IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/88317.html
   My bibliography  Save this paper

Voters sometimes provide the wrong incentives. The lesson of the Brazilian drought industry

Author

Listed:
  • Cavalcanti, Francisco

Abstract

Citizen assessment of government performance is a cornerstone of the successful functioning of democracy. However, accountability is a double-edged sword. When voters misunderstand the stakes and provide the wrong incentives to elected officials, political accountability leads to an implementation of suboptimal welfare policies. This paper reveals that an electorate can demand clientelism. I find evidence that after a drought, voters increase the vote share of local incumbent parties that are politically aligned with the central government to ensure the inflow of partisan government aid relief. Such behavior reinforces the central government’s incentives to bias policies in favor of politically aligned municipalities to influence elections. Consequently, the circle of distortion of aid relief allocation is perpetuated. The data cover the Brazilian democratic elections from 1998 to 2012. I use fixed effects models with panel data and a regression discontinuity design with heterogeneous treatment effects. The results resemble a long-run patronage equilibrium.

Suggested Citation

  • Cavalcanti, Francisco, 2018. "Voters sometimes provide the wrong incentives. The lesson of the Brazilian drought industry," MPRA Paper 88317, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88317
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/88317/1/MPRA_paper_88317.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rocha, Rudi & Soares, Rodrigo R., 2015. "Water scarcity and birth outcomes in the Brazilian semiarid," Journal of Development Economics, Elsevier, vol. 112(C), pages 72-91.
    2. David Strömberg, 2007. "Natural Disasters, Economic Development, and Humanitarian Aid," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 199-222, Summer.
    3. Healy, Andrew & Malhotra, Neil, 2009. "Myopic Voters and Natural Disaster Policy," American Political Science Review, Cambridge University Press, vol. 103(3), pages 387-406, August.
    4. Solé-Ollé, Albert & Sorribas-Navarro, Pilar, 2008. "The effects of partisan alignment on the allocation of intergovernmental transfers. Differences-in-differences estimates for Spain," Journal of Public Economics, Elsevier, vol. 92(12), pages 2302-2319, December.
    5. Allen Hicken & Joel W. Simmons, 2008. "The Personal Vote and the Efficacy of Education Spending," American Journal of Political Science, John Wiley & Sons, vol. 52(1), pages 109-124, January.
    6. Sebastian Calonico & Matias D. Cattaneo & Rocio Titiunik, 2014. "Robust Nonparametric Confidence Intervals for Regression‐Discontinuity Designs," Econometrica, Econometric Society, vol. 82, pages 2295-2326, November.
    7. Gustavo J. Bobonis & Paul J. Gertler & Marco Gonzalez-Navarro & Simeon Nichter, 2022. "Vulnerability and Clientelism," American Economic Review, American Economic Association, vol. 112(11), pages 3627-3659, November.
    8. Manuel Bagues & Berta Esteve-Volart, 2016. "Politicians’ Luck of the Draw: Evidence from the Spanish Christmas Lottery," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1269-1294.
    9. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    10. Drazen, Allan & Eslava, Marcela, 2010. "Electoral manipulation via voter-friendly spending: Theory and evidence," Journal of Development Economics, Elsevier, vol. 92(1), pages 39-52, May.
    11. Fuchs, Alan & Rodriguez-Chamussy, Lourdes, 2014. "Voter response to natural disaster aid : quasi-experimental evidence from drought relief payments in Mexico," Policy Research Working Paper Series 6836, The World Bank.
    12. John T. Gasper & Andrew Reeves, 2011. "Make It Rain? Retrospection and the Attentive Electorate in the Context of Natural Disasters," American Journal of Political Science, John Wiley & Sons, vol. 55(2), pages 340-355, April.
    13. Markus Brückner & Antonio Ciccone, 2011. "Rain and the Democratic Window of Opportunity," Econometrica, Econometric Society, vol. 79(3), pages 923-947, May.
    14. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    15. Siwan Anderson & Patrick Francois & Ashok Kotwal, 2015. "Clientelism in Indian Villages," American Economic Review, American Economic Association, vol. 105(6), pages 1780-1816, June.
