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Can social capital effectively cushion households against adverse income shocks, especially in the absence of formal insurance mechanisms in developing countries? We analyze whether participation in formal and informal community activities (our measure of social capital) helped households in Indonesia mitigating the impact of the 1998 economic crisis. We use the 1997 and 2000 rounds of the Indonesian Family Life Survey (IFLS) to capture the impact of the crisis on household welfare and assess the potency of social capital as a safety net. In contrast to previous studies, our empirical results do not lend support to this hypothesis. Using an IV strategy, we find community participation not to be statistically significant in explaining changes in household expenditure. The large magnitude and universal nature of the shock might explain why social capital did not help households. However, we find some evidence that households who participated in such activities are more likely to have received financial assistance from local authorities without necessarily being the neediest ones.

Despite what the theory predicts, supply of redistributive policies does not always respond to rising inequality. We argue that redistribution reacts to changes in inequality, as long as the economy is not overshadowed by non-economic issues during the elections. To this end we construct a unique data set — where we estimate the race of candidates competing in all elections for U.S. state legislatures since 1980 — and show that the share of racially differentiated electoral contests has a disentangling effect on the inequality–redistribution link: when there are few (many) racially differentiated electoral contests, redistribution is (not) found to be sensitive to changes in inequality.

Do crises make people more prosocial? And what role does communication play in promoting such attitudes and behavior? These answers matter for post-crisis economic recovery as social capital has been linked to growth. We leverage the incidence of Covid-19 --a multifaceted global crisis-- and using a representative panel of US residents, surveyed in April and October 2020, we explore how a) pandemic-induced economic and health anxiety map to prosocial inclinations and behavior, and b) whether communication (and what types) can foster social capital formation. We find that individual exposure to the economic and health consequences of the pandemic had no effect on prosocial inclinations and social capital; but perceived economic vulnerability reduced trust in government and respect for authority and increased preferences for redistribution. Yet information about the aggregate economic consequences of Covid-19 fosters social capital build-up (e.g., altruism, giving, patience) and prosocial preferences. In contrast, information about the health costs of the pandemic has the opposite effect; it greatly reduces interpersonal trust. These information effects also map into policy preferences beyond the Covid-19 crisis. Our findings are consistent with cultural accounts on the determinants of Americans' prosocial inclinations and preferences.

In this paper, we examine the relationship between supranational integration and domestic party-system polarization (extremism). We first construct a theoretical argument that uncovers the key trade-off between the “output legitimacy” of a supranationally integrated party system and the inevitable loss of “input legitimacy” caused by externally imposed policy constraints. This translates into a strategic tradeoff between responsibility and responsiveness at the party level of electoral competition. We hypothesize that while moderate supranational policy constraints can initially speed-up platform convergence, ever-closer political integration may reverse the trend towards higher levels of party-system polarization and party extremism.We apply our framework to the case of EU integration and test our key non-monotonic prediction both at the party-system level of polarization and at the party level of ideological extremism. Finally, we apply to synthetic control method (SCM) for causal inference in comparative case studies to study how political integration and supranational policy constraints have affected their overall level of party-system polarization over time. Our overall empirical analysis strongly corroborates our theoretical argument.

The announcement of Pfizer/BioNTech’s COVID-19 vaccine success on 9 November 2020 led to a global stock market surge. But how did the general public respond to such good news? We report results of a nation-wide natural experiment in the US and the UK on how the vaccine news influenced citizens' government evaluations, anxiety, beliefs and elicited behaviors. While most outcomes were unaffected by the news, trust in government and elected politicians (and their competency) saw a significant decline in both countries. As the news did not concern the government, and the government did not have time to act on the news, our results suggest a dispositional response to positive news more likely to be explained by a form of the psychological mechanism of motivated reasoning. They also offer a novel insight regarding the association between trust in government and compliance with its policies: anxiety might explain both.

Recent studies have found considerable partisan polarization of both reality and policy preferences in the US. Furthermore, this polarization is so entrenched that it is immune to the provision of factual information. Has the COVID-19 pandemic, which affects citizens unequally, reproduced or disrupted these polarization patterns? To answer this question, we conducted a US-wide conjoint survey experiment with embedded information treatments. We focus on citizens’ fiscal adjustment preferences given the (anticipated) lasting fiscal COVID-19 legacy. We find that both reality perceptions regarding the pandemic and policy preferences over post-COVID-19 fiscal adjustment are polarized along familiar partisan lines, but map less well onto traditional socio- economic cleavages. However, we find that the partisan policy polarization largely disappears when citizens are exposed to information on predicted COVID-19 deaths and income losses. This de-polarizing effect is due to synchronous movement by both Democrats and Republicans, which bridges the policy gap between them. Importantly, such information has the additional re-set effect of shifting fiscal adjustment preferences towards a greater reliance on wealth and corporate taxes. We find further evidence that a US-wide consensus over a post-pandemic fiscal policy ’New Deal’ is feasible and potentially lasting.

