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Rational ignorance, populism, and reform

Prato, Carlo and Wolton, Stephane (2017) Rational ignorance, populism, and reform. European Journal of Political Economy, 50. 119 -135. ISSN 0176-2680

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Identification Number: 10.1016/j.ejpoleco.2017.11.006

Abstract

This paper studies how voters' demand for economic reforms affects the probability that successful or populist reforms are adopted. We study a model of electoral competition with rationally ignorant voters in which the success of a reform is tied to a politician's unobservable competence. We show that when voters' demand for reform is high, candidates engage in a form of populism and propose reformist agendas regardless of their ability to successfully carry them out. As voters are then faced with either risky reformers or policy inaction, the relationship between demand for reform and the probability that any (i.e., genuine or populist) policy change is implemented depends on how harmful botched reforms are. Our results help organize the mixed empirical evidence regarding the impact of crises on the likelihood of reform. They also suggest that the rise of populism may cause political disenchantment rather than the other way round.

Item Type: Article
Official URL: https://www.journals.elsevier.com/european-journal...
Additional Information: © 2017 Elsevier B.V
Divisions: Government
Subjects: J Political Science > JA Political science (General)
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy-Making and Implementation
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
Sets: Departments > Government
Collections > Economists Online
Date Deposited: 02 Jan 2018 14:32
Last Modified: 20 Mar 2019 03:21
URI: http://eprints.lse.ac.uk/id/eprint/86371

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