    16. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    17. Eiji Yamamura, 2014. "Impact of natural disaster on public sector corruption," Public Choice, Springer, vol. 161(3), pages 385-405, December.
    18. Thomas A. Garrett & Russell S. Sobel, 2003. "The Political Economy of FEMA Disaster Payments," Economic Inquiry, Western Economic Association International, vol. 41(3), pages 496-509, July.
    19. Ahlerup, Pelle, 2013. "Natural Disasters and Government Turnover," Working Papers in Economics 554, University of Gothenburg, Department of Economics.
    20. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(3), pages 933-959.
    21. Torsten Persson & Gérard Roland & Guido Tabellini, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1163-1202.
    22. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    23. Sascha O. Becker & Peter H. Egger & Maximilian von Ehrlich, 2013. "Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 29-77, November.
    24. Monica Martinez-Bravo, 2014. "The Role of Local Officials in New Democracies: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 104(4), pages 1244-1287, April.
    25. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    26. Abney, F. Glenn & Hill, Larry B., 1966. "Natural Disasters as a Political Variable: The Effect of a Hurricane on an Urban Election," American Political Science Review, Cambridge University Press, vol. 60(4), pages 974-981, December.
    27. Cole, Shawn & Healy, Andrew & Werker, Eric, 2012. "Do voters demand responsive governments? Evidence from Indian disaster relief," Journal of Development Economics, Elsevier, vol. 97(2), pages 167-181.
    28. Healy, Andrew & Malhotra, Neil, 2010. "Random Events, Economic Losses, and Retrospective Voting: Implications for Democratic Competence," Quarterly Journal of Political Science, now publishers, vol. 5(2), pages 193-208, August.
    29. Quiroz Flores, Alejandro & Smith, Alastair, 2013. "Leader Survival and Natural Disasters," British Journal of Political Science, Cambridge University Press, vol. 43(4), pages 821-843, October.
    30. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    31. James D. Hamilton, 2017. "Why You Should Never Use the Hodrick-Prescott Filter," NBER Working Papers 23429, National Bureau of Economic Research, Inc.
    32. Dilip Mookherjee & Pranab K. Bardhan, 2012. "Political Clientelism and Capture: Theory and Evidence from West Bengal, India," WIDER Working Paper Series wp-2012-097, World Institute for Development Economic Research (UNU-WIDER).
    33. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314, December.
    34. Charles Cohen & Eric D. Werker, 2008. "The Political Economy of ``Natural'' Disasters," Journal of Conflict Resolution, Peace Science Society (International), vol. 52(6), pages 795-819, December.
    35. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    36. Brollo, Fernanda & Nannicini, Tommaso, 2012. "Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil," American Political Science Review, Cambridge University Press, vol. 106(4), pages 742-761, November.
    37. Heersink, Boris & Peterson, Brenton D. & Jenkins, Jeffery A., 2017. "Disasters and Elections: Estimating the Net Effect of Damage and Relief in Historical Perspective," Political Analysis, Cambridge University Press, vol. 25(2), pages 260-268, April.
    38. Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
    39. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    40. Neumayer, Eric & Plümper, Thomas & Barthel, Fabian, 2014. "The political economy of natural disaster damage," LSE Research Online Documents on Economics 50699, London School of Economics and Political Science, LSE Library.
    41. Stephen Coate & Michael Conlin, 2004. "A Group Rule–Utilitarian Approach to Voter Turnout: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(5), pages 1476-1504, December.
    42. Barnhart, John D., 1925. "Rainfall and the Populist Party in Nebraska," American Political Science Review, Cambridge University Press, vol. 19(3), pages 527-540, August.
    43. Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
    Full references (including those not matched with items on IDEAS)

