IDEAS home Printed from https://ideas.repec.org/a/eee/jcecon/v46y2018i4p988-1005.html
   My bibliography  Save this article

Populism and the return of the “Paranoid Style”: Some evidence and a simple model of demand for incompetence as insurance against elite betrayal

Author

Listed:
  • Tella, Rafael Di
  • Rotemberg, Julio J.

Abstract

We present a simple model of populism as the rejection of “disloyal” leaders. We show that adding the assumption that people are worse off when they experience low income as a result of leader betrayal (than when it is the result of bad luck) to a simple voter choice model yields a preference for incompetent leaders even if all leaders have the same underlying probability of betrayal. These deliver worse material outcomes in general, but they reduce the feelings of betrayal during bad times. Some evidence consistent with our model is gathered from the Trump–Clinton 2016 election: on average, subjects primed with the importance of competence in policymaking decrease their support for Trump, the candidate who scores lower on competence in our survey (even amongst Trump supporters). But two groups respond to the treatment with a large (approximately 5 percentage points) increase in their support for Donald Trump: those living in rural areas and those that are low educated, white and living in urban and suburban areas.

Suggested Citation

  • Tella, Rafael Di & Rotemberg, Julio J., 2018. "Populism and the return of the “Paranoid Style”: Some evidence and a simple model of demand for incompetence as insurance against elite betrayal," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 988-1005.
    • Handle: RePEc:eee:jcecon:v:46:y:2018:i:4:p:988-1005
    DOI: 10.1016/j.jce.2018.03.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0147596718300374
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jce.2018.03.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism in Latin America," NBER Books, National Bureau of Economic Research, Inc, number dorn91-1, March.
    2. John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 399-425, September.
    3. Besley, Timothy & Reynal-Querol, Marta, 2011. "Do Democracies Select More Educated Leaders?," American Political Science Review, Cambridge University Press, vol. 105(3), pages 552-566, August.
    4. Koehler, Jonathan J. & Gershoff, Andrew D., 2003. "Betrayal aversion: When agents of protection become agents of harm," Organizational Behavior and Human Decision Processes, Elsevier, vol. 90(2), pages 244-261, March.
    5. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    6. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 85-114.
    7. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
    8. Ernesto Dal Bó & Pedro Dal Bó & Jason Snyder, 2009. "Political Dynasties," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 115-142.
    9. McCormick, John P., 2001. "Machiavellian Democracy: Controlling Elites with Ferocious Populism," American Political Science Review, Cambridge University Press, vol. 95(2), pages 297-313, June.
    10. Ilyana Kuziemko & Michael I. Norton & Emmanuel Saez & Stefanie Stantcheva, 2015. "How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments," American Economic Review, American Economic Association, vol. 105(4), pages 1478-1508, April.
    11. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
    12. Jeff Butler & Paola Giuliano & Luigi Guiso, 2016. "Trust and Cheating," Economic Journal, Royal Economic Society, vol. 126(595), pages 1703-1738, September.
    13. Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180.
    14. Daron Acemoglu & James A. Robinson & Ragnar Torvik, 2013. "Why Do Voters Dismantle Checks and Balances?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(3), pages 845-875.
    15. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    16. Ragnar Torvik & Daron Acemoglu & James A. Robinson, 2013. "Why Do Voters Dismantle Checks and Balances? Extensions and Robustness," Working Paper Series 14013, Department of Economics, Norwegian University of Science and Technology.
    17. Iris Bohnet & Fiona Greig & Benedikt Herrmann & Richard Zeckhauser, 2008. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States," American Economic Review, American Economic Association, vol. 98(1), pages 294-310, March.
    18. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
      • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    19. Oliver Hart & John Moore, 2008. "Contracts as Reference Points," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 1-48.
