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on Positive Political Economics |
| By: | Hövermann, Andreas; Kohlrausch, Bettina; Langer, Arnim; Meuleman, Bart |
| Abstract: | In the face of the 2024 European Parliament elections, the study at hand investigates the role of work, working conditions, and workers' voice for (anti-)democratic attitudes and far-right voting intentions. For this purpose, primary survey data was collected among the labour force in ten EU countries (N=15, 000). While in all countries, far-right populists obtain sizeable shares of the voting intentions in the data, the majority of respondents in all countries neither intend to vote right-wing nor have voted right-wing in the past and consider the principle of democracy as very important. The world of work is highly relevant when it comes to understanding and combating the rise of the political far right. This study finds consistent and strong evidence that good working conditions and workers' voice provide a buffer against anti-democratic attitudes. Furthermore, concerns about transformations of the labour market play a crucial role for the attitudes towards democracy. Yet, there is no straightforward link with far-right voting intentions: The extent to which democratic attitudes translate into corresponding voting preferences depends on the supply side of the respective party system and the political climate of the country in question. The study closes with proposed instruments towards a fairer and more democratic labour market across the EU. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wsistu:308840 |
| By: | Ethan Kaplan; Suresh Naidu |
| Abstract: | We survey and summarize recent literature on labor unions in political economy. While labor unions have been a long-standing subject of study in labor and macroeconomics, until recently they have been less studied by political economists, despite being important political actors in many policy-relevant contexts. We first organize the literature into work on the external influence of unions on the political system, including effects on voting, campaign finance, lobbying, and intraparty bargaining. We then discuss work on the internal politics and organization of unions, including issues of selection and representation, union aggregation of preferences. We pay special attention to the economic and political effects of public sector unions. We also discuss union behavior in weakly institutionalized contexts, where crime, corruption, rent-seeking, political strikes, and violence are all issues. We conclude with directions for future work. |
| JEL: | J5 P0 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33295 |
| By: | David E. Broockman; Elizabeth Rhodes; Alexander W. Bartik; Karina Dotson; Sarah Miller; Patrick K. Krause; Eva Vivalt |
| Abstract: | We study the causal effects of income on political attitudes and behavior with a field experiment. In the experiment, a non-profit gifted 1, 000 low-income Americans $1, 000 per month for three years tax-free, and 2, 000 control participants $50 monthly. Contrary to resource models of participation, we find no effects on political participation or engagement, and rule out effects equivalent to the observational association between turnout and income. Political preferences largely do not change, with the estimates again distinguishable from the observational relationship that economic conservatism increases with income. Dispositions such as trust in government, polarization, and support for democracy also do not change. We do find effects consistent with mood misattribution: affect towards one's own racial group, other racial groups, and some politicians slightly improves. There is also some evidence that treated participants saw work as more important for individuals, society, or even as a requirement for accessing government programs; qualitative evidence illuminates potential mechanisms. Our findings contrast with findings from other economic shocks such as government-sponsored or taxable transfers—thereby helping clarify the mechanisms likely responsible for their effects—and underscore the durability of political predispositions. |
| JEL: | D72 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33214 |
| By: | Kistinger, Dorothea (Mercator Research Institute on Global Commons and Climate Change (MCC)); Kögel, Noah (Mercator Research Institute on Global Commons and Climate Change (MCC)); Koch, Nicolas (Mercator Research Institute on Global Commons and Climate Change (MCC)); Kalkuhl, Matthias (Mercator Research Institute on Global Commons and Climate Change (MCC)) |
| Abstract: | The transition to a renewable heating system poses extraordinary policy challenges to societies in Europe and beyond. Many buildings are heated decentrally, which makes broad public acceptance essential. As governments may be held responsible for perceived policy impacts on individuals, analyzing their effects on electoral support is of high relevance. This study examines the electoral impact of an amendment to the German Buildings Energy Act which proposed a phase-out of fossil-fueled heating systems. We combine municipal election data with granular socioeconomic and building stock data and apply difference-in-differences regressions to identify treatment effects of the policy amendment on electoral support. We find that material costs of the policy, proxied by the characteristics of the local building stock, led to relative gains for the right-wing populist party, further increasing in low-income areas. These findings highlight the importance of holistic climate policy approaches that account for heterogeneous burdens and counteract a political backlash through compensation policies. |
