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

Abstract

Can participation in financial markets lead individuals to re-evaluate 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 seven weeks. No political messages or non-financial information were included. The treatment systematically shifted vote choices towards 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 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.

Keywords: Financial Markets, Conflict, Peace, Political Economy

JEL Classification: C93, D72, D74, N2, O12