How does the source of politically-relevant economic information affect voter beliefs and ultimat... more How does the source of politically-relevant economic information affect voter beliefs and ultimately political preferences? This paper randomly varies whether voters receive an aggregate unemployment projection from the central bank, government or opposition party using a survey experiment in Denmark with unique access to detailed panel and administrative data. All sources induce voters to update their unemployment expectations. While all voters regard the Danish Central Bank as the most credible source, only sophisticated voters update more after receiving information from a party with political incentives to state otherwise. However, belief updating is no greater when the source is aligned with the voter’s previously expressed political preferences. After decreasing unemployment expectations, we find clear evidence of intended economic voting, without voters changing their policy preferences: the average respondent is 3.5 percentage points more likely to vote for the government. Such economic voting is driven by politically sophisticated rather than swing voters.
While social pressure is widely believed to influence voters, evidence that information passed be... more While social pressure is widely believed to influence voters, evidence that information passed between social ties affects beliefs, policy preferences, and voting behavior is limited. We investigate whether information about unemployment shocks diffuses through networks of strong and mostly weak social ties and influences voters in Denmark. We link surveys with population-level administrative data that log unemployment shocks afflicting respondents’ familial, vocational, and educational networks. Our results show that the share of second-degree social ties—individuals that voters learn about indirectly—that became unemployed within the last year increases a voter’s perception of national unemployment, self-assessed risk of becoming unemployed, support for unemployment insurance, and voting for left-wing political parties. Voters’ beliefs about national aggregates respond to all shocks similarly, whereas subjective perceptions and preferences respond primarily to unemployment shocks afflicting second-degree ties in similar vocations. This suggests that information diffusion through social ties principally affects political preferences via egotropic—rather than sociotropic—motives.
International policy cooperation with asymmetric information about country actions is subject to ... more International policy cooperation with asymmetric information about country actions is subject to the risk of moral hazard among member states. In the case of fiscal policy in an economic union, moral hazard can take the form of fiscal gimmickry or creative accounting. This paper examines empirically the incentives for such fiscal gimmickry in the European Monetary Union. Using stock-flow adjustment data for EU countries from 1990-2007, we show that a strong commitment to a deficit limit creates incentives for fiscal gimmicks, as does political pressure from the electoral cycle and economic pressure from negative business cycle shocks. However, where domestic institutional transparency is higher, these incentives are muted and opportunistic behavior largely disappears. We infer that domestic pressures can undermine fiscal policy coordination in economic unions when institutional transparency is low. Acknowledgements: We thank Alberto Alesina, Roel Beetsma, Tom Cusack, Achim Goerres, ...
Individuals’ political preferences are the result of a combination of selfinterest and beliefs ab... more Individuals’ political preferences are the result of a combination of selfinterest and beliefs about how the world works. While it is broadly accepted that expectations about social mobility in the long-run can aect political preferences today, much less is known about how voters update their preferences when reality does notmatch expectations. e goal of this paper is to understand the dynamics of political preferences over redistribution as new information about individual voters’ economic circumstances and experiences arrives in the form of unanticipated shocks to two key determinants of individual welfare: employment and income. We elicit and validate subjective probabilistic expectations over future employment and incomes in the short term and construct measures of anticipated and unanticipated shocks comparing expectations with realized outcomes, measured from third party reports, in a large panel. Our main result, based on xed eects specications allowing for interpersonal ...
Binary, count, and duration data all code for discrete events occurring at points in time. Althou... more Binary, count, and duration data all code for discrete events occurring at points in time. Although a single data generation process can produce any of these three data types, the statistical literature is not very helpful in providing methods to estimate parameters of the same process from each. In fact, only a single theoretical process exists for which known statistical methods can estimate the same parameters --- and it is generally limited to count and duration data. The result is that seemingly trivial decisions about which level of data to use can have important consequences for substantive interpretations. We describe the theoretical event process for which results exist, based on time-independence. We also derive a new set of models for a time-dependent process and compare their predictions to those of a commonly used model. Any hope of avoiding the more serious problems of aggregation bias in events data is contingent on first deriving a much wider arsenal of statistical m...
Previous research into endogenous trade policy has described extensively the political incentives... more Previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets, but no studies have shown directly that firms behave as predicted. We adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms. In particular, we examine the lobbying choices of Norwegian firms in the 1980s. Given available subsidy funds from Norway's oil boom and some government decisions in the 1970s, firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves. Joint contacting of Parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets. Data analysis shows that asset specifi...
The editors wish to thank the following reviewers for their evaluations during 2000. ... Emanuel ... more The editors wish to thank the following reviewers for their evaluations during 2000. ... Emanuel Adler, Hebrew University Hayward Alker, University of Southern California Juliann Allison, University of California James Alt, Harvard University Karen Alter, Harvard University Kristi Andersen, Syracuse University Charles Anderton, College of the Holy Cross Peter Andreas, Harvard University Badredine Arfi, University of Illinois at Urbana–Champaign William Avery, University of Nebraska–Lincoln Robert Ayson, Massey University, New Zealand Laurie Bagby, Kansas State University ...
