Citizens or Clients? Evidence on Opportunistic Voting from a Natural Experiment in Greece

Abstract

Electoral fragmentation is found to have a positive effect on government spending (Persson et al. 2007). We use data from Greek elections and exploit, as a natural experiment, the underreporting of Greece’s past fiscal record in order to document a reverse causal link and identify the effect of government spending on electoral fragmentation. The retrospective revision of Greece’s deficit figures before the elections constituted an information shock which generated expectations for reduced government spending. We find that expected spending cuts caused a steep decline in the electoral support for dominant parties (a record increase in fragmentation). We decompose this decline into two components and uncover the mechanisms taking place: protest voting and rent-seeking voting (client-voters abandoning the dominant parties due to less expected rents). We document that the latter effect dominates in patronage-intense regions, using the share of public sector employment as a proxy (Robinson and Verdier 2013), and we find that support for dominant parties declined by 5% more on those regions. That is, only one out of seven voters that abandoned the big parties did so out of purely opportunistic motivations, challenging the conventional wisdom of the Greek citizen-client.

Keywords: Greek elections, electoral fragmentation, government spending, machine parties, natural experiment, rent-seeking voters, clientelism, protest voting, trust.

JEL Classification: C23, D72, H50, H62