Jealousy of Trade: Exclusionary Preferences and Economic Nationalism

This paper presents a new framework for understanding economic nationalism based on an empirically-validated desire for dominance, which generates a preference for exclusionary policies. We incorporate such preferences into a model of international trade. The model predicts that exclusionary preferences lead people to favor tariffs and protectionist policies that harm both their trading partner's and their own consumption. This implies that higher prices caused by exclusionary policies like tariffs will be more acceptable than those caused by non-exclusionary policies. We provide support for these predictions through two survey experiments, which also account for the role of cognitive biases and misinformation.