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Long-term causes of populism

Author

Listed:
  • Gian Italo Bischi

    (The University of Urbino Carlo Bo)

  • Federico Favaretto

    (Boston College)

  • Edgar J. Sanchez Carrera

    (The University of Urbino Carlo Bo
    Research Fellow at CIMA UAdeC)

Abstract

Why is populism emerging now in Europe? Why is it present in USA and Latin America? What model of political choice may explain these facts? Our paper addresses these questions by building an evolutionary game with two groups of players that decide whether to support a populist party by weighting demand for redistribution and demand for tough policy against immigration. Fundamentally, it is assumed that agents care about immigration the more they fear it and the higher number of other people care about it. Overall, positive shifts in the fear of immigration and increases in inequality drive citizens to converge toward supporting populists. The stability of the equilibria depends on the crucial parameters of the model, namely: fear of immigrants, the effect that the population type (the number of citizens supporting populism) have on individual preferences, economic inequality. Different equilibria represent different cases of populism: South-American left-wing populism and European right-wing populism. We propose that an economic society with a low inequality of wealth and with a low fear of immigrants is needed to avoid populism.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:jeicoo:v:17:y:2022:i:1:d:10.1007_s11403-020-00300-7
    DOI: 10.1007/s11403-020-00300-7
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    1. 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.

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    More about this item

    Keywords

    Behavioral economics; Economic and political behavior; Political party; Populism; Population games; Wealth inequality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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