The Impact of Corona Populism: Empirical Evidence from Austria and Theory

Abstract

I study the impact of opposition politics aimed at downplaying the threat of Covid-19. Exploiting a policy U-turn of a major Austrian right-wing party (FPÖ), I first show that beliefs regarding the health risks of Covid-19 of FPÖ voters vs. others diverged after the turn using a difference-in-differences approach. Using aggregate-level data, I study whether weekly Covid-19 deaths per capita are significantly positively correlated with support for the FPÖ on the regional level. By linking aggregate- and individual-level data, I show that imputed regional beliefs about the economic and health impact of Covid-19 have a significant effect on cases and deaths per capita. Paradoxically, the FPÖ vote share is significantly positively correlated with deaths per capita after the turn, but not with the reported number of infections. I hypothesize that this can be traced back to a self-selection bias in testing, which causes a correlation between the number of “corona skeptics” and the share of unreported cases after the turn. I find empirical support for this hypothesis in individual-level data from a Covid-19 prevalence study that involves information about participants’ true vs. reported infection status. I finally study a simple heterogeneous mixing epidemiological model and show that a testing bias can indeed explain the apparent paradox of an increase in deaths without an increase in reported cases.

Keywords: pandemic, covid-19, sars-cov2, heterogeneous mixing, sir model, economic epidemiology, political polarization

JEL Classification: H12, H75, I12, I18