksandr; Vi, Linh
  12. Assessment of the influence of Institutions and Globalization on environmental pollution for Open and Closed economies By Bright A. Gyamfi; Divine Q. Agozie; Ernest B. Ali; Festus V. Bekun; Simplice A. Asongu

  1. By: Fernando, Bruna
    Abstract: The left-right scale of political orientation plays a pivotal role in shaping individual behaviour and government policies, particularly in Western countries. Rational-choice theory suggests that individuals with lower (higher) incomes lean towards left-wing (right-wing) redistributive policies. Empirical evidence has, however, challenged this classical view. Building on cognitive dissonance theory, neuroeconomics, and social psychology, this paper provides a more comprehensive view of ideology formation based on how individuals balance selfishness with other human motivations. The paper uses data from the European Social Survey and Schwartz’s scale of human values to estimate models of individuals’ political orientation, considering the potential endogeneity of income. The results show that relative income and the social values of Conservation and Self-Transcendence strongly affect ideology. Low-income individuals prioritize self-interest, however, while also preserving other motivations. This framework helps to explain heterogeneity in political preferences, as well as communication discourses and policies designed to fit different citizens’ profiles.
    Keywords: political orientation; preferences; self-interest; redistribution; neuroeconomics; occupational class
    JEL: A13 D72 D91 Z13
    Date: 2024–03–25
  2. By: Lucas Epstein; Erich Muehlegger
    Abstract: In 2018, California voters rejected Proposition 6, a ballot initiative that sought to repeal state gasoline taxes and vehicle fees enacted as part of the 2017 Road Repair and Accountability Act. We study the relationship between support for the proposition, political ideology and the economic burdens imposed by the Act. For every hundred dollars of annual per-household imposed costs, we estimate that support for the proposition rose by 3 - 9 percentage points. Notably, we find that the relationship between voting and the economic burden of the policy is seven times stronger in the most conservative tracts relative to the most liberal tracts. Since conservative areas in California and elsewhere tend to bear a higher burden from transportation and energy taxes than liberal areas, heterogeneity in the response to economic burdens has important implications for the popular support for environmental taxes and the ongoing policy debate about how to finance future road infrastructure.
    JEL: H23 R48
    Date: 2024–04
  3. By: Freitas Monteiro, Teresa; Prömel, Christopher
    Abstract: One of the primary objectives of protests and demonstrations is to bring social, political, or economic issues to the attention of politicians and the wider population. While protests can have a mobilizing and persuading effect, they may reduce support for their cause if they are perceived as a threat to public order. In this study, we look at how local or spontaneously organised xenophobic demonstrations affect concerns about hostility towards foreigners and worries about immigration among natives in Germany. We use a regression discontinuity design to compare the attitudes of individuals interviewed in the days immediately before a large far-right demonstration and individuals interviewed in the days immediately after that demonstration. Our results show that large right-wing demonstrations lead to a substantial increase in worries about hostility towards foreigners of 13.7% of a standard deviation. In contrast, worries about immigration are not affected by the demonstrations, indicating that the protesters are not successful in swaying public opinion in their favour. In the heterogeneity analyses, we uncover some polarisation in the population: While worries about hostility against foreigners increase and worries about immigration decrease in left-leaning regions, both types of worries increase in districts where centre-right parties are more successful. Lastly, we also show that people become more politically interested in response to protests, mainly benefiting left-wing parties, and are more likely to wish to donate money to help refugees.
    Keywords: Protests, Right-wing Extremism, Xenophobia, Attitudes, Polarisation
    JEL: D72 D74 D83 J15
    Date: 2024
  4. By: Daniel Ofori-Sasu (University of Ghana Business School); Elikplimi Komla Agbloyor (University of Ghana Business School); Dennis Nsafoah (Niagara University); Simplice A. Asongu (Johannesburg, South Africa)
    Abstract: This study examines the effect of regulatory independence of the central bank in shaping the impact of electoral cycles on bank lending behaviour in Africa. It employs the dynamic system Generalized Method of Moments (SGMM) Two-Step estimator for a panel dataset of 54 African countries over the period, 2004-2022. The study found that banks lend substantially higher during election years, and reduce lending patterns thereafter. The study shows that countries that enforce monetary policy autonomy of the central bank induce a negative impact on bank lending behaviour while those that apply strong macro-prudential independent action and central bank independence reduce lending in the long term. The study provides evidence to support that regulatory independence of the central bank dampens the positive effect of elections on bank lending around election years while they amplify the reductive effects on bank lending after election periods. There is a wake-up call for countries with weak independent central bank regulatory policy to strengthen their independent regulatory policy frameworks and political institutions. This will enable them better strategize to yield a desirable outcome of bank lending to the real economy during election years.
