Risky Reforms and the Emergence of Populist Candidates

Arnaud Pandevant ()
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Arnaud Pandevant: CREST–´Ecole polytechnique, France

No 2026-08, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper studies how electoral competition can generate candidates who advocate risky, on-average inefficient reforms. I show that such candidates, whom I call populist, can arise endogenously in a citizen candidate model. Voters have reference-dependent preferences and may support such reforms. If all voters have the same reference point, platforms span a single axis: poorer voters support higher taxes and, if sufficiently poor, the risky reform. If the median voter supports it, any two-candidate equilibrium must include a populist. If there is exactly one populist in equilibrium, that candidate cannot propose lower taxes than the non-populist. If reference points are heterogeneous, and low skill pushes voters below their reference point, populist candidates must have sufficiently low skill, which is consistent with the empirical literature.

Pages: 24 pages
Date: 2026-08-05
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