Mind the Gap: Why Wealthy Voters Support Brexit

Abstract

Does insurance alter voters' decisions to support the status-quo? As wealth provides a cushion against financial risk, which in turn decreases risk-aversion, we argue that wealth increases support for a change to the status quo. When calculating net benefits, a less risk averse individual places a lower weight on costs than on benefits, thereby reinforcing the decision to depart from the status quo. We test our theory in the case of Brexit, which has been widely characterized as a vote by economically left-behind voters. Our results show that individuals who lacked wealth are less likely to support leaving the EU, meaning they are more biased to the status quo. We corroborate our theory using two panel data surveys, accounting for unobserved individual level heterogeneity, and also using a survey experiment. The findings have implications for the role of wealth-as-insurance in electoral behavior, and also important implications for understanding the Brexit case.