Voter Preferences, Electoral Promises, and the Composition of Public Spending

Philip Keefer, Carlos Scartascini and Razvan Vlaicu

No 10450, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper proposes and empirically tests a new demand-side explanation for distortions in public spending composition. Voters prefer spending with certain and immediate benefits when they have low trust in electoral promises and high discount rates. The paper incorporates these characteristics of voter choices into a probabilistic voting model with public spending tradeoffs. In equilibrium, candidates promising larger allocations to transfers and short-term public goods are more likely to win elections in settings with low trust and high impatience. An original survey of individual-level preferences for public spending in seven Latin American capital cities provides observational and experimental evidence consistent with the model-derived hypotheses. Respondents reporting low trust in politician promises are more likely to prefer transfers to public goods; respondents with high discount rates prefer short-term to long-term spending. These patterns also appear in country-level data on spending outcomes from the last two decades.

Keywords: public investment; public goods; Trust; Spending composition; Voter preferences; Discounting; Transfers (search for similar items in EconPapers)
JEL-codes: D72 H20 H50 O10 (search for similar items in EconPapers)
Date: 2020-06
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:10450

DOI: 10.18235/0002434

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