Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism

100 Pages Posted: 25 Apr 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

Zurich University of Applied Sciences (ZHAW)

Multiple version iconThere are 2 versions of this paper

Date Written: 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 favouritism, political economy, situational ambiguity

JEL Classification: D720, H300, H840, P160, Q540

Suggested Citation

Schneider, Stephan A. and Kunze, Sven, Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism (2022). CESifo Working Paper No. 9710, Available at SSRN: https://ssrn.com/abstract=4091815 or http://dx.doi.org/10.2139/ssrn.4091815

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

Zurich University of Applied Sciences (ZHAW) ( email )

United States

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