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Valuing Peace: The Effects of Financial Market Exposure on Votes and Political Attitudes

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  • Saumitra Jha
  • Moses Shayo

Abstract

Can participation in financial markets lead individuals to reevaluate the costs of conflict, change their political attitudes, and even their votes? Prior to the 2015 Israeli elections, we randomly assigned Palestinian and Israeli financial assets to likely voters and incentivized them to actively trade for up to 7 weeks. No political messages or nonfinancial information were included. The treatment systematically shifted vote choices toward parties more supportive of the peace process. This effect is not due to a direct material incentive to vote a particular way. Rather, the treatment reduces opposition to concessions for peace and changes awareness of the broader economic risks of conflict. While participants who were assigned Palestinian assets are more likely to associate their assets' performance with peace, they are less engaged in the experiment. Combined with the superior performance of Israeli stocks during the study period, the ultimate effects of Israeli and Palestinian assets are similar.

Suggested Citation

  • Saumitra Jha & Moses Shayo, 2019. "Valuing Peace: The Effects of Financial Market Exposure on Votes and Political Attitudes," Econometrica, Econometric Society, vol. 87(5), pages 1561-1588, September.
    • Handle: RePEc:wly:emetrp:v:87:y:2019:i:5:p:1561-1588
    DOI: 10.3982/ECTA16385
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    Cited by:

    1. Jeanne Hagenbach & Rachel Kranton, 2023. "Competition, Cooperation, and Motivated Social Perceptions," SciencePo Working papers Main hal-03792554, HAL.
    2. Ghazala Azmat & Katja Maria Kaufmann, 2021. "Formation of College Plans: Expected Returns, Preferences and Adjustment Process," SciencePo Working papers Main hal-03812823, HAL.
    3. Basco, Sergi & Domènech, Jordi & Maravall, Laura, 2023. "Land reform and rural conflict. Evidence from 1930s Spain," Explorations in Economic History, Elsevier, vol. 89(C).
    4. López, Fernando & Rosas, Guillermo, 2022. "COVID-19 and attitudes towards early withdrawal of pension funds: The role of trust and political ideology," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    5. Fabbri, Marco & Bigoni, Maria, 2021. "How Property Shapes Distributional Preferences," IZA Discussion Papers 14768, Institute of Labor Economics (IZA).
    6. Timothy Besley & Thiemo Fetzer & Hannes Mueller, 2023. "How Big Is the Media Multiplier? Evidence from Dyadic News Data," CESifo Working Paper Series 10619, CESifo.
    7. Pushkar Maitra & Ananta Neelim, 2024. "Discrimination in Developing Countries," Monash Economics Working Papers 2024-03, Monash University, Department of Economics.
    8. Maiti, Surya Nath & Pakrashi, Debayan & Saha, Sarani & Smyth, Russell, 2022. "Don't judge a book by its cover: The role of intergroup contact in reducing prejudice in conflict settings," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 533-548.
    9. Besley, Timothy & Fetzer, Thiemo & Mueller, Hannes, 2019. "Terror and Tourism: The Economic Consequences of Media Coverage," CAGE Online Working Paper Series 449, Competitive Advantage in the Global Economy (CAGE).
    10. Roberto A. Weber & Sili Zhang, 2023. "What Money Can Buy: How Market Exchange Promotes Values," CESifo Working Paper Series 10809, CESifo.
    11. Leonardo Bursztyn & Michael Callen & Bruno Ferman & Saad Gulzar & Ali Hasanain & Noam Yuchtman, 2020. "Political Identity: Experimental Evidence on Anti-Americanism in Pakistan [Economics And Identity]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2532-2560.
    12. Arthur Blouin & Julian Dyer, 2021. "How Cultures Converge: An Empirical Investigation of Trade and Linguistic Exchange," Working Papers tecipa-691, University of Toronto, Department of Economics.
    13. Jeanne Hagenbach & Rachel Kranton, 2023. "Competition, Cooperation, and Motivated Social Perceptions," Working Papers hal-03792554, HAL.
    14. Hoff,Karla & Jalan,Jyotsna & Santra,Sattwik, 2021. "Participatory Theater Empowers Women : Evidence from India," Policy Research Working Paper Series 9680, The World Bank.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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