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

76 Pages Posted: 16 Jan 2016 Last revised: 25 May 2018

Saumitra Jha

Stanford Graduate School of Business

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics

Date Written: May 25, 2018

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 increases awareness of the broader economic risks of conflict. While participants assigned Palestinian assets are more likely to associate their assets' performance to 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

Suggested Citation

Jha, Saumitra and Shayo, Moses, Valuing Peace: The Effects of Financial Market Exposure on Votes and Political Attitudes (May 25, 2018). Stanford University Graduate School of Business Research Paper No. 3389. Available at SSRN: https://ssrn.com/abstract=2716660 or http://dx.doi.org/10.2139/ssrn.2716660

Saumitra Jha (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, IL Jerusalem 91905
Israel

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