Voter Preferences, Electoral Promises, and the Composition of Public Spending

61 Pages Posted: 10 Jun 2020

See all articles by Philip Keefer

Philip Keefer

Inter-American Development Bank

Carlos Scartascini

Research Department - Inter-American Development Bank (IDB)

Razvan Vlaicu

Inter-American Development Bank; University of Maryland

Date Written: April 16, 2020

Abstract

This paper proposes and empirically tests a new demand-side explanation for distortions in public spending composition. Voters prefer spending with certain and immediate benefits when they have low trust in electoral promises and high discount rates. The paper incorporates these characteristics of voter choices into a probabilistic voting model with public spending tradeoffs. In equilibrium, candidates promising larger allocations to transfers and short-term public goods are more likely to win elections in settings with low trust and high impatience. An original survey of individual-level preferences for public spending in seven Latin American capital cities provides observational and experimental evidence consistent with the model-derived hypotheses. Respondents reporting low trust in politician promises are more likely to prefer transfers to public goods; respondents with high discount rates prefer short-term to long-term spending. These patterns also appear in country-level data on spending outcomes from the last two decades.

Keywords: spending composition, voter preferences, trust, discounting, transfers, public goods, public investment

JEL Classification: D72, H20, H50, O10

Suggested Citation

Keefer, Philip and Scartascini, Carlos G. and Vlaicu, Razvan, Voter Preferences, Electoral Promises, and the Composition of Public Spending (April 16, 2020). Available at SSRN: https://ssrn.com/abstract=3581006 or http://dx.doi.org/10.2139/ssrn.3581006

Philip Keefer

Inter-American Development Bank ( email )

1300 New York Ave., NW
Washington, DC 20577
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Carlos G. Scartascini

Research Department - Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
2026231963 (Phone)

HOME PAGE: http://www.cscartascini.org

Razvan Vlaicu (Contact Author)

Inter-American Development Bank ( email )

1300 New York Ave NW
Washington, DC 20577
United States

University of Maryland ( email )

3114 Tydings Hall
College Park, MD 20742
United States

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