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on Positive Political Economics |
| By: | Aaron Günther; Niklas Potrafke; Felix Rösel; Timo Wochner |
| Abstract: | What are the consequences of losing political representation in a democracy? A reform of Germany’s mixed electoral system left more than 7 million citizens in 23 constituencies without a directly elected representative after the 2025 national election. Which and how many constituencies were affected was unpredictable and quasi-random. We show that losing political representation reduces citizens’ satisfaction with democracy. Moreover, discontent is independent of party preferences and spreads through social networks, reducing democratic satisfaction even among individuals who were unaware of the reform’s outcome. Political representation is a cornerstone of democracy; its erosion may give rise to democratic backsliding. |
| Keywords: | political representation, democracy, social networks |
| JEL: | D02 D72 P11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12051 |
| By: | Steven T. Berry (Yale University); Christian Cox (University of Arizona); Philip A. Haile (Yale University) |
| Abstract: | We study voting in general elections for the U.S. House of Representatives. Our data set includes demographics and turnout of all registered voters for the years 2016Ð2020, as well as vote shares at the precinct and contest level. We estimate a Downsian voting model incorporating rich observed and unobserved heterogeneity at the voter and contest level. We find that voters with high perceived voting costs tend to favor Democrats, as do marginal voters in most districts. Variation in state voting policies accounts for a modest share of overall estimated voting costs but is sufficient to determine the majority party in some years. We also find that many statesÕ district maps favor one party in converting votes to seats. On net these biases favor Republicans. For example, we estimate that winning 50% of votes in every state would give Republicans a 9 percentage point seat advantage in the House. |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2453 |
| By: | Sourav Das (University of Kassel); Patrick Hufschmidt (Technical University of Dortmund); Fabian Mankat (University of Kassel); Konstantinos Theocharopoulos (University of Siegen) |
| Abstract: | This paper examines Political Budget Cycles in federal systems, focusing on how a central incumbent allocates discretionary transfers across states in response to electoral incentives. We develop a theoretical model predicting that average discretionary transfers increase during federal election periods. While swing states consistently receive higher discretionary transfers due to their electoral competitiveness, the election-period increase is larger for non-swing states. Using a panel dataset of Indian states from 2006 to 2022, we find evidence consistent with the theoretical model: discretionary transfers are significantly higher in federal election periods, swing states receive more discretionary transfers in non-election periods, and the election-period increase in discretionary transfers is more pronounced for non-swing states. |
| Keywords: | Political budget cycles, Swing states, Federal systems, Elections, India |
| JEL: | D83 E62 H70 H72 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202518 |
| By: | Klaus Gründler; Niklas Potrafke; Timo Wochner |
| Abstract: | Many democracies allow their legislators to engage in private employment, but the consequences for parliamentary priorities are still poorly understood. We collect large-scale longitudinal data on outside employment and biographic characteristics for all members of the 18th German Bundestag, and link this information to all spoken words and voting behavior in parliament. We present novel evidence that outside employment is associated with parliamentary priorities. Legislators address topics of sectors from which they receive private income more often, are more positive about these sectors, and take a generally more pro-industry stance in legislation. Our results have important implications regarding the independence of legislators. |
| Keywords: | MPs’ outside earnings, payment of politicians, lobbying |
| JEL: | D72 H11 K40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12016 |
| By: | Andres Rodriguez-Pose; Zhuoying You; Peter Teirlinck |
| Abstract: | This This paper explores the relationship between support for extreme political parties and research and innovation across regions in the European Union (EU). Extreme parties often exhibit deep scepticism towards expertise and science, with extreme right-wing parties, in particular, challenging the legitimacy of climate change; an attitude that may weaken green research and innovation. We draw on data from 1, 137 EU regions —including scientific publication and patent records— and apply Tobit regression models to find that stronger support for extreme parties is associated with lower levels of scientific research and technological innovation, both overall and in their green forms. While this pattern is visible across the political spectrum, important differences emerge. Support for extreme right-wing parties is consistently tied to reduced research output and innovation performance, particularly in green technological sectors. By contrast, the relationship with extreme left-wing support is more variable, depending on the degree of radicalism, and shows no consistent negative connection with green innovation. |
| Keywords: | research, innovation, climate change, extreme parties, regions, Europe |
