Distributive Politics and Economic Ideology

Lopez-Rodriguez, David (2011): Distributive Politics and Economic Ideology.

Abstract

This paper presents a theoretical model to investigate the effect of heterogeneous ideological preferences over the public provision of goods on both the scope of government spending and the electoral competition among political parties. The proposed model points out that the presence of both ideological politicians who compete for of ce and electoral uncertainty generate a partisanship effect on economic policy. In particular, pro-market (right-wing) politicians commit to lower public provision of goods and income taxation schedules that implement larger income inequality than pro-government (left-wing) politicians. The model also predicts that the public funding of godos through income taxation confers an electoral advantage to pro-market ideological positions. In fact, pro-market politicians can court moderate pro-leftist voters by promises of higher net income that pro-government politicians are not willing to fund. As a result, a right-wing party exhibits larger chances of winning elections, and its policy proposal determines lower ideological sacri�ce than for the left-wing party.

• Item Type: MPRA Paper
• Language: English
• Keywords: scope of government; political redistribution of income; economic ideology; electoral advantage
• Subjects: H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior

References

Alesina, Alberto, �Credibility and Policy Convergence in a Two-Party System with Rational Voters,�American Economic Review, 78 (1988), 796-805.

Alesina, Alberto, and George-Marios Angeletos, "Fairness and Redistribution," American Economic Review, 95 (2005), 960-980.

Alesina, Alberto, and Nicola Fuchs-Schündeln, "Good Bye Lenin (or not?). The effect of Communism on people�s preferences," American Economic Review, 97 (2007), 907-928.

Alesina, Alberto, and Edward Glaeser, Fighting Poverty in the US and Europe: A World of Difference (Oxford, UK: Oxford University Press, 2004).

Alesina, Alberto, and Eliana La Ferrara, "Preferences for Redistribution in the Land of Opportunities," Journal of Public Economics, 89 (2005), 897-931.

Austen-Smith, David, and Je¤rey Banks, Positive Political Theory II: Strategy and Structure (Ann Harbor, MI: The University of Michigan Press, 2005).

Banks, Je¤rey, and John Duggan, "Probabilistic Voting in the Spatial Model of Elections: The Theory of Office-Motivated Candidates," in Social Choice and Strategic Decisions: Essays in Honor of Je¤rey S. Banks, David Austen-Smith and John Duggan, eds. (New York, NY: Springer-Verlag, 2006).

Bartels, Larry, Unequal Democracy: The Political Economy of the New Gilded Age (Princeton, NJ: Princeton University Press, 2008).

Bénabou, Roland, "Ideology," Journal of the European Economic Association, 6 (2008), 321�-352.

Bénabou, Roland, and Jean Tirole, "Belief in a Just World and Redistributive Politics," Quarterly Journal of Economics, 121 (2006), 699-746.

Besley, Tim, and Anne Case, "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, 41 (2003), 7-73.

Besley, Tim, and Stephen Coate, "An Economic Model of Representative Democracy," Quarterly Journal of Economics, 112 (1997), 85-114.

Besley, Tim, Torsten Persson, and Daniel Sturm, "Political Competition, Policy and Growth: Theory and Evidence from the United States," Review of Economic Studies, 77 (2010), 1329-1352.

Besley, Tim, and Ian Preston, "Electoral Bias and Policy Choice: Theory and Evidence," Quarterly Journal of Economics, 122 (2007), 1473-1510.

Calvert, Randall, "Robustness of the Multidimensional Voting Model: Candidate Motivations, Uncertainty, and Convergence," American Journal of Political Science, 29 (1985), 69�95.

Currie, Janet, and Firouz Gahvari, "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, 46 (2008), 333-383.

Dixit, Avinash, and John Londregan, �The Determinants of Success of Special Interests in Redistributive Politics,�Journal of Politics, 58 (1996), 1132-1155.

Dixit, Avinash, and John Londregan, �Ideology, Tactics, and E¢ ciency in Redistributive Politics,�Quarterly Journal of Economics, 113 (1998), 497-529.

Ferreira, Fernando, and Joseph Gyourko, "Do Political Parties Matter? Evidence from US Citites," Quarterly Journal of Economics, 124 (2009), 399-422.

Fong, Christina, �Social Preferences, Self-Interest, and the Demand for Redistribution,�Journal of Public Economics, 82 (2001), 225-246.

Glaeser, Edward, Giacomo Ponzetto, and Jesse Shapiro, "Strategic Extremism: Why Republicans and Democrats Divide on Religious Values," Quarterly Journal of Economics, 120 (2005), 1283-1330.

Groseclose, Tim, "A Model of Candidate Location When One Candidate Has a Valence Advantage," American Journal of Political Science, 45 (2001), 862-86.

Huber, John, and Michael Ting, "Redistribution, Pork and Elections," Columbia University Working Paper, 2009.

Iversen, Torben, and David Soskice, �Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More than Others,�American Political Science Review, 100 (2006), 165-182.

Lee, David, Enrico Moretti, and Matthew Butler, "Do Voters A¤ect or Elect Policies? Evidence from the U.S. House," Quarterly Journal of Economics, 119 (2004), 807-859.

Lindbeck, Assar, and Jörgen Weibull, �Balanced-Budget Redistribution as the Outcome of Political Competition,�Public Choice, 52 (1987), 273-297.

Lizzeri, Alessandro, and Nicola Persico, �The Provision of Public Goods Under Alternative Electoral Incentives,�American Economic Review, 91 (2001), 225-239.

Milesi-Ferreti, Gian Maria, Roberto Perotti, and Massimo Rostagno, �Electoral Systems and the Composition of Public Spending,�Quarterly Journal of Economics, 117 (2002), 609-657.

Osborne, Martin, and Al Slivinski, "A Model of Political Competition with Citizen-Candidates," Quarterly Journal of Economics, 111 (1996), 65�96.

Persson, Torsten, and Guido Tabellini, �The Size and Scope of government: Comparative politics with rational politicians,�European Economic Review, 43 (1999), 699-735.

Persson, Torsten, and Guido Tabellini, Political Economics: Explaining Economic Policy (Cambridge, MA: MIT Press, 2000).

Persson, Torsten, and Guido Tabellini, The Economic Effects of Constitutions (Cambridge,MA: MIT Press, 2003).

Piketty, Thomas, "Social Mobility and Redistributive Politics," Quarterly Journal of Economics, 110 (1995), 551-84.

Roemer, John, "Why Don�t the Poor Expropriate the Rich," Journal of Public Economics, 70(1998), 399-424.

Wittman, Donald, �Candidates with policy preferences: A dynamic model,� Journal of Economic Theory, 14 (1977), 180-89.

Wittman, Donald, �Candidate motivation: A synthesis of alternative theories,� American Political Science Review, 77 (1983), 142-57.