Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism

98 Pages Posted: 18 Feb 2021 Last revised: 2 Mar 2022

See all articles by Stephan A. Schneider

Stephan A. Schneider

ETH Zurich - KOF Swiss Economic Institute ; CESifo (Center for Economic Studies and Ifo Institute)

Sven Kunze

Heidelberg University - Alfred Weber Institute for Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2022

Abstract

Allocation decisions are vulnerable to political influence, but it is unclear in which situations politicians use their discretionary power in a partisan manner. We analyze the allocation of presidential disaster declarations in the United States, exploiting the spatiotemporal randomness of hurricane strikes from 1965-2018 along with changes in political alignment. We show that decisions are not biased when disasters are unambiguously strong or weak. Only in ambiguous situations, after medium-intensity hurricanes, do areas governed by presidents' co-partisans receive up to twice as many declarations. This political bias explains 10 percent of total relief spending, totaling USD 450 million per year.

Keywords: disaster relief, distributive politics, hurricanes, natural disasters, nonlinearity, party alignment, political influence, political economy, situational ambiguity

JEL Classification: D72, H30, H84, P16, Q54

Suggested Citation

Schneider, Stephan A. and Kunze, Sven, Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism (March 1, 2022). Available at SSRN: https://ssrn.com/abstract=3786196 or http://dx.doi.org/10.2139/ssrn.3786196

Stephan A. Schneider (Contact Author)

ETH Zurich - KOF Swiss Economic Institute ( email )

Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Sven Kunze

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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