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Misspecified Politics and the Recurrence of Populism

Author

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  • Gilat Levy
  • Ronny Razin
  • Alwyn Young

Abstract

We develop a dynamic model of political competition between two groups that differ in their subjective model of the data generating process for a common outcome. One group has a simpler model than the other group as they ignore some relevant policy variables. We show that policy cycles must arise and that simple world views—which can be interpreted as populist world views—imply extreme policy choices. Periods in which those with a more complex model govern increase the specification error of the simpler world view, leading the latter to overestimate the positive impact of a few extreme policy actions.

Suggested Citation

  • Gilat Levy & Ronny Razin & Alwyn Young, 2022. "Misspecified Politics and the Recurrence of Populism," American Economic Review, American Economic Association, vol. 112(3), pages 928-962, March.
    • Handle: RePEc:aea:aecrev:v:112:y:2022:i:3:p:928-62
    DOI: 10.1257/aer.20210154
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    Citations

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    Cited by:

    1. Kfir Eliaz & Ran Spiegler, 2024. "News Media as Suppliers of Narratives (and Information)," Papers 2403.09155, arXiv.org.
    2. Tito Boeri & Matteo Gamalerio & Massimo Morelli & Margherita Negri, 2024. "Pay-as-they-get-in: attitudes toward migrants and pension systems," Journal of Economic Geography, Oxford University Press, vol. 24(1), pages 63-78.
    3. Chauvin, Juan Pablo & Tricaud, Clemence, 2022. "Gender and Electoral Incentives: Evidence from Crisis Response," IDB Publications (Working Papers) 12411, Inter-American Development Bank.
    4. J. Aislinn Bohren & Daniel N. Hauser, 2023. "Behavioral Foundations of Model Misspecification," PIER Working Paper Archive 23-007, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    5. Lockwood, Ben & Le, Minh & Rockey, James, 2024. "Dynamic electoral competition with voter loss-aversion and imperfect recall," Journal of Public Economics, Elsevier, vol. 232(C).
    6. Emmanuelle Auriol & Nicolas Bonneton & Mattias Polborn, 2023. "Shaking Up the System: When Populism Disciplines Elite Politicians," CRC TR 224 Discussion Paper Series crctr224_2023_473, University of Bonn and University of Mannheim, Germany.
    7. Strobl, Martin & Sáenz de Viteri, Andrea & Rode, Martin & Bjørnskov, Christian, 2023. "Populism and inequality: Does reality match the populist rhetoric?," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 1-17.
    8. Le Yaouanq, Yves, 2023. "A model of voting with motivated beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 394-408.
    9. Stefanadis, Christodoulos, 2023. "Oligarchy, underutilized capacity, and government policy," European Economic Review, Elsevier, vol. 160(C).
    10. Kfir Eliaz & Simone Galperti & Ran Spiegler, 2022. "False Narratives and Political Mobilization," Papers 2206.12621, arXiv.org.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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