    20. Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 771-805.
    21. Iris Bohnet & Benedikt Herrmann & Richard Zeckhauser, 2010. "Trust and the Reference Points for Trustworthiness in Gulf and Western Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 811-828.
    22. Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount Of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180, October.
    23. Galasso, Vincenzo & Nannicini, Tommaso, 2011. "Competing on Good Politicians," American Political Science Review, Cambridge University Press, vol. 105(1), pages 79-99, February.
    24. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1015-1049.
    25. Michael Kosfeld & Markus Heinrichs & Paul J. Zak & Urs Fischbacher & Ernst Fehr, 2005. "Oxytocin increases trust in humans," Nature, Nature, vol. 435(7042), pages 673-676, June.
    26. Weinzierl, Matthew, 2014. "The promise of positive optimal taxation: normative diversity and a role for equal sacrifice," Journal of Public Economics, Elsevier, vol. 118(C), pages 128-142.
    27. Rotemberg, Julio J., 2008. "Minimally acceptable altruism and the ultimatum game," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 457-476, June.
    28. Ziblatt, Daniel, 2009. "Shaping Democratic Practice and the Causes of Electoral Fraud: The Case of Nineteenth-Century Germany," American Political Science Review, Cambridge University Press, vol. 103(1), pages 1-21, February.
    29. Fehr, Ernst & Fischbacher, Urs & Kosfeld, Michael, 2005. "Neuroeconomic Foundations of Trust and Social Preferences," IZA Discussion Papers 1641, Institute of Labor Economics (IZA).
    30. Rafael Di Tella & Robert MacCulloch, 2009. "Why Doesn't Capitalism Flow to Poor Countries?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 285-332.
    31. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    32. repec:hal:spmain:info:hdl:2441/4km7l02j139aj8hl7kcccmqk9s is not listed on IDEAS
    33. Emmanuel Saez & Stefanie Stantcheva, 2016. "Generalized Social Marginal Welfare Weights for Optimal Tax Theory," American Economic Review, American Economic Association, vol. 106(1), pages 24-45, January.
    34. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    35. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
    36. Barnett,William A. & Schofield,Norman & Hinich,Melvin (ed.), 1993. "Political Economy: Institutions, Competition and Representation," Cambridge Books, Cambridge University Press, number 9780521428316.
    37. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 7-13, National Bureau of Economic Research, Inc.
    38. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    39. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
    40. Eliana La Ferrara & Robert H. Bates, 2001. "Political Competition in Weak States," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 159-184, July.
    41. Ernst Fehr & Urs Fischbacher & Michael Kosfeld, 2005. "Neuroeconomic Foundations of Trust and Social Preferences: Initial Evidence," American Economic Review, American Economic Association, vol. 95(2), pages 346-351, May.
    42. Jeffrey D. Sachs, 1989. "Social Conflict and Populist Policies in Latin America," NBER Working Papers 2897, National Bureau of Economic Research, Inc.
    43. Ernst Fehr & Oliver Hart & Christian Zehnder, 2011. "Contracts as Reference Points--Experimental Evidence," American Economic Review, American Economic Association, vol. 101(2), pages 493-525, April.
    44. Jacoby, William G., 2014. "Is There a Culture War? Conflicting Value Structures in American Public Opinion," American Political Science Review, Cambridge University Press, vol. 108(4), pages 754-771, November.
    45. Ernst Fehr & Oliver Hart & Christian Zehnder, 2008. "Contracts as reference points � experimental evidence," IEW - Working Papers 393, Institute for Empirical Research in Economics - University of Zurich.
    46. Gary E. Bolton & Axel Ockenfels, 2010. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States: Comment," American Economic Review, American Economic Association, vol. 100(1), pages 628-633, March.
    47. Julio J. Rotemberg, 2014. "Models of Caring, or Acting as if One Cared, About the Welfare of Others," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 129-154, August.
    48. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer;Economic Science Association, vol. 9(3), pages 193-208, September.
    49. Rudiger Dornbusch & Sebastian Edwards, 1991. "Introduction to "The Macroeconomics of Populism in Latin America"," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 1-4, National Bureau of Economic Research, Inc.
