Government Spending and Voting Behavior

Abstract

abstract: Does government spending on public goods affect the vote choice of citizens? On one hand, prior research has characterized voters as fiscal conservatives who may turn toward conservative parties when government spending goes up. On the other hand, increased spending may signal that the economy is doing well, which makes progressive parties a more viable option. To adjudicate between both hypotheses, this article draws on a natural experiment, which created exogenous variation in government spending. A discontinuity in the 2011 German census meant that some municipalities saw an unforeseen increase in budgets. Using a regression discontinuity design, the authors show that the increase in budgets and subsequent spending on public goods benefited left-leaning parties but had no detectable effect on incumbent support. To parse out the causal channel, the authors rely on panel evidence and demonstrate that treated residents viewed their economic situation more favorably than did untreated residents, which led the former to espouse progressive parties.