|
on Positive Political Economics |
| By: | Paula González (Universidad Pablo de Olavide); Francesca Passarelli (Universidad de Oviedo); Yolanda F. Rebollo-Sanz (Universidad Pablo de Olavide) |
| Abstract: | Using data on nearly 190, 000 candidates across five Spanish municipal elections (2003–2019), we estimate the causal effect of electoral defeat on party switching. We combine a high-dimensional fixed effects panel model with a regression discontinuity design exploiting the quasi-random assignment of council seats under Spain’s closed-list D’Hondt system. Both approaches yield consistent evidence that not securing a council seat is associated with a higher probability of changing party affiliation by 2.1 to 2.3 percentage points—a 13.5% to 14.5% relative increase. Additionally, regression estimates show that party switching is more strongly linked to better future electoral outcomes among non-elected switchers than among candidates who switch while holding a seat. Our results support the theory that politicians are primarily motivated by office-seeking ambitions and highlight the strategic nature of party switching in local politics. |
| Keywords: | party switching, party labels, political defectors, closed-list systems, politicians, office-seeking ambition, Spain, municipal elections, local randomization, regression discontinuity. |
| JEL: | D72 H11 C21 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pab:wpaper:26.03 |
| By: | Marina Diakonova (Banco de España); Julia Estefania-Flores (Banco de España); Corinna Ghirelli (Banco de España); Ana Peñalosa (Banco de España); Javier J. Pérez (Banco de España); Aitana Simó (Banco de España) |
| Abstract: | We propose a narrative-based approach to construct high-frequency measures of political polarization and legislative gridlock for seven democracies: France, Germany, Spain, Italy, the United Kingdom, the United States and Canada. Our indices reveal that polarization has risen markedly since the Global Financial and Sovereign Debt Crises, with a faster increase in North America than in Europe. Through a range of exercises we show that the two indices respond differently to elections and unified government control, and that the latter weakens the pass-through between political polarization and gridlock. Consistent with the literature, we also find that investment declines following an increase in either index. Together, these high-frequency, cross-country measures provide a new tool for comparative political economy analysis. |
| Keywords: | political polarization, legislative gridlock, textual analysis, cross-country analysis |
| JEL: | D72 D74 H3 P16 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2636e |
| By: | Eric Zitzewitz |
| Abstract: | As prediction markets become more prominent, there are concerns that they will be a conduit for political bias. I analyze prediction markets returns from 1880 to 2025 and find no evidence of an overpricing of either left or right-leaning candidates, across a variety of subsamples. In recent elections, there is also no overpricing of either male or female, white or non-white, or young or old candidates. Most political prediction markets exhibit a favorite-longshot bias, and markets on near-term polling averages exhibit a very small overpricing of left-leaning outcomes (e.g., President Trump’s approval falling), which is detectable only because the sample size is large. For elections, however, despite attracting participants who may not be representative of the voting population, prediction markets yield predictions without systematic bias. |
| JEL: | G13 G4 P0 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35846 |
| By: | Federico Fioravanti; Zoi Terzopoulou |
| Abstract: | When voters evaluate alternatives sequentially, an anchoring bias makes their ballots depend on the order in which alternatives are presented. For approval ballots, no non-constant voting rule is robust to this dependence. We show that ranked ballots change the picture sharply: a rank-based rule is robust to the presentation order if and only if it is tops-only. Robustness to anchoring is thus available, but only at the price of ignoring everything a voter reports beyond her favourite alternative. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.10316 |
| By: | Levi Boxell; Jacob Conway; Nicolas Longuet-Marx |
| Abstract: | What role do journalists play in determining the political slant of the news they produce? We develop and estimate a model where journalists and newspaper outlets contract over both slant and wages. The model implies a set of conditions under which we can consistently estimate the role of journalist preferences in driving the observed variation in slant across outlets by leveraging journalist transitions between outlets. To measure slant, we train a transformer-based, machine learning model using articles tweeted by politicians and apply it to a full-text database of 9+ million newspaper articles published in the US between 2013 and 2018. Under our model and identifying assumptions, our estimates (a) reject the hypothesis that journalists have zero ideological preferences over the content they produce and (b) imply that 10% of the variation in slant can be explained by journalists. When journalists move across outlets, their average slant shifts by 77% of the gap between their destination and origin outlet averages. In counterfactuals that reweight journalist party composition, moving from the observed left-leaning distribution to an even distribution of Democrats, Republicans, and non-partisans shifts average article slant in a more conservative direction, but only by 0.04 standard deviations in slant. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.04182 |
| By: | Raša Karapandža; Yaw Nyarko |
| Abstract: | Large language models (LLMs) increasingly provide economic and financial advice. We develop a microeconomic framework for understanding this role. We prove that an LLM acts like a voting rule: each input text is an election, possible continuations are candidates, and output probabilities are vote shares derived from the training corpus. Such rules can generate Condorcet cycles, implying intransitive pairwise recommendations and potential money-pump exploitation. Using ChatGPT-4o, we identify millions of cycles in pairwise investment choices among S&P 100 firms. Our theorems establish the voting interpretation on the training data and support its use off-sample. We also show that correcting cycles ex post is generally infeasible. Finally, temperature changes the voting rule: at T = 1, outputs are sampled in proportion to vote shares; lower temperatures favor the plurality winner, whereas higher temperatures flatten probabilities toward uniformity. |
| JEL: | D81 D83 D91 G41 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35839 |
| By: | Jon D. Wisman |
| Abstract: | It is commonplace for contemporary American politicians to characterize as ideal the values prevalent during the early US Republic, ignoring that many critical socio-economic conditions that undergirded those values longer ago ceased to exist. Those conditions were radically altered during post-Civil War industrialization as increasing members of American society lacked independent status as owners in control of the resources and tools with which they worked. They were forced to work for others, suffer the humiliation of being bossed about, and the threat of unemployment. This degrading of work weakened democratic values, eroded community, transformed the household, and gave rise to the consumer culture that so irked Thorstein Veblen. This article, after examining the nature of work in pre-industrial America, addresses the subsequent process of proletarianization. It then details how the debasement of work transformed political values, weakened communities, altered the household, and steered worker families to increasingly seek status through consumption rather than through work and community, thereby eventually threatening environmental devastation. The final section addresses how two reforms – guaranteeing employment at living wages with reskilling where necessary and implementing measures to extend freedom and democracy into the workplace – could enable the U.S. to recapture the security, worker freedom, and community that pre-dated industrialization. These reforms are necessary for preserving democracy and avoiding ecological Armageddon. The political feasibility of these two reforms is that they would preserve capitalism, retaining its two most fundamental social institutions of private property and markets, albeit without exploitation and degraded work. |
| Keywords: | Debased labor, political values, guaranteed employment, workplace democracy. |
| JEL: | E21 E44 G01 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:amu:wpaper:2026-01 |
| By: | Daniel Aaronson; Mark Borgschulte; Sunny Liu; Bhashkar Mazumder |
| Abstract: | Does education lead to political activity? We find that a large, early 20th century school construction program, the Rosenwald schools, led to more NAACP branches in the rural South starting in the early 1940s, i.e. prior to the classic U.S. Civil Rights Movement. Branch growth was stronger where Jim Crow occupational segregation prevented Black men from realizing some of the economic gains of their education. Our findings lend support to theories emphasizing that economic context can act as a critical mediator in determining whether human capital causes political engagement. |
| JEL: | I20 J71 N32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35842 |