Resource windfalls, connectivity, and political polarization

Abstract

Can natural resource windfalls polarize political opinions? We find that, in societies with heightened political engagement (connectivity), the answer is in the affirmative. Resource windfalls spark public debates over their usage. A model of contest over public opinion predicts that under high societal connectivity resource-induced public debates lead to elevated polarization by allowing extremists unbridled control over the discourse. Employing detailed individual-level U.S. data on political opinions covering several decades, we first confirm that active participation in the political discourse is associated with more extreme (polarized) opinions. Second, we test the model’s predictions by examining the impact of plausibly exogenous variations in states’ connectivity levels and resource windfalls on individuals’ political opinions. Our baseline estimates show that a one standard deviation of resource windfalls induces a 4% increase in the affective polarization of individuals residing in high connectivity states. Our results shed light on hitherto overlooked adverse effects of natural resource abundance, as well as on the dynamics of political polarization.