| Keywords: | climate policy, public acceptance, voting, building sector, difference-in-differences |
| JEL: | C21 D72 Q48 Q58 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17596 |
| By: | Yaroslav Rosokha; Xinxin Lyu; Denis Tverskoi; Sergey Gavrilets |
| Abstract: | We theoretically and experimentally study an indefinite dynamic game intended to capture two main aspects of the political process – elections in which opposing factions compete by spending resources and policy-making in which those same factions are required to cooperate for the successful legislature. The main theoretical result is that limits on spending in the election contest increase cooperation. On the experimental side, we first test and confirm theoretical predictions and then explore whether such limits could arise endogenously. We find that a majority of subjects are successful in establishing a consensus on low limits, leading to higher cooperation and welfare. |
| Keywords: | Political Economy, Endogenous Institutions, Dynamic Games, Cooperation, Coordination, Contest, Experiments |
| JEL: | C73 C92 D91 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:pur:prukra:1352 |
| By: | Stephen Calabrese; Dennis Epple; Richard Romano |
| Abstract: | Beginning in the 1970’s, many state courts declared the widespread inequality in education spending across schools to violate their state’s constitution. Funding systems then emerged providing differing approaches to state and local support of education. We develop a theoretical framework and characterize outcomes under alternative systems. Our framework is distinctive in having voting over policies in both state and local elections. We also develop a calibrated computational model to compare equilibrium outcomes under the alternative school finance systems and to examine across state differences in expenditures. The model predicts that voters prefer systems with mixed state and local finance with designs mirroring those observed in practice. |
| JEL: | H10 H19 H72 I24 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33212 |
| By: | Salvatore Barbaro (Johannes-Gutenberg University, Germany); Anna-Sophie Kurella (University of Mannheim, Germany) |
| Abstract: | The Condorcet paradox has been a significant focus of investigation since Kenneth Arrow rediscovered its importance for economic theory. Recent research on this phenomenon has oscillated between simulation studies, probability calculations based on hypothetical voter preferences, and empirical analyses often limited by unsatisfactory data. This paper presents the first comprehensive evaluation of 253 electoral polls conducted across 59 countries. Our findings demonstrate that the Condorcet paradox has virtually no empirical relevance: with only one exception, we find no evidence of cyclical majorities in any of the 253 elections. This result remains robust after statistical inference testing. Furthermore, this study provides insights into which parties are particularly likely to emerge as Condorcet winners and explores how these Condorcet winners assert themselves after elections. |
| Keywords: | Elections; Condorcet Paradox; Condorcet Winner; Voting |
| JEL: | D71 |
| Date: | 2025–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:jgu:wpaper:2501 |
| By: | Daniel L. Chen (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Eric Reinhart |
| Abstract: | The impartiality and apolitical nature of the American judiciary are key to its legitimacy and the liberal constitutional legal system it supports. Though less than 1% of U.S. Federal judges admit to political motivations for retirement or resignation, our research suggests these influences are more widespread. Examining data from 1802 to 2019, we found 11% of retirements and 23% of resignations from the U.S. Courts of Appeals may be linked to political cycles. Judges are less likely to retire before a Presidential election when the President is from a different party than their appointing party, and more likely to resign after the election if the President is from their appointing party. These politically motivated exits have grown, accounting for 14% of retirements since 1975, which points to a more politically charged and polarized judiciary. Previous studies relying on self-reports or annual analyses have missed these political dynamics in judges' departure timing. Our quarter-to-election level analysis reveals that significant decisions by Federal judges may often be influenced by unconscious bias or conscious partisan loyalty, both of which challenge the idea of judicial neutrality and the common law precedents judges must uphold. Our findings support growing concerns about undemocratic political power being exercised through the courts, giving rise to juristocracy – the practice of engaging in politics under the guise of legal proceedings. |
| Keywords: | judicial tenure, political polarization, juristocracy, legitimacy, court reform |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04850358 |
| By: | Colin Gilson (UNamur - Université de Namur [Namur]); Sarah Bouraga (UNamur - Université de Namur [Namur]) |