If growth in automation increasingly challenges the American Dream, will preferences for redistributive policies increase? We inform survey experiment respondents that automation will increase inequality, and luck or decisions made by elites (rather than individual effort) will influence who loses out. We find that beliefs promoted by the American Dream are relatively immutable and preferences for redistributive policies increase only where baseline support is sufficiently high, relatively unpolarized along partisan lines, or where respondents are skeptical of elites. However, leveraging the labor market shock caused by the COVID-19 pandemic to create a state-of-the-art re-centered shift-share IV, we causally identify that shock exposure interacts with our informational treatments to increase perceived economic vulnerability, overriding resistance to redistribution arising from opposition to government intervention in the economy, and heightening preferences for several innovative redistributive policies.

Policy makers responding to COVID-19 need to know people’s relative valuation of health over wealth. Loosening and tightening lockdowns moves a society along a (perceived) health-wealth trade-off and the associated changes have to accord with the public’s relative valuation of health and wealth for maximum compliance. In our survey experiment (N=4,618), we randomize information provision on economic and health costs to assess public preferences over this trade-off in the UK and the US. People strongly prioritize health over wealth, but the treatment effects suggest these priorities will change as experience of COVID-19 deaths and income losses evolves. Information also has heterogeneous/polarizing effects. These results encourage policy caution. Individual differences in health-wealth valuation highlight this study’s importance because they map onto compliance with current lockdown measures.

Voter demand for less redistribution in the face of mass migration maps into actual outcomes insofar as politicians supplying these policies respond to it. We study whether establishing new asylum-seeker centers influences redistributive outcomes in Finnish local elections --a country where municipalities have a significant control over fiscal policies. The sudden and unprecedentedly large inflow of asylum-seekers in the fall 2015 and the resulting establishment of asylum centers allows for a difference-in-differences design. We examine simultaneously supply and demand for redistribution by focusing both on candidates' policy positions and also voters' preferences. On the supply side, we find that, on average, candidates do not respond to the presence of refugees by adopting anti-redistributive positions. Our estimates are precise enough to rule out even fairly small effects. In contrast, on the demand side, there is evidence of various voter responses against redistribution (and in favor of the anti-immigration party), on average suggesting that representative democracy filters the mapping of voter preferences on policy outcomes. But this political disequilibrium comes at the price of a \textit{populist backlash}: we find decreased support for insider elite candidates. We probe the mechanism behind the backlash: in the localities more intensely exposed to refugee migration, we observe also a supply-side response (candidates oppose redistribution) while a demand response is less heterogeneous. In the municipalities where the gap between demand and supply is wider also the backlash is larger.

People frequently choose to reduce own payoffs to help others. This non-selfish behavior is typically assumed to arise because people are motivated by social preferences. An alternative explanation is that they follow social norms. We test which of these two accounts can better explain subjects' decisions in a simple distribution game. Unlike previous studies, we elicit preferences and perceived norms directly for each subject. We find that norm-following explains people's distributive choices better than social preferences, and lack of confidence in one's social preference predicts norm-following. Our finding have implications for the strength of the Pareto criterion in welfare evaluations.

Despite common perception, existing theoretical literature lacks a complete for- mal argument regarding the relationship between the electoral rule disproportionality and platform polarization. In this paper, we build a model that incorporates the disproportionality of the electoral system in a standard Downsian electoral competition setup with mainly, but not necessarily purely, policy-motivated parties. We first show that in equilibrium, platform polarization is decreasing in the level of the electoral rule disproportionality. We then argue that the number of parties has a positive effect on platform polarization when polarization is measured by the distance between the two most distant platforms. This effect does not hold when polarization is measured by the widely used Dalton index. Constructing a dataset covering more than 300 elections, our main theoretical findings are empirically supported, pointing towards the electoral rule disproportionality as a major determinant of polarization.

We study parties' optimal ideological cohesion across electoral rules, when the following trade-off is present: A more heterogenous set of candidates is electorally appealing (catch-all party), yet, it serves policy-related goals less efficiently. When the rule becomes more disproportional, thus inducing a more favorable seat allocation for the winner, the first effect is amplified, incentivizing parties to be less cohesive. We provide empirical support using a unique data-set that records candidates' ideological positions in Finnish municipal elections. Exploiting an exogenous change of electoral rule disproportionality at different population thresholds, we identify the causal effect of electoral rules on parties' cohesion.

