Political Economics

Alberto Alesina, a founding member of the IGM economic experts panel, passed away in May 2020 – a sad loss for the whole research community. As the remembrances posted by the IGM directors on our website illustrate, Alberto was a fantastic economist, a wonderful person and a friend to many of the panelists.

To mark the sad occasion, we invited both our US and European panels to express their views on aspects of Alberto’s work. We asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:

(a) Political conflict plays a key role in shaping economic decisions, policies and outcomes.

US panel: (b) The US has a smaller social welfare system than other rich countries in part because it is more heterogeneous by race and ethnicity.

European panel: (b) Most European countries have larger social welfare systems than the United States in part because the latter is more heterogeneous by race and ethnicity.

Of our 43 US experts, 40 participated in this survey; of our 45 European experts, 39 participated – for a total of 79 expert reactions.

Political conflict and the economy

On the first statement, both panels are unanimous that political conflict plays a key role in shaping economic decisions, policies and outcomes. Weighted by each expert’s confidence in their response, 69% of the US panel strongly agree, and 31% agree; and 56% of the European panel strongly agree, and 44% agree.

Among the short comments that the experts are able to include in their responses, Charles Wyplosz at the Graduate Institute, Geneva, notes: ‘This is what Alberto Alesina taught us.’ Caroline Hoxby at Stanford says: ‘My insightful and powerfully-minded colleague Alberto Alesina is responsible for much of the evidence on this point. Read his masterful work.’ Alberto’s Harvard colleague Pol Antras adds: ‘Thank you very everything you taught us, Alberto. Rest in Peace.’

Aaron Edlin at Berkeley points out that: ‘Where there are decisions to be made, there is politics, and where there is politics, there is conflict.’ And Larry Samuelson at Yale explains: ‘Political actors respond to incentives; conflicting incentives play a key role in shaping economic policy and activity.’

A couple of wrinkles come from Franklin Allen at Imperial, who comments: ‘In most countries, this is the case, in my view. In some totalitarian countries, it is not the case though’; while Peter Neary at Oxford states: ‘Hardly controversial in itself. More so is its importance relative to ideology, history, and deep economic forces.’

Anil Kashyap at Chicago provides a link to Alberto’s paper on macroeconomics and politics; while Pete Klenow at Stanford references Alberto’s paper with European panelist Eliana La Ferrara on the positive and negative effects of ethnic diversity on economic policies and outcomes.

Ethnic heterogeneity and support for social welfare systems

The second statement was framed slightly differently in the way it was put to the two panels, but the central idea was the same: whether the fact that the United States is more heterogeneous by race and ethnicity than most European countries is the reason for its smaller social welfare system.

On this issue, views are more varied: of the US panel (weighted by each expert’s confidence in their response), 17% strongly agree, 69% agree, 13% are uncertain, and 1% disagree. The European panel agrees considerably less (though still a majority), expresses more uncertainty (a third), and features more disagreement: 15% strongly agree, 40% agree, 33% are uncertain, and 13% disagree.

Among panelists who agree, Eric Maskin at Harvard says: ‘Alberto Alesina’s writings establish both points quite persuasively’; while Pol Antras comments: ‘I think Alberto convinced most of us that this is part of the reason. Of course, there are many other reasons why.’

Several other panelists mention some of those other reasons, Peter Neary, himself sadly no longer with us, adds: ‘The sad passing of Alberto Alesina reminds us of his work showing this; though ideology and public perceptions of heterogeneity also matter.’ Larry Samuelson comments: ‘The evidence is that people are more supportive of programs whose benefits go to “people like me”.’ Christopher Udry at Northwestern states: ‘But put it differently. It’s not diversity itself. It’s racism.’

A historical perspective comes from Daron Acemoglu at MIT, who says: ‘But unclear how much of this is because of the current effect of these variables or the historical, long-lasting compromises they induced.’ And Angus Deaton at Princeton notes: ‘I think it is less to do with heterogeneity, than with the legacy of slavery and white versus black.’

Among panelists who are say they are uncertain or disagree, Markus Brunnermeier at Princeton notes: ‘Empirical evidence points to it, but Canada might be a counterexample.’ Richard Blundell at University College London asks: ‘Isn’t it more about the underlying inequalities by race and ethnicity in the US rather than race and ethnicity itself?’ And Aaron Edlin concludes: ‘Looking across states with casual empiricism, many of the more diverse appear to have stronger social welfare programs. This gives me pause.’

Pete Klenow and Christian Leuz at Chicago both mention Alberto’s paper with Edward Glaeser and Bruce Sacerdote asking the question: why doesn’t the United States have a European-style welfare state? And Christian directs us to further papers by Alberto and colleagues on immigration and preferences for redistribution.

All comments made by the experts are in the full survey results.

Romesh Vaitilingam
@econromesh

Question A:

Political conflict plays a key role in shaping economic decisions, policies and outcomes.

