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on Positive Political Economics |
| By: | Somdeep Chatterjee (Economics Group, Indian Institute of Management Calcutta); Pushkar Maitra (Department of Economics, Monash University); Manhar Manchanda (Economics Group, Indian Institute of Management Calcutta) |
| Abstract: | We examine the impact of political competition on economic development in a multi-party setting. We constructing a novel measure of competition: threat from collusion. A constituency is defined as competitive when there is a ‘relevant’ third-position candidate, i.e., the ex-post vote share of the third-ranked candidate exceeds the winning margin. Using data on Indian Legislative Assembly elections and a regression discontinuity (RD) design we show that constituencies with a barely ‘relevant’ third witness a 1.2 to 3.3 percentage point higher growth in nightlights. The effects are largely driven by constituencies (i) where the eventual winner is aligned with the state government, (ii) in institutionally weak states, and (iii) where the winner is a male candidate. The main mechanism is higher availability of public goods and a reduction in reported crime in constituencies with a relevant third. We rule out other channels by showing that there is no effect when the possibility of collusion is not credible. |
| Keywords: | Collusion, Development, Vote Shares, Political Competition; Relevant Third |
| JEL: | D72 D73 O12 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2024-13 |
| By: | Salvatore Nunnari; Eugenio Proto; Aldo Rustichini |
| Abstract: | Rational choice theories assume that voters accurately assess the outcomes of policies. However, many important policies—such as regulating prices and introducing Pigouvian taxation—yield outcomes through indirect or equilibrium effects that may differ from their direct effects. Citizens may underestimate these effects, leading to a demand for bad policy, that is, opposition to reforms that would increase welfare or support for reforms that would decrease it. This appreciation might be linked to cognitive functions, raising important research questions: Do cognitive abilities influence how individuals form preferences regarding policies, especially untried reforms? If so, what is the underlying mechanism? We use a simple theoretical framework and an experiment to show that enhanced cognitive abilities may lead to better policy choices. Moreover, we emphasize the crucial role of beliefs about other citizens’ cognitive abilities. These findings have important policy implications as they suggest that educational programs developing cognitive skills or interventions increasing trust in others’ understanding could improve the quality of democratic decision-making in our societies. |
| Keywords: | voting, policy reform, political failure, cognition, experiment |
| JEL: | C90 D72 D91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11206 |
| By: | Robert Dur; Arjan Non; Paul Prottung; Benedetta Ricci |
| Abstract: | In many public policy areas, randomized policy experiments can greatly contribute to our knowledge of the effects of policies and can thus help to improve public policy. However, policy experiments are not very common. This paper studies whether a lack of appreciation for policy experiments among voters may be the reason for this. Collecting survey data representative of the Dutch electorate, we find clear evidence contradicting this view. Voters strongly support policy experimentation and particularly so when they do not hold a strong opinion about the policy. In a subsequent survey experiment among a selected group of Dutch politicians, we find that politicians conform their expressed opinion about policy experiments to what we tell them the actual opinion of voters is. |
| Keywords: | policy experiments, randomized controlled trials, voters, politicians, public policy, survey experiment, conformism |
| JEL: | C93 D72 D78 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11194 |
| By: | Hongzhou Chen; Xiaolin Duan; Abdulmotaleb El Saddik; Wei Cai |
| Abstract: | Harnessing the transparent blockchain user behavior data, we construct the Political Betting Leaning Score (PBLS) to measure political leanings based on betting within Web3 prediction markets. Focusing on Polymarket and starting from the 2024 U.S. Presidential Election, we synthesize behaviors over 15, 000 addresses across 4, 500 events and 8, 500 markets, capturing the intensity and direction of their political leanings by the PBLS. We validate the PBLS through internal consistency checks and external comparisons. We uncover relationships between our PBLS and betting behaviors through over 800 features capturing various behavioral aspects. A case study of the 2022 U.S. Senate election further demonstrates the ability of our measurement while decoding the dynamic interaction between political and profitable motives. Our findings contribute to understanding decision-making in decentralized markets, enhancing the analysis of behaviors within Web3 prediction environments. The insights of this study reveal the potential of blockchain in enabling innovative, multidisciplinary studies and could inform the development of more effective online prediction markets, improve the accuracy of forecast, and help the design and optimization of platform mechanisms. The data and code for the paper are accessible at the following link: https://github.com/anonymous. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14844 |