In this paper we consider a multi-party electoral competition model in which parties, which care both about implemented policy and their electoral performance, strategically promise a redistribution scheme while their social ideologies are considered to be known and fixed (differentiated parties). Voters, who differ both in income and in social ideologies, vote sincerely for the party that they cumulatively like the most (that is, taking into account both the redistribution scheme proposals and parties’ social ideologies). Formal analysis of this game uncovers a moderates-vs-extremists equilibrium: parties with moderate social ideologies tend to favor generous redistribution in order to capture the votes of the poor majority, while parties with extremist social ideologies are more likely to be non-competitive in the economic dimension by proposing policies that do not reflect the interests of the poor. An implication of this result is that, ceteris paribus, an increase in income inequality should lead to an increase in the cumulative vote share of moderate parties and, hence, in a decrease in party-system fragmentation.

Although Europe has experienced unprecedented numbers of refugee arrivals in recent years, there exists almost no causal evidence regarding the impact of the refugee crisis on natives' attitudes, policy preferences, and political engagement. We exploit a natural experiment in the Aegean Sea, where Greek islands close to the Turkish coast experienced a sudden and massive increase in refugee arrivals while similar islands slightly farther away did not. Leveraging a targeted survey of 2,070 islands residents and distance to Turkey as an instrument, we find that direct exposure to refugee arrivals induces sizeable and lasting increases in natives' hostility toward refugee, immigrant and Muslim minorities; support for restrictive asylum and immigration policies; and political engagement to effect such exclusionary policies. Since refugees only passed through these islands, our findings challenge both standard economic and cultural explanations of anti-immigrant sentiment, and show that mere exposure suffices in generating lasting increases in hostility.

We exploit the act of the conservative Greek government (2004–2009) to fiddle the books as a natural experiment in order to document a causal link between government spending and electoral fragmentation and identify the mechanism via which it operates. The retrospective revision of Greece’s deficit figures just before the 2010 regional elections constituted an information shock, which generated expectations for reduced pork-barrel spending. We decompose the resulting effect and uncover the main mechanism taking place: rent-seeking voting and patronage (client-voters abandoning the dominant parties due to less expected rents). We find that expected spending cuts caused a steep decline (increase) in the electoral support for dominant parties (fragmentation). This effect is significantly more pronounced in patronage-intense regions. Using the size of public sector as a proxy for patronage (Hicken 2011), we find that support for dominant parties declined differentially by 5 percentage points more on those regions. That is, at least one in six voters that abandoned the big parties did so out of purely opportunistic motivations. Overall, our work highlights the importance of institutional constraints in affecting electoral and political power-sharing.

This chapter presents a formal model of electoral competition where parties’ platforms are endogenously chosen and depend on the degree of the electoral rule disproportionality. We first show that proportional electoral systems generate centrifugal forces that increase candidate differentiation. This in turn implies that more proportional systems are associated with lower levels of abstention from indifference. This two-step theoretical prediction of the effect of electoral systems on turnout is then empirically validated even when we jointly control for the prevailing pivotality and party-system size hypotheses. Thus, our work highlights an additional link in the proportionality-turnout nexus.

In the period after the break of the Great Recession a series of drastic changes in the political systems of many affected countries occurred: the predominant role of systemic parties in forming political outcomes was challenged and many previously non-systemic voices gained significant political power. A simplistic reading of this fact suggests that economic insecurity constitutes a general threat to political stability. In this paper we focus on the years before the Great Recession (1960-2007) and -- after addressing possible issues of endogeneity -- we present evidence from 22 OECD countries that contradicts this conclusion: when the economy is not in turmoil, there is a strong positive relationship between unemployment -- the major macroeconomic determinant of economic insecurity -- and electoral support for systemic parties. That is, democratic politics respond to increasing economic insecurity by enhancing the prospects of political stability and, consequently, economic prosperity and growth (Alesina et al. 1996).

We present a formal model of electoral competition where parties' platforms are endogenously chosen and depend on the degree of the electoral rule disproportionality. We first show that proportional electoral systems generate centrifugal forces that increase candidate differentiation. This in turn implies that more proportional systems are associated with lower levels of abstention from indifference. This two step theoretical prediction of the effect of electoral systems on turnout is then empirically validated even when we jointly control for the prevailing pivotality and party-system size hypotheses. Thus, our work highlights an additional link in the proportionality-turnout nexus.