Programmatic Transfers and the Political Control of Information Effects

• In Event: Poster Session: Political Economy

Abstract

Why do politicians employ programmatic transfers? I study a model where an office and legacy motivated incumbent has a unit of budget which he can spend in the provision of public goods and transfers. In my framework, public goods provision is the most informative policy instrument regarding the incumbent's underlying competence; the use of transfers involve choosing the mass of beneficiaries (the extensive margin) and the size of the per-capita transfer (the intensive margin); and disposable income is correlated with voter information. I show the incumbent can increase his probability of re-election by using transfers, because they allow him to calibrate the informativeness of his governance and to manage the proportion of better informed voters. The optimal allocation to a transfers program can display an inverted-U shape in the players' prior beliefs about the incumbent: when the incumbent is super-leading or super-trailing with respect to his challenger, using the budget for legacy-building today is the best gamble; in between these extremes, there is a critical threshold after which the electoral gains from using transfers to induce voter learning decrease. I argue that the model can help us make sense of the mixed causal evidence of the effects of transfers on vote shares: the learning imbalance that this policy creates among beneficiaries and non-beneficiaries, together with the random components of performance, makes all the directions of causal effects to be positive probability events. Finally, the non-monotonicity in the allocation to transfers induces a non-monotonic probability distribution over measurable causal effects.

Author

• Arduino Tomasi, University of Chicago