| By: | Maria Petrova; Gregor Schubert; Bledi Taska; Pinar Yildirim |
| Abstract: | Career opportunities and expectations shape people’s decisions and can diminish over time. In this paper, we study the career implications of automation and robotization using a novel data set of resumes from approximately 16 million individuals from the United States. We calculate the lifetime "career value" of various occupations, combining (1) the likelihood of future transitions to other occupations, and (2) the earning potential of these occupations. We first document a downward trend in the growth of career values in the U.S. between 2000 and 2016. While wage growth slows down over this time period, the decline in the average career value growth is mainly due to reduced upward occupational mobility. We find that robotization contributes to the decline of average local labor market career values. One additional robot per 1000 workers decreased the average local market career value by $3.9K between 2004 and 2008 and by $2.48K between 2008 and 2016, corresponding to 1.7% and 1.1% of the average career values from the year 2000. In commuting zones that have been more exposed to robots, the average career value has declined further between 2000 and 2016. This decline was more pronounced for low-skilled individuals, with a substantial part of the decline coming from their reduced upward mobility. We document that other sources of mobility mitigate the negative effects of automation on career values. We also show that the changes in career values are predictive of investment in long-term outcomes, such as investment into schooling and housing, and voting for a populist candidate, as proxied by the vote share of Trump in 2016. We also find further evidence that automation affected both the demand side and supply side of politics. |
| JEL: | J01 L6 M0 M20 M29 M55 O14 O3 P0 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32655 |
| By: | Kaymak, Erol |
| Abstract: | One of the big surprises of the June 2024 European Parliamentary elections occurred in the Republic of Cyprus, where a 24-year-old YouTuber and social media influencer, Fidias Panayiotou, won a seat running as an independent having secured over 19 percent of the vote. Whereas the vast majority of polls had predicted the rise of the radical right National People's Front Party (ELAM) in Cyprus along with other far-right parties in Europe, Panayiotou's victory and overall vote tally was unforeseen. His win came at the expense of the left-wing Progressive Party of the Working People (AKEL), dashing the hopes for the re-election of Turkish Cypriot MEP Niyazi Kızılyürek, whose 2019 election to the European Parliament was seen as a milestone for bi-communal relations in divided Cyprus. Kızılyürek's defeat highlights the persistent difficulties in achieving greater political integration and representation for Turkish Cypriots within the EU framework. This underscores the urgent need for inclusive dialogue, economic integration, and proactive measures to address Cyprus's unique challenges, aiming to foster a more cooperative and resilient future for the island. Initiative - in other words, a new model for structured relations with a partner that is very important for the EU and Germany. Here, the EU should also show more flexibility than in the past. |
| Keywords: | European Parliamentary elections 2024, Republic of Cyprus, Democratic Rally (DISY), National People's Front Party (ELAM), Progressive Party of the Working People (AKEL), European People's Party group (EPP), Niyazi Kızılyürek, Annita Demetriou |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:300621 |
| By: | Carozzi, Felipe; Gago, Andrés |
| Abstract: | We study whether female-headed local governments in Spain are more likely to engage in gender sensitive policies such as long-term care support, pre-schooling, or work and family-life balancing services. Using a fuzzy regression discontinuity design estimated on the set of mixed electoral races, we find no evidence of female mayors being more likely to implement these policies at the local level. We do find evidence of differences between parties in the probability of implementing these policies, suggesting that the gender of the politician is less important than their partisan or ideological position when it comes to these policy levers. We interpret these results through a model of political selection in which strong parties can impose their agendas on candidates despite primitive differences in policy preferences across genders. |
| Keywords: | female politicians; gender policies; long-term care; Female politicians; Gender policies; Long-term care; European Research Council under the European Union’s Horizon 2020 Programme (ERC Starting Grant agreement 638893 – CompSChoice |
| JEL: | J16 J14 |
| Date: | 2023–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:117437 |
| By: | Nikita Savin; Daniel Treisman |