    Keywords: Political Economy; Political Credit Cycles, Electoral Cycle; Central Bank Regulatory Independence; Bank lending Behaviour
    JEL: D7 D72 G2 G3 E3 E5 E61 G21 L10 L51 M21 P16 P26
    Date: 2024–01
  5. By: Robert Gold; Julian Hinz; Michele Valsecchi
    Abstract: Do economic sanctions affect internal support of sanctioned countries’ governments? To answer this question, we focus on the sanctions imposed on Russia in 2014 and identify their effect on voting behavior in both presidential and parliamentary elections. On the economic side, the sanctions significantly hurt Russia’s foreign trade — with regional variance. We use trade losses caused by the sanctions as measure for regional sanctions exposure. For identification, we rely on a structural gravity model that allows us to compare observed trade flows to counterfactual flows in the absence of sanctions. Difference-in-differences estimations reveal that regime support significantly increases in response to the sanctions, at the expense of voting support of Communist parties. For the average Russian district, sanctions exposure increases the vote share gained by President Putin and his party by 13 percent. Event studies and placebo estimations confirm the validity of our results.
    Keywords: economic sanctions, voting behaviour, gravity estimation, rally-around-the-flag
    JEL: F12 F14 F15
    Date: 2024
  6. By: Eric Chyn; Kareem Haggag; Bryan A. Stuart
    Abstract: How do majority groups respond to a narrowing of inequality in racially polarized environments? We study this question by examining the effects of the Freedmen’s Bureau, an agency created after the U.S. Civil War to provide aid to former slaves and launch institutional reform in the South. We use new historical records and an event study approach to estimate impacts of the Bureau on political economy in the South. In the decade immediately after the war, counties with Bureau field offices had reduced vote shares for Democrats, the major political party that previously championed slavery and opposed Black civil rights during Reconstruction. In the longer-run, we find evidence of backlash in the form of higher Democratic vote shares and increases in several forms of racial violence, including lynchings and attacks against Black schools. This backlash extends through the twentieth century, when we find that counties that once had a Bureau field office have higher rates of second-wave and third-wave Ku Klux Klan activity and lower rates of intergenerational economic mobility. Overall, our results suggest that the initial impacts of the Freedmen’s Bureau stimulated countervailing responses by White majorities who sought to offset social progress of Black Americans.
    JEL: D72 D74 I31 J15 N31
    Date: 2024–04
  7. By: Margot Belguise
    Abstract: Politicians often use “red herrings” to distract voters from scandals. When do such red herrings succeed? I develop a model in which an incumbent runs for re-election and potentially faces a scandal. Some incumbents enjoy telling “tales” (attention-grabbing stories) while others use tales to distract voters from the scandal. Multiple equilibria can arise: one with a norm of tale-telling in which red herrings succeed and another with a norm against tale-telling in which they fail. Increased media attention to tales has a non-monotonic effect, facilitating red herrings at low attention levels, but serving a disciplinary function at high levels.
    Date: 2024
  8. By: Claudia Landwehr (Johannes Gutenberg University Mainz); Armin Schäfer (Johannes Gutenberg-University Mainz, Germany)
    Abstract: In the face of mounting evidence for the substantive under-representation of marginalized groups and for the lack of responsiveness to their concerns in democratic legislation, calls for measures to improve descriptive representation have become louder. While better descriptive representation may be in the interest of a majority of citizens, the implementation of respective measures is eventually down to political elites. We therefore ask what legislators in the United States and Germany think about the importance of descriptive representation. Leveraging data from new surveys in both countries, we analyze respondents’ views on descriptive representation concerning gender, age, class, ethnicity, and sexual orientation. We hypothesize, first, that process preferences for better descriptive representation are correlated with substantive preferences for progressiv e policies and that parties on the left will deem descriptive representation more important. Secondly, we expect intersectionality to affect the formation of process preferences, and members of disadvantaged groups to be more supportive of better descriptive representation of all groups. Our findings show clear differences between parties, confirming that left-leaning parties tend to be more supportive of descriptive representation. Moreover, women are more supportive of descriptive representation in most parties, with female legislators supporting not only women’s representation but also better descriptive representation for other groups. The group least supportive of descriptive representation are men in right-wing parties.
