Political Economy

November 15, 2013
Alberto Alesina of Harvard University, Organizer

Filipe Campante, Harvard University and NBER, and David Yanagizawa, Harvard University

Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan

Campante and Yanagizawa-Drott study the economic effects of religious practices in the context of the observance of Ramadan fasting, one of the central tenets of Islam. To establish causality, they exploit variation in the length of the fasting period attributable to the rotating Islamic calendar. They report two key, quantitatively meaningful results: 1) longer Ramadan fasting has a negative effect on output growth in Muslim countries, and 2) it increases subjective well-being among Muslims. The authors then examine labor market outcomes, and find that these results cannot be primarily explained by a direct reduction in labor productivity as a result of fasting. Instead, the evidence indicates that Ramadan affects Muslims' relative preferences regarding work and religiosity, suggesting that the mechanism operates at least partly by changing beliefs and values that influence labor supply and occupational choices beyond the month of Ramadan itself. Together, the authors' results indicate that religious practices can affect labor supply choices in ways that have negative implications for economic performance, but that nevertheless increase subjective well-being among followers.

Vincenzo Galasso and Tommaso Nannicini, Università Bocconi

Men Vote in Mars, Women Vote in Venus: A Survey Experiment in the Field

Galasso and Nannicini investigate the differential response of male and female voters to competitive persuasion in political campaigns. During the 2011 municipal elections in Milan, a sample of eligible voters was randomly divided into three groups. Two were exposed to the same incumbent's campaign but to different opponents' campaigns, with either a positive or a negative tone. The third—control—group received no electoral information. The campaigns were administered online and consisted of various advertising tools including videos, texts, and slogans. Stark gender differences emerge. Negative advertising increases men's turnout, but has no effect on women. Women, however, vote more for the opponent and less for the incumbent when they are exposed to the opponent's positive campaign. Exactly the opposite occurs for men. Additional tests show that the authors' results are not driven by gender identification with the candidate, ideology, or other voters' observable attributes. Based on these findings, effective strategies of persuasive communication would take gender into account. The authors' results may also help to reconcile the conflicting evidence on the effect of negative versus positive advertising, as the average impact may disappear when aggregated across gender.

Jesse Shapiro, University of Chicago and NBER

On the Limits of Expert Credibility: Theory and an Application to Climate Change

Shapiro presents a model in which a voter cannot learn the consensus opinion of experts. In the model a journalist reports on an unknown state to a voter who makes a policy decision. The journalist’s report consists of the opinion of a single neutral expert and a rejoinder by an opposition party. At some cost, the party may hire a credible expert to comment on its behalf. The more uniform is expert opinion, the more informative is the report of a single expert, and hence the greater is the opposition party’s incentive to hire its own expert. When experts are divided, equilibrium reports are more informative than the neutral expert’s opinion. When experts are nearly unanimous, no informative equilibrium exists. Stronger consensus among experts can therefore lead to weaker consensus among citizens. The author applies the model to climate change and other cases in which scientific consensus has not led to public consensus.

Cemal Arbatl, Higher School of Economics; Quamrul Ashraf, Brown University; and Oded Galor, Brown University and NBER

The Nature of Civil Conflict

Arbatl, Ashraf, and Galor empirically establish that the emergence, prevalence, and recurrence of civil conflicts in the modern era reflect the long shadow of prehistory. Exploiting variations across contemporary national populations, the authors demonstrate that genetic diversity, as determined predominantly tens of thousands of years ago, has contributed significantly to the frequency, incidence, and onset of both overall and inter-ethnic civil conflicts over the last half-century, accounting for a large set of geographical and institutional correlates of conflict as well as measures of economic development. These findings plausibly reflect the adverse influence of genetic diversity on interpersonal trust and cooperation, the potential contribution of genetic diversity to income inequality, the potential association between genetic diversity and divergence in preferences for public goods and redistributive policies, and the contribution of genetic diversity to the degrees of fractionalization and polarization across ethnic and linguistic groups in the population.

Scott Abramson and Carles Boix, Princeton University

The Roots of the Industrial Revolution: Political Institutions or Socially Embedded Know-How?

Abramson and Boix reassess the literature of growth by looking at the evolution of the European economy from around 1200 to 1900. Employing a comprehensive dataset for the European continent that includes geographic and climate features (1200-1800), urbanization data (1200-1800), per capita income data in the second half of the 19th century, location of proto-industrial centers (textile and metal sectors from 1300 to the Industrial Revolution), political borders, and political institutions, the authors estimate the geographic, economic, and political covariates of urbanization (commonly used as a proxy for per capita income) and 19th century per capita income. They show that the process of economic take-off (and of a growing economic divergence across the European continent) was caused by the early emergence and growth of cities and urban clusters in a European north-south corridor that broadly runs from southern England to northern Italy. In contrast to previous findings in the institutionalist literature, the authors show that the fortunes of parliamentary institutions in early modern Europe played a small part in the success of the industrial revolution and the distribution of income across the continent in the late 19th century. Rather, industrialization took place in those territories that had a strong proto-industrial base, often regardless of the absence of executive constraints (in the two centuries preceding the Industrial Revolution).

James Alt, Harvard University, and David Lassen, University of Copenhagen

Unemployment Expectations, Information, and Voting: Experimental and Administrative Micro-Evidence

Voters differ in their assessment of the economy, both retrospectively and prospectively. In this paper, Alt and Lassen examine whether voters' subjective forecasts of the economy and their assessments of their individual unemployment risk affect how they vote, or if their forecasts reflect, rather than cause, their partisan leanings. The authors employ a unique Danish dataset comprising panel surveys, a survey experiment, and detailed administrative registry data on individuals. They demonstrate considerable heterogeneity in individuals' forecasts of the aggregate unemployment rate and show how these forecasts are formed by voter characteristics and voters' own expectations about the risk of unemployment in combination with local and industry economic conditions. They employ a randomly allocated survey treatment that influences unemployment forecasts in an instrumental variable approach. Based on this, the authors reject endogeneity of economic forecasts and show, in a least squares setting, that sociotropic economic forecasts have a causal effect on voting behavior. Finally, the authors' results are consistent with individual unemployment risk affecting both subjective forecasts of the aggregate economy and voting. However, the reverse is not true: controlling for fine-grained data on individual economic circumstances the authors do not find significant effects from the aggregate economy and partisan identity on perceptions of individual unemployment risk.

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