Responses weighted by each expert's confidence

Question B:

Most European countries have larger social welfare systems than the United States in part because the latter is more heterogeneous by race and ethnicity.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Allen
Franklin Allen
Imperial College London
Agree
6
Bio/Vote History
In most countries this is the case in my view. In some totalitarian countries it is not the case though.
Antras
Pol Antras
Harvard
Strongly Agree
10
Bio/Vote History
Thank you very everything you taught us, Alberto. Rest in Peace.
Blanchard
Olivier Blanchard
Peterson Institute
Strongly Agree
9
Bio/Vote History
Bloom
Nicholas Bloom
Stanford
Strongly Agree
9
Bio/Vote History
Blundell
Richard William Blundell
University College London
Agree
5
Bio/Vote History
Carletti
Elena Carletti
Bocconi Did Not Answer Bio/Vote History
Danthine
Jean-Pierre Danthine
Paris School of Economics
Agree
5
Bio/Vote History
De Grauwe
Paul De Grauwe
LSE
Agree
7
Bio/Vote History
Eeckhout
Jan Eeckhout
UPF Barcelona
Strongly Agree
9
Bio/Vote History
Fehr
Ernst Fehr
Universität Zurich
Strongly Agree
10
Bio/Vote History
Freixas
Xavier Freixas
Barcelona GSE Did Not Answer Bio/Vote History
Fuchs-Schündeln
Nicola Fuchs-Schündeln
Goethe-Universität Frankfurt
Strongly Agree
8
Bio/Vote History
Galí
Jordi Galí
Barcelona GSE
Agree
7
Bio/Vote History
Giavazzi
Francesco Giavazzi
Bocconi
Agree
6
Bio/Vote History
Griffith
Rachel Griffith
University of Manchester
Agree
4
Bio/Vote History
Guerrieri
Veronica Guerrieri
Chicago Booth
Strongly Agree
8
Bio/Vote History
Guiso
Luigi Guiso
Einaudi Institute for Economics and Finance
Strongly Agree
10
Bio/Vote History
Honohan
Patrick Honohan
Trinity College Dublin
Strongly Agree
7
Bio/Vote History
Javorcik
Beata Javorcik
University of Oxford
Agree
8
Bio/Vote History
Krahnen
Jan Pieter Krahnen
Goethe University Frankfurt
Agree
6
Bio/Vote History
Evident...
Kőszegi
Botond Kőszegi
Central European University Did Not Answer Bio/Vote History
La Ferrara
Eliana La Ferrara
Harvard Kennedy
Strongly Agree
10
Bio/Vote History
Leuz
Christian Leuz
Chicago Booth
Strongly Agree
6
Bio/Vote History
Mayer
Thierry Mayer
Sciences-Po
Agree
7
Bio/Vote History
Meghir
Costas Meghir
Yale
Agree
8
Bio/Vote History
Neary
Peter Neary
Oxford
Agree
7
Bio/Vote History
Hardly controversial in itself. More so is its importance relative to ideology, history, and deep economic forces
O'Rourke
Kevin O'Rourke
Oxford
Agree
7
Bio/Vote History
Pagano
Marco Pagano
Università di Napoli Federico II
Agree
7
Bio/Vote History
Pastor
Lubos Pastor
Chicago Booth
Strongly Agree
10
Bio/Vote History
Governments set, and change, the rules of the game.
Persson
Torsten Persson
Stockholm University
Agree
8
Bio/Vote History
Pissarides
Christopher Pissarides
London School of Economics and Political Science Did Not Answer Bio/Vote History
Portes
Richard Portes
London Business School
Agree
5
Bio/Vote History
Prendergast
Canice Prendergast
Chicago Booth
Agree
8
Bio/Vote History
Reichlin
Lucrezia Reichlin
London Business School
Strongly Agree
8
Bio/Vote History
Repullo
Rafael Repullo
CEMFI
Strongly Agree
4
Bio/Vote History
Rey
Hélène Rey
London Business School
Strongly Agree
9
Bio/Vote History
Schoar
Antoinette Schoar
MIT
Strongly Agree
8
Bio/Vote History
Sturm
Daniel Sturm
London School of Economics
Agree
8
Bio/Vote History
Van Reenen
John Van Reenen
LSE
Agree
7
Bio/Vote History
Vickers
John Vickers
Oxford
Agree
4
Bio/Vote History
Voth
Hans-Joachim Voth
University of Zurich
Strongly Agree
9
Bio/Vote History
Weder di Mauro
Beatrice Weder di Mauro
The Graduate Institute, Geneva Did Not Answer Bio/Vote History
Whelan
Karl Whelan
University College Dublin Did Not Answer Bio/Vote History
Wyplosz
Charles Wyplosz
The Graduate Institute Geneva
Strongly Agree
9
Bio/Vote History
This is what Alberto Alesina taught us.
Zilibotti
Fabrizio Zilibotti
Yale University
Strongly Agree
10
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Allen
