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The Political Economy of Ideas: On Ideas Versus Interests in Policymaking

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  • Sharun Mukand
  • Dani Rodrik

Abstract

We develop a conceptual framework to highlight the role of ideas as a catalyst for policy and institutional change. We make an explicit distinction between ideas and vested interests and show how they feed into each other. In doing so the paper integrates the Keynes-Hayek perspective on the importance of ideas with the currently more fashionable Stigler-Becker (interests only) approach to political economy. We distinguish between two kinds of ideational politics – the battle among different worldviews on the efficacy of policy (worldview politics) versus the politics of victimhood, pride and identity (identity politics). Political entrepreneurs discover identity and policy ‘memes’ (narratives, cues, framing) that shift beliefs about how the world works or a person’s belief of who he is (i.e. identity). Our framework identifies a complementarity between worldview politics and identity politics and illustrates how they may reinforce each other. In particular, an increase in identity polarization may be associated with a shift in views about how the world works. Furthermore, an increase in income inequality is likely to result in a greater incidence of ideational politics. Finally, we show how ideas may not just constrain, but also ‘bite’ the interests that helped propagate them in the first instance.

Suggested Citation

  • Sharun Mukand & Dani Rodrik, 2018. "The Political Economy of Ideas: On Ideas Versus Interests in Policymaking," NBER Working Papers 24467, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24467
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    1. Arthur Blouin & Sharun W. Mukand, 2019. "Erasing Ethnicity? Propaganda, Nation Building, and Identity in Rwanda," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1008-1062.
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    1. Arthur Blouin & Sharun W. Mukand, 2019. "Erasing Ethnicity? Propaganda, Nation Building, and Identity in Rwanda," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1008-1062.
    2. Di Tella, Rafael & Rodrik, Dani, 2019. "Labour Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys," CEPR Discussion Papers 14175, C.E.P.R. Discussion Papers.
    3. Rafael Di Tella & Dani Rodrik, 2019. "Labor Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys," NBER Working Papers 25705, National Bureau of Economic Research, Inc.
    4. Carsten Hefeker & Michael Neugart, 2019. "Policy Coordination Under Model Disagreement and Uncertainty," Open Economies Review, Springer, vol. 30(4), pages 719-737, September.
    5. Vyacheslav V. Volchik & Maxim A. Koryttsev & Elena V. Maslyukova, 2019. "Institutions and ideology of managerialism in higher education and science," Upravlenets, Ural State University of Economics, vol. 10(6), pages 15-27, December.
    6. Rodríguez Chatruc, Marisol & Stein, Ernesto & Vlaicu, Razvan, 2021. "How issue framing shapes trade attitudes: Evidence from a multi-country survey experiment," Journal of International Economics, Elsevier, vol. 129(C).

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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