How does the source of politically-relevant economic information affect voter beliefs and ultimat... more How does the source of politically-relevant economic information affect voter beliefs and ultimately political preferences? This paper randomly varies whether voters receive an aggregate unemployment projection from the central bank, government or opposition party using a survey experiment in Denmark with unique access to detailed panel and administrative data. All sources induce voters to update their unemployment expectations. While all voters regard the Danish Central Bank as the most credible source, only sophisticated voters update more after receiving information from a party with political incentives to state otherwise. However, belief updating is no greater when the source is aligned with the voter’s previously expressed political preferences. After decreasing unemployment expectations, we find clear evidence of intended economic voting, without voters changing their policy preferences: the average respondent is 3.5 percentage points more likely to vote for the government. Such economic voting is driven by politically sophisticated rather than swing voters.
While social pressure is widely believed to influence voters, evidence that information passed be... more While social pressure is widely believed to influence voters, evidence that information passed between social ties affects beliefs, policy preferences, and voting behavior is limited. We investigate whether information about unemployment shocks diffuses through networks of strong and mostly weak social ties and influences voters in Denmark. We link surveys with population-level administrative data that log unemployment shocks afflicting respondents’ familial, vocational, and educational networks. Our results show that the share of second-degree social ties—individuals that voters learn about indirectly—that became unemployed within the last year increases a voter’s perception of national unemployment, self-assessed risk of becoming unemployed, support for unemployment insurance, and voting for left-wing political parties. Voters’ beliefs about national aggregates respond to all shocks similarly, whereas subjective perceptions and preferences respond primarily to unemployment shocks afflicting second-degree ties in similar vocations. This suggests that information diffusion through social ties principally affects political preferences via egotropic—rather than sociotropic—motives.
International policy cooperation with asymmetric information about country actions is subject to ... more International policy cooperation with asymmetric information about country actions is subject to the risk of moral hazard among member states. In the case of fiscal policy in an economic union, moral hazard can take the form of fiscal gimmickry or creative accounting. This paper examines empirically the incentives for such fiscal gimmickry in the European Monetary Union. Using stock-flow adjustment data for EU countries from 1990-2007, we show that a strong commitment to a deficit limit creates incentives for fiscal gimmicks, as does political pressure from the electoral cycle and economic pressure from negative business cycle shocks. However, where domestic institutional transparency is higher, these incentives are muted and opportunistic behavior largely disappears. We infer that domestic pressures can undermine fiscal policy coordination in economic unions when institutional transparency is low. Acknowledgements: We thank Alberto Alesina, Roel Beetsma, Tom Cusack, Achim Goerres, ...
Individuals’ political preferences are the result of a combination of selfinterest and beliefs ab... more Individuals’ political preferences are the result of a combination of selfinterest and beliefs about how the world works. While it is broadly accepted that expectations about social mobility in the long-run can aect political preferences today, much less is known about how voters update their preferences when reality does notmatch expectations. e goal of this paper is to understand the dynamics of political preferences over redistribution as new information about individual voters’ economic circumstances and experiences arrives in the form of unanticipated shocks to two key determinants of individual welfare: employment and income. We elicit and validate subjective probabilistic expectations over future employment and incomes in the short term and construct measures of anticipated and unanticipated shocks comparing expectations with realized outcomes, measured from third party reports, in a large panel. Our main result, based on xed eects specications allowing for interpersonal ...
Binary, count, and duration data all code for discrete events occurring at points in time. Althou... more Binary, count, and duration data all code for discrete events occurring at points in time. Although a single data generation process can produce any of these three data types, the statistical literature is not very helpful in providing methods to estimate parameters of the same process from each. In fact, only a single theoretical process exists for which known statistical methods can estimate the same parameters --- and it is generally limited to count and duration data. The result is that seemingly trivial decisions about which level of data to use can have important consequences for substantive interpretations. We describe the theoretical event process for which results exist, based on time-independence. We also derive a new set of models for a time-dependent process and compare their predictions to those of a commonly used model. Any hope of avoiding the more serious problems of aggregation bias in events data is contingent on first deriving a much wider arsenal of statistical m...
Previous research into endogenous trade policy has described extensively the political incentives... more Previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets, but no studies have shown directly that firms behave as predicted. We adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms. In particular, we examine the lobbying choices of Norwegian firms in the 1980s. Given available subsidy funds from Norway's oil boom and some government decisions in the 1970s, firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves. Joint contacting of Parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets. Data analysis shows that asset specifi...
The editors wish to thank the following reviewers for their evaluations during 2000. ... Emanuel ... more The editors wish to thank the following reviewers for their evaluations during 2000. ... Emanuel Adler, Hebrew University Hayward Alker, University of Southern California Juliann Allison, University of California James Alt, Harvard University Karen Alter, Harvard University Kristi Andersen, Syracuse University Charles Anderton, College of the Holy Cross Peter Andreas, Harvard University Badredine Arfi, University of Illinois at Urbana–Champaign William Avery, University of Nebraska–Lincoln Robert Ayson, Massey University, New Zealand Laurie Bagby, Kansas State University ...
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