    50. Berinsky, Adam J. & Huber, Gregory A. & Lenz, Gabriel S., 2012. "Evaluating Online Labor Markets for Experimental Research: Amazon.com's Mechanical Turk," Political Analysis, Cambridge University Press, vol. 20(3), pages 351-368, July.
    51. Eckel, Catherine C. & Wilson, Rick K., 2004. "Is trust a risky decision?," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 447-465, December.
    52. Barnett,William A. & Schofield,Norman & Hinich,Melvin (ed.), 1993. "Political Economy: Institutions, Competition and Representation," Cambridge Books, Cambridge University Press, number 9780521417815.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Razin, Ronny & Levy, Gilat & Young, Alwyn, 2022. "Misspecified politics and the recurrence of populism," LSE Research Online Documents on Economics 112544, London School of Economics and Political Science, LSE Library.
    2. Gavresi, Despina & Litina, Anastasia, 2023. "Past exposure to macroeconomic shocks and populist attitudes in Europe," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 989-1010.
    3. Gian Italo Bischi & Federico Favaretto & Edgar J. Sanchez Carrera, 2022. "Long-term causes of populism," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(1), pages 349-377, January.
    4. Federico Favaretto & Donato Masciandaro, 2022. "Populism, financial crises and banking policies: Economics and psychology," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(4), pages 441-464, September.
    5. Benoit Crutzen & Dana Sisak & Otto Swank, 2020. "Left Behind Voters, Anti-Elitism and Popular Will," Tinbergen Institute Discussion Papers 20-055/VII, Tinbergen Institute.
    6. Tito Boeri & Prachi Mishra & Chris Papageorgiou & Antonio Spilimbergo, 2021. "Populism and Civil Society," Economica, London School of Economics and Political Science, vol. 88(352), pages 863-895, October.
    7. Massimo Morelli & Antonio Nicolò & Paolo Roberti, 2021. "A Commitment Theory of Populism," CESifo Working Paper Series 9473, CESifo.
    8. Marcus Noland, 2020. "Protectionism under Trump: The China Shock, Deplorables, and the First White President," Asian Economic Policy Review, Japan Center for Economic Research, vol. 15(1), pages 31-50, January.
    9. Carlo Altomonte & Gloria Gennaro & Francesco Passarelli, 2019. "Collective Emotions And Protest Vote," BAFFI CAREFIN Working Papers 19107, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    10. Paul Vertier, 2018. "The democratic challenges of electoral representation and populism : an empirical approach [Les défis démocratiques de la représentation électorale et du populisme : une approche empirique]," SciencePo Working papers Main tel-03419534, HAL.
    11. Eugenio Levi & Isabelle Sin & Steven Stillman, 2021. "Understanding the Origins of Populist Political Parties and the Role of External Shocks," CESifo Working Paper Series 9036, CESifo.
    12. Morelli, Massimo & Gennaro, Gloria & Lecce, Giampaolo, 2021. "Mobilization and the Strategy of Populism Theory and Evidence from the United States," CEPR Discussion Papers 15686, C.E.P.R. Discussion Papers.
    13. Arnstein Aassve & Gianmarco Daniele & Marco Le Moglie, 2018. "Never Forget the First Time: The Persistent Effects of Corruption and the Rise of Populism in Italy," BAFFI CAREFIN Working Papers 1896, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    14. Mizuno, Nobuhiro & Okazawa, Ryosuke, 2018. "Why do voters elect less qualified candidates?," MPRA Paper 89215, University Library of Munich, Germany.
    15. Foerster, Manuel & Voss, Achim, 2022. "Believe me, I am ignorant, but not biased," European Economic Review, Elsevier, vol. 149(C).
    16. Nowakowski, Adam, 2021. "Do unhappy citizens vote for populism?," European Journal of Political Economy, Elsevier, vol. 68(C).
    17. Peter Buisseret & Richard Van Weelden, 2020. "Crashing the Party? Elites, Outsiders, and Elections," American Journal of Political Science, John Wiley & Sons, vol. 64(2), pages 356-370, April.
    18. Chen, Shuai, 2020. "Unemployment, Immigration, and Populism: Evidence from Two Quasi-Natural Experiments in the United States," GLO Discussion Paper Series 652, Global Labor Organization (GLO).
    19. Chen, Shuai, 2023. "Unemployment, Immigration, and Populism," IZA Discussion Papers 16642, Institute of Labor Economics (IZA).
    20. Chen, Shuai, 2019. "Marriage, minorities, and mass movements," Other publications TiSEM 9cb1b11d-12e6-46a8-adca-4, Tilburg University, School of Economics and Management.