| Abstract: | Donald Trump’s campaign speeches have impressed some and outraged others. Yet relatively little is known about how his rhetoric has changed over time and how it compares to that of other politicians, both in the US and abroad. We analyze a monthly series of Trump’s public addresses in 2015-24, comparing them to speeches by other U.S. presidential candidates and various world leaders, past and present. We find that Trump’s use of violent vocabulary has increased over time—reflecting increasing attention to wars but even more to crime—and now surpasses that of all other democratic politicians we studied. Simultaneously, Trump’s use of words related to economic performance has declined, matching a general trend among presidential candidates. Finally, although containing populist elements, Trump’s rhetoric diverges from the populist stereotype in notable ways, particularly in his relatively infrequent references to “the people.” He increasingly exemplifies a negative populism, concentrated on denigrating out-groups. |
| JEL: | P0 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32665 |
| By: | Julian Budde; Thomas Dohmen; Simon Jäger; Simon Trenkle |
| Abstract: | We study the descriptive and substantive representation of workers through worker representatives, focusing on the selection of German works council representatives and their impact on worker outcomes. Becoming a professional representative leads to substantial wage gains for the elected, concentrated among blue-collar workers. Representatives are positively selected in terms of pre-election earnings and person fixed effects. They are more likely to have undergone vocational training, show greater interest in politics, and lean left politically compared to the employees they represent; blue-collar workers are close to proportionally represented among works councilors. Drawing on a retirement-IV strategy and event-study designs around council elections, we find that blue-collar representatives reduce involuntary separations, consistent with blue-collar workers placing stronger emphasis on job security |
| JEL: | J5 J51 J54 J63 P12 P13 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32740 |
| By: | Hui Ren Tan; Tianyi Wang |
| Abstract: | We study a far-reaching episode of demagoguery in American history. From the late 1940s to 1950s, anti-communist hysteria led by Senator Joseph McCarthy and others gripped the nation. Hundreds of professionals in Hollywood were accused of having ties with the communist. We show that these accusations were not random, targeting those with dissenting views. Actors and screenwriters who were accused suffered a setback in their careers. Beyond the accused, we find that the anti-communist crusade also had a chilling effect on film content, as non-accused filmmakers avoided progressive topics. The decline in progressive films, in turn, made society more conservative. |
| JEL: | L82 N32 N42 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32682 |
| By: | Baraldi, Anna Laura; Fosco, Giovanni |
| Abstract: | Differing attitudes towards environmental issues between men and women as policymakers may affect policies and actions. Accordingly, this research analyses the issue of the causal relationship between women politicians and the level of air pollution. The analysis tests for this in Italy, exploiting a gender quota measure (Law 215/2012) as an exogenous shock to the percentage of female municipal councilors. Difference-indifferences instrumental variable approach finds that an increase in the percentage of female councilors decreases the maximum number of days in which at least one type of monitoring stations (among all the stations installed in the provincial capital municipality) has detected an excess of PM10 with respect to its daily limit. This research provides evidence of the most likely mechanism driving the results by proving that an increase in female officeholders has a positive impact on a number of environmental friendly policies and measures (as the bicycle lanes, the urban green, the bike- and carsharing services, district heating and traffic blockage) aimed at reducing the harmful air particles. |
| Keywords: | Air pollution, Gender quotas, Municipal elections, Female politicians |
| JEL: | C26 D72 J16 Q53 |
| Date: | 2024–07–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121377 |
| By: | Hafner-Burton, Emilie M; Schneider, Christina J |
| Abstract: | Recent years have witnessed significant democratic backsliding. Many democracies around the world experience incremental deteriorations of democratic institutions, rules, and norms resulting from the actions of duly elected governments, but we still know little about how backsliding is affected by international integration. We argue that integration of countries into the U.S.-led Liberal International Order (LIO) after the end of the Cold War has provided aspiring autocrats in office with tools, resources, and political support to pursue strategies of incremental executive aggrandizement. Our theory implies that integration has increased the likelihood of democratic backsliding, especially in regimes where anti-pluralist forces are able to capture international integration for their own purposes. We test the empirical implications of our theory with a mixed-methods approach that combines a large-n quantitative comparative analysis of democratic backsliding in 97 democracies after the Cold War with a typical case study to trace the underlying causal mechanisms of the theory. The findings indicate that international economic and political integration have had a robust positive effect on the likelihood of democratic backsliding in a broad range of contexts and that the hypothesized mechanisms are observable in the detailed case study. These findings have important implications for democracy in an integrated world. |
| Keywords: | Social and Behavioral Sciences, democratic backsliding, liberal international order, international integration |