    Date: 2024–04–09
  9. By: Francesco Sabato Massimo (CSO - Centre de sociologie des organisations (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: During his long political trajectory Bruno Trentin (1926-2007) never ceased to question the relationship between work and democracy. The Italian intellectual and trade union leader denounced the domination of the «productivist ideology» of scientific management over the entire social and political Left. According to this ideology, trade union action was reduced to the animation of distributive conflict, while the political struggle was played out outside the economic sphere, through the conquest of the state. Contrary to this vision, the 1960s were the source of a new self-management political culture, born of the encounter between the Marxist, Christian and libertarian traditions of the labour movement, which aimed to make workers and their unions «political subjects» in their own right by gaining real decision-making power over the organisation of work. The decline of Fordism offers an opportunity for a new "contract" in which work can achieve its political recognition and autonomy within the workplace and not from outside. It is from this history that Trentin draws to defend the actuality of a project of liberation from subordinate «work». In this article I reinscribe Trentin's reflections in the long history of his career as an intellectual, trade unionist and political activist, as well as in the controversies and the impasses that have shaped his life and the history whole Italian and European labour movement during the twentieth century.
    Keywords: Organisational democracy, Unions and labour history, Industrial relations, Neocapitalism, Postfordism, Italian and European Left, Democrazia organizzativa, Storia del sindacato e del lavoro, Relazioni industriali, Neocapitalismo, Postfordismo, Sinistra italiana ed europea
    Date: 2023
  10. By: Felix Chopra (Department of Economics, University of Copenhagen); Ingar Haaland (NHH Norwegian School of Economics); Christopher Roth (University of Cologne)
    Abstract: We examine the relative importance of accuracy concerns and belief confirmation motives in driving the demand for news. In experiments with US voters, we first vary beliefs about whether an outlet reports thenews in a right-wing biased, left-wing biased, or unbiased way. We then measure demand for a newsletter covering articles from this outlet. Right-wing voters strongly reduce their demand for left-wing biased news, but not for right-wing biased news. The reverse patterns hold for left-wing voters. These results suggest a trade-off between accuracy concerns and belief confirmation motives. We quantify this trade-off using a structural model and find a similar quantitative importance of both motives.
    Keywords: News Demand, Media Bias, Accuracy Concerns, Belief Confirmation
    JEL: D83 D91 L82 P00
    Date: 2024–04–17
  11. By: Perroni, Carlo (University of Warwick); Scharf, Kimberley (University of Nottingham); Smith, Sarah (University of Bristol); Talavera, Oleksandr (University of Birmingham); Vi, Linh (Aston University)
    Abstract: Combining longitudinal postcode-level data on charitable donations made through a UK giving portal with publicly available data on local crime and neighborhood characteristics, we study the relationship between local crime and local residents’ charitable giving and we investigate the possible mechanisms underlying this relationship. An increase in local crime corresponds to a sizeable increase in the overall size of unscheduled charitable donations. This effect is mainly driven by the responses of female and gender unclassified donors. Donation responses also reflect postcode variation in socio-economic characteristics, levels of mental health, and political leanings, but mainly so for female and gender-unidentified donors.
    Keywords: Charitable Donations ; Prosocial Behavior ; Crime JEL Codes: H41 ; D64 ; D91 ; J15
    Date: 2024
  12. By: Bright A. Gyamfi (Udaipur, India); Divine Q. Agozie (University of Ghana, Business School); Ernest B. Ali (University of Ghana, Ghana); Festus V. Bekun (Istanbul, Turkey); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: As the environmental sustainability effectiveness of various political systems is taken into consideration, it is doubtful as to whether the presumption of the overall efficiency of democracy can be sustained in global governance architecture. The effectiveness of autocracies and democracies (i.e., governance indicators are compared in the present study) with reference to strengths and weaknesses in environmental objectives. This analysis explores the effect of autocracy, democracy, as well as the trend of globalization on CO2 emissions for open and closed economies from 1990 to 2020. Crucial indicators such as economic growth, renewable energy and non-renewable energy are controlled for while examining the roles of economic expansion on the disaggregated energy consumption portfolios for both open and closed economies. The empirical analysis revealed some insightful results. First, for the open economies, with the expectation of non-renewable energy which show a positive significant impact on emissions, all variables show a negative effect on emissions. Furthermore, the closed economies result indicate that, apart from renewable energy which has a negative relationship with emissions, all the variables including the interaction terms have a positive relation with emissions. However, an inverted U-shaped environmental Kuznets curve (EKC) hypothesis was validated for both economies.
    Keywords: Open economies, closed economies, democracy, autocracy, Environmental Kuznets Curve, globalization index, environmental sustainability
    Date: 2024–01

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