The Perverse Politics of Polarization
57 Pages Posted: 9 Feb 2017
Date Written: January 28, 2017
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: Suggested Citation