| Abstract: | Purpose. We aim to explore the problem of power imbalance within Decentralized Autonomous Organizations (DAOs) and propose potential solutions that could contribute to enhancing the democratic nature of DAOs. Design/methodology/approach. In this paper, we apply a qualitative methodology. Using a thematic coding analysis, we process data collected from interviews with 11 experts. Findings. Multiple factors contribute to the perceived lack of democracy within DAOs, such as: token concentration, effective stakeholder communication. Next, quadratic voting has the potential to enhance democracy within DAOs, but this mechanism must be implemented mindfully. Finally, the results were nuanced when it comes to the effectiveness of liquid democracy in DAOs to enhance voter participation and representation. Originality. This paper is one of the first research contributions to propose recommendations to address the power imbalance within DAOs and to contribute to the advancement of decentralized decision-making structures |
| Keywords: | Decentralized Autonomous Organizations (DAOs), Blockchain, Democracy, Voting Process Article Classification. |
| Date: | 2024–01–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04814435 |
| By: | Bo Cowgill; Andrea Prat; Tommaso Valletti |
| Abstract: | Brandeis (1914) hypothesized that firms with market power will also attempt to gain political power. To explore this hypothesis empirically, we combine data on mergers with data on lobbying expenditures and campaign contributions in the US from 1999 to 2017. We pursue two distinct empirical approaches: a panel event study and a differential exposure design. Both approaches indicate that mergers are followed by large and persistent increases in lobbying activity, both by individual firms and by industry trade associations. There is also weaker evidence for an association of mergers with campaign contributions (PACs). We also find that mergers impact the extensive margin of political activity, for example, by impacting companies’ choice to establish their first in-house lobbying teams and/or first corporate PAC. We interpret these results within an oligopoly model augmented with endogenous regulation and lobbying. |
| JEL: | L19 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33255 |
| By: | Stefano Carattini; Anomitro Chatterjee; Todd Cherry |
| Abstract: | Biased beliefs affect real-world decisions, including political solutions to societal challenges. One crucial example is environmental policy: people tend to underestimate the incentive effect of Pigouvian policies. Addressing biased beliefs at scale is then paramount. In the days leading up to a ballot initiative in Washington state, we implemented a large-scale field experiment providing information on carbon taxes to over 285, 000 individuals. We complemented it with a survey experiment of about 1, 000 individuals, with the same treatments as in the field experiment, shedding light on social desirability bias and mechanisms around belief revision. Using data at the voting precinct level, we show that our intervention increases revealed support for carbon taxes, mainly for a treatment centered around earmarking of tax revenue, which was one of the design features of the ballot initiative. We find the effect to be stronger in precincts relatively opposed to the initiative, and less exposed to media coverage of carbon taxes, and more exposed to coverage challenging their effectiveness. |
| Keywords: | carbon taxes, voting behaviour, Facebook ads, natural field experiment |
| JEL: | C93 D72 D82 D83 H23 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11599 |
| By: | Heng-fu Zou (IAS, Wuhan University) |
| Abstract: | Alexis de Tocqueville's Democracy in America offers a profound analysis of the decentralized, self-organizing nature of American society in the 1830s. While Tocqueville never explicitly labeled this system as "anarchy, " his observations describe a societal framework that we may term "American Anarchy." This paper explores how this concept reflects the coexistence of liberty and equality in early American democracy, capturing the dynamic, decentralized, and participatory nature of its political and socialstructure. Tocqueville's work reveals how these principles interacted to create a unique and enduring model of governance. |
| Date: | 2025–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:732 |
| By: | Yuki Uchida (Faculty of Economics, Seikei University); Tetsuo Ono (Graduate School of Economics, Osaka University) |
| Abstract: | This study examines the limitations of political equilibrium in fiscal policy formation by short-sighted governments that represent only the currently living generations, as compared to an allocation determined by a long-lived planner who values both current and future generations. Using an overlapping-generations model calibrated to Germany, Japan, and the United Kingdom, we evaluate the role of the Golden Rule of Public Finance (GR), which restricts deficit financing to public investment. The findings reveal that (i) reduced GR compliance shifts fiscal burdens from middle-aged voters to future generations and older adults, resulting in spillover effects; (ii) GR compliance is significantly influenced by the elasticity of public capital to investment, preferences for public goods, and GDP growth rates; and (iii) non-compliance with the GR causes political equilibrium to diverge from the planner’s optimal allocation. |
| Keywords: | Fiscal Rule; Golden Rule of Public Finance; Probabilistic Voting; Overlapping Generations; Political Distortions |
| JEL: | D70 E62 H63 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2501 |
| By: | Almén, Daniel (Institute for Housing and Urban Research, Uppsala University); Elinder, Mikael (Department of Economics, Uppsala University); Engström, Per (Department of Economics, Uppsala University); Erixson, Oscar (Institute for Housing and Urban Research, Uppsala University); Lundberg, Erik (Department of Economics, Uppsala University); Palme, Mårten (Department of Economics, Stockholm University) |
