PERG seminar Tuesday 24/3: presentations by Evelyne and Bastian

Next week at PERG research seminar

Nador 9, Faculty Tower #208, 11.00-12.40

"Fiscal Consolidation Under Electoral Risk"

Evelyne Huebscher (Assistant Professor, Department of Public Policy) (co-authored with Thomas Sattler, LSE)

When do governments implement scal consolidation measures? Since such policies are unpopular, governments with low levels of electoral support should be hesitant to put them forward. They can, however, strategically time these measures at the beginning of the legislative term to minimize electoral punishment. In contrast, governments with high levels of electoral support face lower electoral risks and therefore can time scal consolidations more exibly throughout the legislative term. Our empirical results show that the probability of consolidation decreases from 40% after an election to 10% towards the end of the term when the government's margin of victory is small. When the electoral margin is large, the probability of consolidation is roughly stable at around 35%. These results raise questions about previous conclusions that scal retrenchment does not involve much electoral risk.

Discussant: Cristina Cordundeanu-Hici (Assistant Professor, School of Public Policy)

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"THE AMERICAN DREAM IS DEAD, LONG LIVE THE AMERICAN DREAM. Redistributive Preferences as a Response to Unequal Economic Opportunities"

Bastian Becker (PhD Candidate, Political Economy)

In the United States, high levels of economic inequality have proven more durable than in other Western democracies. Adherence to the American Dream, and how it makes people accepting of or even blind to inequality, is often invoked as an explanation. Taking the American Dream–that everybody has an equal opportunity to succeed economically–seriously, one must come to the conclusion that the Dream died indeed. In 2010, more than 40% of income differences can be explained by only three circumstances that are beyond individual control; family background, gender, and race. However, continually rising inequality and increased attention by media and politics over the last two decades, might have led American citizens to demand more redistribution in an urge to resurrect the American Dream. To explore this, the present paper asks how perceptions of facts of inequality have changed over the last two decades, and how these perceptions influence preferences for redistribution. Three prominent aspects of inequality stand at the center of this exploration, people’s relative economic standing, outcome inequality, and inequality in opportunity. The paper shows that perceptions do not simply mirror facts, and contends that media and politics play a mediating role. Rather than people’s economic standing or their perception of outcome inequality, perception of inequality in opportunity is most consequential for redistribution preferences. Taking into account that Americans underestimate the actual extent of inequality in opportunity even more so in 2010 than two decades before, the findings of this paper can nurture both hopes and fears regarding the resurrection of the American Dream.

Discussant: Bruno Castanho E Silva (PhD Candidate, Comparative Politics)