| JEL: | D72 D74 O32 O33 R10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2525 |
| By: | John S. Becko; Gene M. Grossman; Elhanan Helpman |
| Abstract: | As geopolitical tensions intensify, great powers often turn to trade policy to influence international alignment. We examine the optimal design of tariffs in a world where large countries care not only about economic welfare but also about the political allegiance of smaller states. We consider both a unipolar setting, where a single hegemon uses preferential trade agreements to attract partners, and a bipolar world, where two great powers compete for influence. In both scenarios, we derive optimal tariffs that balance terms-of-trade considerations with strategic incentives to encourage political alignment. We find that when geopolitical concerns are active, the optimal tariff exceeds the classic Mill-Bickerdike level. In a bipolar world, optimal tariffs reflect both economic and political rivalry, and may be strategic complements or substitutes. A calibration exercise using U.N. voting patterns, an estimate of the cost of buying votes in the U.N., and military spending suggests that geopolitical motives can significantly amplify protectionist pressures and that the emergence of a second great power can contribute to a retreat from globalization. |
| JEL: | F13 F52 F53 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34108 |
| By: | Daniel Engler (University of Kassel, Institute of Economics); Marvin Gleue (University of Kassel, Institute of Economics); Gunnar Gutsche (Paderborn University, Faculty of Business Administration and Economics); Gerrit Hornung (University of Kassel, Institute of Business Law); Sophia Möller (University of Kassel, Institute of Economics); Sabrina Schomberg (University of Kassel, Institute of Business Law); Andreas Ziegler (University of Kassel, Institute of Economics) |
| Abstract: | Inspired by the controversial public and political debate in the European Union (EU) about legal initiatives to protect human rights and the environment along supply chains (e.g., the Corporate Sustainability Due Diligence Directive, CSDDD), this paper examines individual preferences for different designs of supply chain laws that are stricter than the current national legislation. Our econometric analysis is based on data from a representative online survey of 507 citizens in Germany that especially included a stated choice experiment. Our estimation results show that individuals in Germany, on average, have a significantly positive preference for stricter supply chain laws compared to the existing national Supply Chain Act. In addition, the majority of the respondents expect positive sustainability impacts of supply chain laws, while there is ambiguity in the perceptions of whether the economic consequences are predominantly negative. With respect to political attitudes, our results show that citizens with a social or ecological political identification have significantly stronger preferences for stricter supply chain laws. However, in contrast to the strong opposition of conservative and liberal parties in Germany to stricter supply chain legislation, individuals with a liberal or conservative political identification do not have significantly different preferences for stricter supply chain laws than their counterparts. Our results therefore suggest that the political blockade of supply chain laws does not correspond to the views of the majority of the population in Germany. |
| Keywords: | Supply chain laws, individual preferences, stated choice experiment |
| JEL: | K23 K32 K38 Q56 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202509 |
| By: | Andres Rodriguez-Pose; Lewis Dijkstra; Chiara Dorat |
| Abstract: | Over the past two decades, support for Eurosceptic parties has climbed from fringe to nearly one-third of voters. Promising renewed prosperity through less European integration, these partiesimplyEuroscepticismisa‘freelunch.’Drawingonanoriginalpanelof1, 166European NUTS-3 regions (2004-2023) and using fixed-, random-eNects, and diNerence-in-diNerences designs, we test how rising Euroscepticism connects with regional economic and demographic outcomes. We track GDP per capita, productivity, employment, and population growth. We find that a region 10 points more Eurosceptic than another could have ended up with GDP per capita roughly 5% lower than the less Eurosceptic region, as the negative economic influence of Euroscepticism compounds across cycles and intensified after the financial and austerity crises. The same applies for productivity and employment. Demographic impacts are smaller but point in the same direction. Even without governing, Eurosceptic support appears to deter investment and raise uncertainty, deepening the very stagnation that fuels discontent. There is no free lunch: political backlash against European integration carries a measurable costs for the regions that embrace it. |
| Keywords: | Euroscepticism; Economic development; Population growth; European integration; Political discontent; Regions; EU |
| JEL: | F15 D72 R11 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2526 |
| By: | Catherine Boone |
| Abstract: | Levels of interpersonal income inequality in African countries are much higher than they were long assumed to be. The literature on politics in sub-Saharan Africa says little about the redistributive pressures arising from this, other than to argue that class politics is rarely observed in African countries and that clientelism prevails, short-circuiting the political mobilization of economic grievance. |
| Keywords: | Africa, Inequality, Redistribution, Spatial inequality |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-51 |
