Working Paper: CEPR ID: DP6931
Authors: Paulo Roberto Arvate; George Avelino; Jos Tavares
Abstract: Several authors claim that voters in new democracies reward deficits at the polls and this fact is due to a lack of 'voter sophistication'. We test this claim for gubernatorial elections in Brazil, an important case study since it is the fourth most populous democracy in the world, displays a high variance in economic and social characteristics across states, and effectively imposes mandatory voting. Our evidence shows that voters are fiscally conservative, that is, they reward lower deficits, which is in contradiction to the literature. We do find that, when we use state income per capita, education and income inequality as proxies for 'voter sophistication', 'naïve' voters do not reward low deficits as opposed to 'sophisticated' voters, and education is the key element for this distinction. We propose that education rather than the youth of the democracy, is the key element for assessing voter 'sophistication'.
Keywords: budget deficits; elections; fiscal conservatism; political cycles
JEL Codes: D72; E62; H72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| voter sophistication (K16) | fiscal conservativeness (E62) |
| lower deficits (H62) | higher chances of reelection (D72) |
| sophisticated voters (D72) | penalize larger deficits (H62) |
| naive voters (K16) | indifferent to fiscal policy (H39) |
| education levels (I24) | fiscal conservativeness (E62) |