The Perverse Politics of Polarization

57 Pages Posted: 9 Feb 2017

See all articles by S. Nageeb Ali

S. Nageeb Ali

Pennsylvania State University

Maximilian Mihm

New York University (NYU) - Abu Dhabi

Lucas Siga

New York University (NYU) - Abu Dhabi

Date Written: January 28, 2017

Abstract

Many policies, such as trade and immigration, bear important consequences for both the size and distribution of surplus. Oftentimes, people are asked to vote on these policies despite not being all that well-informed about the consequences. This paper studies the extent to which an electorate can aggregate information when voters anticipate that some may benefit from a policy reform at a cost borne by others. We show that information aggregation may fail: with high probability, the outcome chosen when voters are privately informed departs from the outcome when all information is public. We identify a form of "negative correlation" -- where voters treat good news for others as bad news for themselves -- that is necessary and sufficient for this informational failure. Commitments to post-policy redistribution can mitigate this inefficiency, and lead voters to select better policies. We characterize features of economic environments that may foster or preclude negative correlation. Our results offer an understanding of how information can amplify electoral status quo bias, or generate popular support for ill-advised reforms that are ex post regretted and subsequently reversed.

Keywords: distributive politics, information aggregation, polarization

JEL Classification: D7

Suggested Citation

Ali, Syed and Mihm, Maximilian and Siga, Lucas, The Perverse Politics of Polarization (January 28, 2017). Available at SSRN: https://ssrn.com/abstract=2907489 or http://dx.doi.org/10.2139/ssrn.2907489

Syed Ali (Contact Author)

Pennsylvania State University ( email )

University Park, State College, PA 16801
United States

Maximilian Mihm

New York University (NYU) - Abu Dhabi ( email )

Abu Dhabi
United Arab Emirates

Lucas Siga

New York University (NYU) - Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

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