Economics and Policy Preferences: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Ballot Proposals

Abstract

Using California ballot proposition returns and exogenous shifts to labor demand, we provide the first large-scale causal evidence of the impact of economic conditions on policy preferences. Consistent with economic theory, we find that positive economic shocks decrease support for redistributive policies. More notably, we find evidence of a need for cognitive consistency in voting behavior as economic shocks have a smaller significant impact on voting on noneconomic ballot issues. While we also demonstrate that positive shocks decrease turnout, we present evidence that our results reflect changes in the electorate's preferences and not simply to its composition. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.