    21. Despina Gavresi & Andreas Irmen & Anastasia Litina, 2023. "Population Aging and the Rise of Populist Attitudes in Europe," DEM Discussion Paper Series 23-10, Department of Economics at the University of Luxembourg.
    22. repec:hal:spmain:info:hdl:2441/7omfps2eu39dnavoo1o6arafcr is not listed on IDEAS
    23. Jeffrey, Karen, 2021. "Automation and the future of work: How rhetoric shapes the response in policy preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 417-433.
    24. Estache, Antonio & Foucart, Renaud, 2018. "The scope and limits of accounting and judicial courts intervention in inefficient public procurement," Journal of Public Economics, Elsevier, vol. 157(C), pages 95-106.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rafael Di Tella & Juan Dubra, 2016. "Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation," Documentos de Trabajo/Working Papers 1607, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    2. Jason Aimone & Daniel Houser, 2012. "What you don’t know won’t hurt you: a laboratory analysis of betrayal aversion," Experimental Economics, Springer;Economic Science Association, vol. 15(4), pages 571-588, December.
    3. Schwerter, Frederik & Zimmermann, Florian, 2020. "Determinants of trust: The role of personal experiences," Games and Economic Behavior, Elsevier, vol. 122(C), pages 413-425.
    4. Rafael Di Tella & Robert MacCulloch, 2009. "Why Doesn't Capitalism Flow to Poor Countries?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 285-332.
    5. Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 771-805.
    6. Aimone, Jason A. & Houser, Daniel, 2013. "Harnessing the benefits of betrayal aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 1-8.
    7. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," Research Memorandum 005, Maastricht University, Graduate School of Business and Economics (GSBE).
    8. Rahul Mehrotra & Vincent Somville & Lore vandewalle, 2016. "Increasing trust in the bank to enhance savings: Experimental evidence from India," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
    9. Chesterley, Nicholas & Roberti, Paolo, 2018. "Populism and institutional capture," European Journal of Political Economy, Elsevier, vol. 53(C), pages 1-12.
    10. Ernst Fehr, 2009. "On The Economics and Biology of Trust," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 235-266, 04-05.
    11. Gavoille, Nicolas, 2018. "Who are the ‘ghost’ MPs? Evidence from the French parliament," European Journal of Political Economy, Elsevier, vol. 53(C), pages 134-148.
    12. Houser, Daniel & Schunk, Daniel & Winter, Joachim, 2010. "Distinguishing trust from risk: An anatomy of the investment game," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 72-81, May.
    13. Wahl, Fabian, 2012. "Why it matters what people think: Beliefs, legal origins and the deep roots of trust," FZID Discussion Papers 52-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    14. Glaeser, Edward & Scheinkman, Jose & Shleifer, Andrei, 2003. "The injustice of inequality," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 199-222, January.
    15. Algan, Yann & Cahuc, Pierre, 2014. "Trust, Growth, and Well-Being: New Evidence and Policy Implications," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 2, pages 49-120, Elsevier.
    16. Jason A Aimone & Daniel Houser, 2011. "Beneficial Betrayal Aversion," PLOS ONE, Public Library of Science, vol. 6(3), pages 1-5, March.
    17. Hong, Kessely & Bohnet, Iris, 2007. "Status and distrust: The relevance of inequality and betrayal aversion," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 197-213, April.
    18. Özalp Özer & Yanchong Zheng & Yufei Ren, 2014. "Trust, Trustworthiness, and Information Sharing in Supply Chains Bridging China and the United States," Management Science, INFORMS, vol. 60(10), pages 2435-2460, October.
    19. Chetty, Rinelle & Hofmeyr, Andre & Kincaid, Harold & Monroe, Brian, 2021. "The Trust Game Does Not (Only) Measure Trust: The Risk-Trust Confound Revisited," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    20. Chassang, Sylvain & Zehnder, Christian, 2016. "Rewards and punishments: informal contracting through social preferences," Theoretical Economics, Econometric Society, vol. 11(3), September.

    More about this item

    Keywords

    Corruption; Betrayal; Populism; Incompetence;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:46:y:2018:i:4:p:988-1005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622864 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.