| Date: | 2023–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt0965w1jb |
| By: | Benz, Pierre; Strebel, Michael A.; Di Capua, Roberto; Mach, André |
| Abstract: | Numerous studies have focused on wealth elites’ housing, including their spatial and social exclusiveness. The insertion of the power elite in urban space has, however, largely been left unexplored. By combining positional and residential information on over 7, 400 urban elites, we study how academic, economic, and political elites’ residential patterns have evolved from 1890 to 2000 in the three largest Swiss cities (Basel, Geneva, Zurich). First, we uncover a long-term dynamic of suburbanization, which however does not result in even spatial dispersion: while gradually abandoning center cities, elites do not randomly disperse in the surrounding municipalities. Rather, they tend to settle in very specific areas. Second, we find that spatial differentiation of urban elites’ residences varies across elite categories: economic elites tend to geographically segregate from both academic and political elites over the course of the twentieth century and settle in more privileged areas. At the same time, academic and left political elites, while historically living in distinct neighborhoods, tend to converge at the end of the century, echoing new similarities in their profile. This highlights the importance of studying the urban power elites’ residential patterns in a long-term perspective. |
| Date: | 2024–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:mkaqx |
| By: | Paola Giuliano; Antonio Spilimbergo |
| Abstract: | A growing body of work has shown that aggregate shocks affect the formation of preferences and beliefs. This article reviews evidence from sociology, social psychology, and economics to assess the relevance of aggregate shocks, whether the period in which they are experienced matters, and whether they alter preferences and beliefs permanently. We review the literature on recessions, inflation experiences, trade shocks, and aggregate non-economic shocks including migrations, wars, terrorist attacks, pandemics, and natural disasters. For each aggregate shock, we discuss the main empirical methodologies, their limitations, and their comparability across studies, outlining possible mechanisms whenever available. A few conclusions emerge consistently across the reviewed papers. First, aggregate shocks impact many preferences and beliefs, including political preferences, risk attitudes, and trust in institutions. Second, the effect of shocks experienced during young adulthood is stronger and longer lasting. Third, negative aggregate economic shocks generally move preferences and beliefs to the right of the political spectrum, while the effects of non-economic adverse shocks are more heterogeneous and depend on the context. |
| JEL: | E0 P0 Z11 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32669 |
| By: | Bocar A. Ba; Abdoulaye Ndiaye; Roman Rivera; Alexander Whitefield |
| Abstract: | We study how negative sentiment around an industry impacts beliefs and behaviors, focusing on demands for racial justice after the murder of George Floyd and the salience of the “defund the police” movement. We assess stakeholder beliefs on the impact of protests on the stock prices of police-affiliated firms. In our survey experiment, laypeople and finance professionals predicted more negative stock price outcomes when they lacked details on the products supplied by such firms. Exposure to narratives about the context of the protests further reduced the prediction accuracy of these groups. In contrast, product information improved the prediction accuracy of respondents. Turning to real-life behavior, we find that mutual funds exposed to protests were 20% less likely to hold police stocks, after the protests, than funds in areas without protests. Political support for maintaining police funding, though in the majority, declined by 4.3 percentage points in protest areas. The salience of the “defund the police” narrative led to significant overreactions in both financial predictions and real-life behavior. |
| JEL: | D72 D74 D84 G41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32730 |
| By: | Capkun, Vedran (HEC Paris); Grazioli, Francesco (ESCP Business School) |
| Abstract: | We examine whether and how the implementation of national security policies by the Committee on Foreign Investment in the United States (CFIUS) affects corporate investment. CFIUS can block a foreign takeover of a US company when its closing threatens to impair the national security of the United States. On a sample of 41, 918 firm-year observations (6, 192 US incorporated listed firms) over the 2008–2019 period, we find that CFIUS interventions reduce corporate investment by firms in industries of national security interest. We also document a decrease in corporate investment following the 2016 US presidential election, which increased the likelihood of CFIUS interventions. The effects are more pronounced among firms that are financially constrained and more exposed to foreign investments. Our results may be of interest to regulators who have recently adopted CFIUS-like mechanisms to protect their critical assets from foreign takeovers. |
| Keywords: | National Security; CFIUS; Corporate Investment |
| JEL: | D22 F38 G18 |
| Date: | 2023–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1486 |