    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. Jeroen Klomp, 2020. "Election or Disaster Support?," Journal of Development Studies, Taylor & Francis Journals, vol. 56(1), pages 205-220, January.
    2. Roberto Ramos & Carlos Sanz, 2018. "Backing the incumbent in difficult times: the electoral impact of wildfires," Working Papers 1810, Banco de España.
    3. Savu, A., 2021. "Reverse Political Coattails under a Technocratic Government: New Evidence on the National Electoral Benefits of Local Party Incumbency," Cambridge Working Papers in Economics 2121, Faculty of Economics, University of Cambridge.
    4. Stephan Schneider & Sven Kunze, 2021. "Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism," KOF Working papers 21-491, KOF Swiss Economic Institute, ETH Zurich.
    5. Bracco, Emanuele & Lockwood, Ben & Porcelli, Francesco & Redoano, Michela, 2015. "Intergovernmental grants as signals and the alignment effect: Theory and evidence," Journal of Public Economics, Elsevier, vol. 123(C), pages 78-91.
    6. Nick Obradovich, 2017. "Climate change may speed democratic turnover," Climatic Change, Springer, vol. 140(2), pages 135-147, January.
    7. Casaburi, Lorenzo & Caprettini, Bruno & Venturini, Miriam, 2021. "Redistribution, Voting and Clientelism: Evidence from the Italian Land Reform," CEPR Discussion Papers 15679, C.E.P.R. Discussion Papers.
    8. Thushyanthan Baskaran & Sonia Bhalotra & Brian Min & Yogesh Uppal, 2018. "Women legislators and economic performance," WIDER Working Paper Series wp-2018-47, World Institute for Development Economic Research (UNU-WIDER).
    9. Leopoldo Fergusson & Pablo Querubin & Nelson A. Ruiz & Juan F. Vargas, 2021. "The Real Winner's Curse," American Journal of Political Science, John Wiley & Sons, vol. 65(1), pages 52-68, January.
    10. Muraközy, Balázs & Telegdy, Álmos, 2016. "Political incentives and state subsidy allocation: Evidence from Hungarian municipalities," European Economic Review, Elsevier, vol. 89(C), pages 324-344.
    11. Rahman, Muhammad Habibur & Anbarci, Nejat & Ulubaşoğlu, Mehmet A., 2022. "“Storm autocracies”: Islands as natural experiments," Journal of Development Economics, Elsevier, vol. 159(C).
    12. Neugart, Michael & Rode, Johannes, 2021. "Voting after a major flood: Is there a link between democratic experience and retrospective voting?," European Economic Review, Elsevier, vol. 133(C).
    13. Marta Curto-Grau (Universitat de Barcelona) & Albert Sole-Olle (Universitat de Barcelona) & Pilar Sorribas-Navarro(Universitat de Barcelona), 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers in Economics 288, Universitat de Barcelona. Espai de Recerca en Economia.
    14. Maffioli, Elisa M., 2021. "The political economy of health epidemics: Evidence from the Ebola outbreak," Journal of Development Economics, Elsevier, vol. 151(C).
    15. Kantorowicz, Jarosław & Köppl–Turyna, Monika, 2019. "Disentangling the fiscal effects of local constitutions," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 63-87.
    16. Lara E., Bernardo & Toro M., Sergio, 2019. "Tactical distribution in local funding: The value of an aligned mayor," European Journal of Political Economy, Elsevier, vol. 56(C), pages 74-89.
    17. Muhammad Habibur Rahman & Nejat Anbarci & Prasad Sankar Bhattacharya & Mehmet Ali Ulubaşoğlu, 2017. "The Shocking Origins of Political Transitions: Evidence from Earthquakes," Southern Economic Journal, John Wiley & Sons, vol. 83(3), pages 796-823, January.
    18. Ahlerup, Pelle, 2013. "Natural Disasters and Government Turnover," Working Papers in Economics 554, University of Gothenburg, Department of Economics.
    19. Klomp, Jeroen, 2017. "Flooded with debt," Journal of International Money and Finance, Elsevier, vol. 73(PA), pages 93-103.
    20. Makarin, Alexey & Piqué, Ricardo & Aragón, Fernando, 2020. "National or sub-national parties: Does party geographic scope matter?," Journal of Development Economics, Elsevier, vol. 146(C).

    More about this item

    Keywords

    clientelism; voter; alignment; drought.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • N56 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Latin America; Caribbean
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:88317. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.