Voter Responsiveness to Measures of Local Fiscal Performance

• In Event: Information Flows and Policy Priorities in Local Elections

Abstract

American cities are endowed with large service responsibilities. Many of the most important services affecting income, educational, and social outcomes are delivered at the local level. Decisions about trash routes, sewer systems, public housing, and policing, for instance, are all typically made by city governments. These policy choices affect the day-to-day lives of residents in ways that are immediate and very visible. But these are not the only policy choices elected city leaders make. Some decisions, like those made to alter the fiscal standing of a government, directly affect the more visible policy choices while themselves garnering less attention. In this research, we explore whether and how voters evaluate these financial choices. Do voters take signals about local government financial health into account when casting their ballots? Do these fiscal signals matter relative to other signals of local incumbent performance?

The core theoretical issue we explore in our work is how voters in city elections make decisions about who to support. Though there has been recent research exploring the measures that voters use to evaluate local elected officials (ideology as in Sances (2017), municipal service quality as in Burnett and Kogan (2016), outcomes falling largely outside the purview of local policy like crime rates and the state of the economy as in Arnold and Carnes (2012), racial cues as in Berinsky, de Benedictis-Kessner, Goldberg, and Margolis (2020), and indicators of public school performance as in Berry and Howell (2007), for example), we still know relatively little about how voters cast their ballots in local elections, particularly in the absence of partisan cues.

There is, however, evidence that certain fiscal signals drive elected officials toward otherwise counterintuitive decisions. For instance, during the early months of the Covid-19 pandemic some cities were hesitant to draw down rainy day stabilization funds despite massive revenue shortfalls. Their reluctance was driven by a fear of credit rating downgrades. Not spending those reserves frequently lead to fiscal austerity measures via cuts to core services. This raises the question: why would elected officials support service cuts over credit downgrades? Is it possible that voters care about signals of financial health to a larger degree than is typically assumed?

We study this issue by combining a survey experiment with an observational study. In the former, we execute an original, preregistered experimental design. We manipulate two dimensions of the political environment – crime and financial health in the form of credit ratings – to assess the extent to which these factors influence voters’ decisions in local elections in large American cities. To test for partisan patterns of accountability and issue ownership in local elections (e.g. Petrocik 1996), we explore the importance of policy performance both within and outside the context of partisan elections. We also examine voters’ knowledge of their local government’s financial health. In the observational study, we use data from city audited financial statements and associated credit ratings to explore whether and how incumbent vote share responds to actual changes in the financial health of their city. When combined, the results shed new light on how voters respond to fiscal information in practice and provide evidence about the mechanisms behind those changes. These results have strong implications about democratic accountability and the potential asymmetries between local fiscal policy and voter preferences.

Authors

• Carolyn Abott, Baruch College - CUNY

• Matthew Incantalupo, Yeshiva University

• Akheil Singla, Arizona State University