| Abstract: | We exploit education reforms in Sweden and other European countries to estimate the causal effects of longer and modernized compulsory education on civic engagement. In most countries, compulsory education was extended by 1–2 years, and the curricula were reformed to better foster democratic and socially responsible citizens. We use high-quality, population-wide register data from Sweden and survey data from the other countries on key measures of civic engagement: voting in elections, charitable giving, and blood donations. Our estimates are generally precise and close to zero, allowing us to rule out even comparatively small positive effects. These results suggest that the post-WWII education reforms in Europe under study were unsuccessful in fostering more civic-minded citizens, and the additional years of schooling attributed to these reforms did not contribute to the positive association between educational attainment and civic engagement also observed in the data. |
| Keywords: | Education reforms; Civic engagement; Prosocial behaviour; Political participation; Voting; Charitable giving; Blood donation |
| JEL: | D64 D73 I21 N34 |
| Date: | 2025–01–02 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1515 |
| By: | Igor L. R. Azevedo; Toyotaro Suzumura |
| Abstract: | Stock market forecasting has been a topic of extensive research, aiming to provide investors with optimal stock recommendations for higher returns. In recent years, this field has gained even more attention due to the widespread adoption of deep learning models. While these models have achieved impressive accuracy in predicting stock behavior, tailoring them to specific scenarios has become increasingly important. Election Day represents one such critical scenario, characterized by intensified market volatility, as the winning candidate's policies significantly impact various economic sectors and companies. To address this challenge, we propose the Election Day Stock Market Forecasting (EDSMF) Model. Our approach leverages the contextual capabilities of large language models alongside specialized agents designed to analyze the political and economic consequences of elections. By building on a state-of-the-art architecture, we demonstrate that EDSMF improves the predictive performance of the S&P 500 during this uniquely volatile day. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2412.11192 |
| By: | Clayton, Christopher; Maggiori, Matteo (Stanford University); Schreger, Jesse |
| Abstract: | Great powers are increasingly using their economic and financial strength for geopolitical aims. This rise of "geoeconomics" has the potential to reshape the international trade and financial system. This paper examines the role of domestic political economy forces in determining a government’s ability to project geoeconomic power abroad. We also discuss the role that persuading or coercing foreign governments plays in projecting geoeconomic power around the world. |
| Date: | 2025–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:j8p3m |
| By: | Thomas Epper (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Ernst Fehr (UCPH - University of Copenhagen = Københavns Universitet); Claus Thustrup Kreiner (UCPH - University of Copenhagen = Københavns Universitet); Søren Leth-Petersen (UCPH - University of Copenhagen = Københavns Universitet); Isabel Skak Olufsen (UCPH - University of Copenhagen = Københavns Universitet); Peer Ebbesen Skov (AUT - Auckland University of Technology) |
| Abstract: | Rising inequality has brought redistribution back on the political agenda. In theory, inequality aversion drives people's support for redistribution. People can dislike both advantageous inequality (comparison relative to those worse off) and disadvantageous inequality (comparison relative to those better off). Existing experimental evidence reveals substantial variation across people in these preferences. However, evidence is scarce on the broader role of these two distinct forms of inequality aversion for redistribution in society. We provide evidence by exploiting a unique combination of data. We use an incentivized experiment to measure inequality aversion in a large population sample (≈9, 000 among 20- to 64-y-old Danes). We link the elicited inequality aversion to survey information on individuals' support for public redistribution (policies that reduce income differences) and administrative records revealing their private redistribution (real-life donations to charity). In addition, the link to administrative data enables us to include a large battery of controls in the empirical analysis. Theory predicts that support for public redistribution increases with both types of inequality aversion, while private redistribution should increase with advantageous inequality aversion, but decrease with disadvantageous inequality aversion. A strong dislike for disadvantageous inequality makes people willing to sacrifice own income to reduce the income of people who are better off, thereby reducing the distance to people with more income than themselves. Public redistribution schemes achieve this but private donations to charity do not. Our empirical results provide strong support for these predictions and with quantitatively large effects compared to other predictors. |
| Date: | 2024–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04816620 |