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Misspecified Politics and the Recurrence of Populism

Author

Listed:
  • 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. Morelli, Massimo & Boeri, Tito & Gamalerio, Matteo & Negri, Margherita, 2023. "Pay-as-they-get-in: Attitudes towards Migrants and Pension Systems," CEPR Discussion Papers 17991, C.E.P.R. Discussion Papers.
    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. Boeri, Tito Michele & Gamalerio, Matteo & Morelli, Massimo & Negri, Margherita, 2023. "Pay-as-they-get-in: attitudes towards migrants and pension systems," LSE Research Online Documents on Economics 121343, London School of Economics and Political Science, LSE Library.
    6. 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.
    7. Le Yaouanq, Yves, 2023. "A model of voting with motivated beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 394-408.
    8. 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.
    9. 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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