| By: | Be'ery, Gilad; Epstein, Dmitry (The Hebrew University of Jerusalem); Sulitzeanu-Kenan, Raanan (The Hebrew University) |
| Abstract: | What do tech workers stand for? As the power of tech workers grows, both as people responsible for information infrastructures and as a political force, it is critical to understand their policy preferences and attitudes. We use the European Social Survey and International Social Survey Programme data to analyze tech workers’ attitudes in cultural and economic policy domains, as well as their trust in the establishment. Beyond offering an empirical description of this domain, we expand existing primarily US-focused research and offer a comparative perspective. Our findings show that while the cultural liberalism of US tech workers tends to replicate in samples outside the US, the economic preferences and anti-establishment sentiments do not. In addition, developers stand out as having more extreme preferences, compared to non-developers working in tech and to other professional elites. These results challenge assumptions about tech workers’ homogeneity and highlight the role of the demographic composition of the industry. We conclude by discussing potential implications for theory and policy. |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:ghqp8_v1 |
| By: | Michael Keinprecht (Department of Economics, WU Vienna University of Economics and Business) |
| Abstract: | The growing inequalities around the world are becoming increasingly alarming making redistribution more relevant than ever. One reason why people may oppose redistribution is third party loss aversion. In a pre-registered online experiment with a within-subjects design, I show that redistribution decisions by third parties are affected by loss aversion. Overall, spectators are 7%-points less likely to redistribute from a status quo to an alternative if the alternative entails a loss for one person, even if inequality aversion, maximin preferences and efficiency concerns favor the alternative. This effect is stronger the higher the loss is compared to the gain and the higher the individual loss aversion of the spectator. The key contribution of the paper is to disentangle third party loss aversion from pure status quo bias, rank reversal aversion and other distributional preferences in multiple loss scenarios and to link it to individual loss aversion. |
| Keywords: | Third party loss aversion, loss aversion, redistribution, spectators, fairness |
| JEL: | D91 D63 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp382 |
| By: | Sandra Walzenbach; Thomas Hinz |
| Abstract: | In today’s digital media landscape, individuals must judge the credibility of competing information from an unprecedented range of sources, including established news organizations, political actors, unverified online voices and self-declared experts. Building on a theoretical discussion of how the internet and social media – with its algorithmic curation, its omnipresent misinformation and strategic disinformation – have altered media consumption, this study examines the challenges individuals face in evaluating the credibility of media content. Informed by dual-process theory and the concept of motivated reasoning, we explore the roles of both belief-consistency and established quality cues (namely source expertise and data references) in shaping credibility judgments. We use the Covid-19 pandemic in Germany as a case study of polarization, contrasting an inconspicuous majority with a vocal minority represented by the “Querdenker” protest movement. Heavily relying on social media, this movement mobilized a heterogeneous base of supporters united by deep-rooted mistrust of politics, science, and mainstream media. To investigate these dynamics, we conducted a factorial survey experiment in which a general population sample evaluated the credibility of Covid-19–related media content. The results provide strong evidence of confirmation bias, no detectable effect of quality cues, and remarkably similar evaluation strategies across both groups. |
| Keywords: | public opinion, media perception, polarization, Covid-19, confirmation bias, factorial survey experiment |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:324165 |
| By: | Daniele Giachini; Leonardo Ciambezi; Verdiana Del Rosso; Fabrizio Fornari; Valentina Pansanella; Lilit Popoyan; Alina S\^irbu |
| Abstract: | While lobbying has been demonstrated to have an important effect on public opinion and policy making, existing models of opinion formation do not specifically include its effect. In this work we introduce a new model of opinion dynamics where lobbyists can implement complex strategies and are characterised by a finite budget. Individuals update their opinions through a learning process resembling Bayesian learning, but influenced by cognitive biases such as under-reaction and confirmation bias. We study the model numerically and demonstrate rich dynamics both with and without lobbyists. In the presence of lobbying, we observe two regimes: one in which lobbyists can have full influence on the agent network, and another where the peer-effect generates polarisation. When symmetric lobbyists are present, the lobbyist influence regime is characterised by long opinion oscillations, while in the transition area between the two regimes we observe convergence to the optimistic model when the lobbying influence is long enough. These rich dynamics pave the way for studying real lobbying strategies to validate the model in practice. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.13767 |