Do local politicians target their voters when making policy decisions?
In other words, did your mayor build
that park next door to please her voters? This question has been discussed
by economists and political scientists for decades, and belongs to a field of
enquiry we call distributive politics.
Answering this question is as important as understanding the effects of the
policies themselves. Why? Because policies and public investment decisions are
not created in a vacuum. To state the (painfully) obvious, politicians have
motivations of their own – like everyone else – and it is sometimes these
motivations, and not some loosely defined “greater good”, that determine
policy.
Together with Luca Repetto,
we have recently revisited this issue by taking a new approach and looking at
the allocation of investments inside
cities. Our question is straightforward: do
Spanish mayors target their voters with local investment?
Understanding the determinants of national policies and
national investment allocations is of course important. Hence, it is not
surprising that most studies in the academic literature have focused on
national level allocations and their determinants. But roughly half of public investment is carried out by local governments
(OECD) and we know little
about how electoral factors shape those allocations. Moreover, the spatial extent and the
policy levers of local governments are different from those of their national
counterparts. So, government behaviour could be different too! In our paper, we try to find out whether this is
the case.
The main challenge when taking this question to the local
level arises from a data problem. Transfers to and between local authorities
are recorded in national and regional budgets, but allocations within those
authorities are usually not easily accessible for research. In our paper, we overcome
this problem by exploiting data from Plan E, a large stimulus program applied
by Zapatero’s socialist government in Spain between late 2008 and 2011. This
program transferred roughly 13 billion euros to Spanish municipalities in an
attempt to kick-start the economy. Local governments had essentially full
discretion to allocate investment projects within their boundaries and jumped
on the resources immediately. Over 57,000 municipal investment projects where
carried out under Plan E. These where usually parks, plazas, and basic service
infrastructure, all of which are likely to have spatially localized benefits.
And here comes the special treat. As an unusual present for future researchers,
the national government required municipalities to geo-locate all projects.
By combining data on these projects with polling station data
for Spanish municipal and national elections, we are able to study whether Spanish mayors allocate more Plan E
spending to areas of strong electoral support. An illustration of the data
we use in the project can be seen in Figure
1.
Figure 1
Notes: Points correspond to Plan
E projects located in the municipality of
Madrid. Census areas are coloured in red if the socialist party PSOE received the
majority of votes in the 2007municipal election, with the intensity of the
shade varying with the vote share. Similarly, blue areas correspond to areas
where the right-wing PP obtained the majority of votes.
No Distributive Politics Inside the
City? Our Analysis
Comparing allocations in cities ruled by different parties is
tricky, because our cities are likely to be different in many dimensions. To deal
with these confounding factors, we implement a close election regression
discontinuity design. We compare municipalities where the socialist party (PSOE)
barely won the mayoralty with municipalities where it barely lost. We then look
at whether areas within these municipalities where PSOE had strong electoral
support receive more resources under a socialist mayor.
Figure 2
Note: The vertical axis
shows different measures of bias in the allocation of Plan
E projects towards PSOE voters.
The horizontal axis shows the PSOE winning
margin, defined as the vote share distance to a seat majority change. Dots are
averages in 1% bins of the winning margin. The lines are local linear
regression estimates.
It is tempting to extrapolate from this result and conclude
that distributive politics do not play an important role within cities. Perhaps
investments benefit a broader group of voters, as people moving beyond their
residence and its surroundings enjoy the benefits of municipal investments
throughout the city. Or maybe local politicians lack the sophistication of
their national counterparts.[1]
But we must be cautious. The targeting of supporters is not the only prediction
in theories of distributive politics. There is a decades-long debate between
political scientists on whether politicians target their supporters or, rather,
target swing voters; voters who are likely to switch sides if policy is
favourable to them. If the latter theory were correct, then distributive
politics could still play an important role, albeit one that is invisible to us.
To be sure, we will need more research in this area.
Despite these caveats, we continue to think our findings are
good news. While there seems to be a good deal of partisan bias in allocation
of national resources to cities, our results show this phenomenon appears to be
absent within these cities. The optimism of the will may lead us to think that
politicians could be targeting citizen based on their needs and not on their
party affiliation. And perhaps that is
good. Alternatively, the pessimism of the intellect may us to think that the
game is being played in some other margin. We can’t say for sure, but we’ll try
to revisit this issue in the future. I’ll keep you posted.
References:
"Distributive Politics inside the City? The Political
Economy of Spain's Plan E", CESifo Working Paper No. 6628, August
2017 (newest version)
Carozzi, Felipe and Repetto, Luca , “Distributive politics inside
the city? The political economy of Spain's Plan E”. SERC Discussion
Papers, SERCDP0212. Spatial Economics Research Centre, London School of
Economics and Political Science, London, UK. February 2017
[1] We discuss these and other
possibilities in the last version of our working paper. In general, evidence
for these alternative mechanisms is not very convincing.
