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Aggregation Reversals and the Social Formation of Beliefs

  • Edward L. Glaeser
  • Bruce Sacerdote

In the past two elections, richer people were more likely to vote Republican while richer states were more likely to vote Democratic. This switch is an aggregation reversal, where an individual relationship, like income and Republicanism, is reversed at some level of aggregation. Aggregation reversals can occur when an independent variable impacts an outcome both directly and indirectly through a correlation with beliefs. For example, income increases the desire for low taxes but decreases belief in Republican social causes. If beliefs are learned socially, then aggregation can magnify the connection between the independent variable and beliefs, which can cause an aggregation reversal. We estimate the model's parameters for three examples of aggregation reversals, and show with these parameters that the model predicts the observed reversals.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13031.

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Date of creation: Apr 2007
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Handle: RePEc:nbr:nberwo:13031
Note: PE POL
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  8. Kevin Murphy & Andrei Shleifer, 2004. "Persuasion in Politics," NBER Working Papers 10248, National Bureau of Economic Research, Inc.
  9. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2007. "The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 209-241, 02.
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  11. Jose A. Scheinkman & Wei Xiong, 2003. "Overconfidence and Speculative Bubbles," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1183-1219, December.
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