Economics and Ideology: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Ballot Proposals
NBER Working Paper No. 14091
Using California ballot proposition returns and exogenous shifts to labor demand, we provide the first large-scale causal evidence of the impact of economic conditions on policy preferences. Consistent with economic theory, we find that positive economic shocks decrease support for redistributive policies. More notably, we find evidence of a need for cognitive consistency in voting behavior as economic shocks have a smaller significant impact on voting on non-economic ballot issues. While we also demonstrate that positive shocks decrease turnout, we present evidence that our results reflect changes to the electorate’s preferences and not simply to its composition.