Rational Ignorance, Populism, and Reform

54 Pages Posted: 16 Mar 2013 Last revised: 14 Dec 2017

See all articles by Carlo Prato

Carlo Prato

Columbia University - Department of Political Science

Stephane Wolton

London School of Economics & Political Science (LSE) - Department of Government

Date Written: December 13, 2017

Abstract

This paper studies how voters' demand for economic reforms affects the probability that successful or populist reforms are adopted. We study a model of electoral competition with rationally ignorant voters in which the success of a reform is tied to a politician's unobservable competence. We show that when voters' demand for reform is high, candidates engage in a form of populism and propose reformist agendas regardless of their ability to successfully carry them out. As voters are then faced with either risky reformers or policy inaction, the relationship between demand for reform and the probability that any (i.e., genuine or populist) policy change is implemented depends on how harmful botched reforms are. Our results help organize the mixed empirical evidence regarding the impact of crises on the likelihood of reform. They also suggest that the rise of populism may cause political disenchantment rather than the other way round.

Keywords: Crises, Populism, Rational Inattention

JEL Classification: D72, D78, D83

Suggested Citation

Prato, Carlo and Wolton, Stephane, Rational Ignorance, Populism, and Reform (December 13, 2017). Available at SSRN: https://ssrn.com/abstract=2285852 or http://dx.doi.org/10.2139/ssrn.2234194

Carlo Prato

Columbia University - Department of Political Science ( email )

7th Floor, International Affairs Bldg.
420 W. 118th Street
New York, NY 10027
United States

Stephane Wolton (Contact Author)

London School of Economics & Political Science (LSE) - Department of Government ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
157
rank
177,517
Abstract Views
2,156
PlumX Metrics