Franklin Allen
Imperial College London
Disagree
6
Bio/Vote History
I don't think that's the reason. It's not based on definite evidence that I am aware of though.
Antras
Pol Antras
Harvard
Agree
7
Bio/Vote History
I think Alberto convinced most of us that this is part of the reason. Of course, there are many other reasons why.
Blanchard
Olivier Blanchard
Peterson Institute
Uncertain
5
Bio/Vote History
Bloom
Nicholas Bloom
Stanford
Uncertain
2
Bio/Vote History
Blundell
Richard William Blundell
University College London
Uncertain
5
Bio/Vote History
Isn't it more about the underlying inequalities by race and ethnicity in the US rather than race and ethnicity itself?
Carletti
Elena Carletti
Bocconi Did Not Answer Bio/Vote History
Danthine
Jean-Pierre Danthine
Paris School of Economics
Uncertain
5
Bio/Vote History
De Grauwe
Paul De Grauwe
LSE
Agree
6
Bio/Vote History
Alesin and Glaeser,
Eeckhout
Jan Eeckhout
UPF Barcelona
Uncertain
6
Bio/Vote History
Fehr
Ernst Fehr
Universität Zurich
Agree
10
Bio/Vote History
Freixas
Xavier Freixas
Barcelona GSE Did Not Answer Bio/Vote History
Fuchs-Schündeln
Nicola Fuchs-Schündeln
Goethe-Universität Frankfurt
Agree
8
Bio/Vote History
Galí
Jordi Galí
Barcelona GSE
Agree
6
Bio/Vote History
That's one of the messages from Alberto Alesina's research.
Giavazzi
Francesco Giavazzi
Bocconi
Strongly Agree
9
Bio/Vote History
Griffith
Rachel Griffith
University of Manchester
Uncertain
1
Bio/Vote History
Guerrieri
Veronica Guerrieri
Chicago Booth
Agree
8
Bio/Vote History
Guiso
Luigi Guiso
Einaudi Institute for Economics and Finance
Agree
7
Bio/Vote History
Honohan
Patrick Honohan
Trinity College Dublin
Agree
5
Bio/Vote History
Javorcik
Beata Javorcik
University of Oxford
Agree
5
Bio/Vote History
Krahnen
Jan Pieter Krahnen
Goethe University Frankfurt
Disagree
6
Bio/Vote History
Kőszegi
Botond Kőszegi
Central European University Did Not Answer Bio/Vote History
La Ferrara
Eliana La Ferrara
Harvard Kennedy
Uncertain
8
Bio/Vote History
Leuz
Christian Leuz
Chicago Booth
Agree
5
Bio/Vote History
The first paper by Alesina et al referenced below examines exactly this question and there are several follow-ups with further support.
-see background information here
-see background information here
-see background information here
Mayer
Thierry Mayer
Sciences-Po
Uncertain
3
Bio/Vote History
Meghir
Costas Meghir
Yale
Uncertain
7
Bio/Vote History
Neary
Peter Neary
Oxford
Agree
5
Bio/Vote History
The sad passing of Alberto Alesina reminds us of his work showing this; though ideology and public perceptions of heterogeneity also matter
O'Rourke
Kevin O'Rourke
Oxford
Uncertain
5
Bio/Vote History
Pagano
Marco Pagano
Università di Napoli Federico II
Disagree
5
Bio/Vote History
Pastor
Lubos Pastor
Chicago Booth
Strongly Agree
6
Bio/Vote History
Persson
Torsten Persson
Stockholm University
Agree
8
Bio/Vote History
Pissarides
Christopher Pissarides
London School of Economics and Political Science Did Not Answer Bio/Vote History
Portes
Richard Portes
London Business School
Uncertain
3
Bio/Vote History
Prendergast
Canice Prendergast
Chicago Booth
Uncertain
8
Bio/Vote History
Reichlin
Lucrezia Reichlin
London Business School
Uncertain
6
Bio/Vote History
Repullo
Rafael Repullo
CEMFI
Agree
4
Bio/Vote History
Rey
Hélène Rey
London Business School
Uncertain
6
Bio/Vote History
Schoar
Antoinette Schoar
MIT
Disagree
7
Bio/Vote History
Sturm
Daniel Sturm
London School of Economics
Uncertain
2
Bio/Vote History
Van Reenen
John Van Reenen
LSE
Disagree
5
Bio/Vote History
Vickers
John Vickers
Oxford
Uncertain
2
Bio/Vote History
Voth
Hans-Joachim Voth
University of Zurich
Strongly Agree
9
Bio/Vote History
Weder di Mauro
Beatrice Weder di Mauro
The Graduate Institute, Geneva Did Not Answer Bio/Vote History
Whelan
Karl Whelan
University College Dublin Did Not Answer Bio/Vote History
Wyplosz
Charles Wyplosz
The Graduate Institute Geneva
Strongly Agree
9
Bio/Vote History
Thanks, Alberto, now we understand.
Zilibotti
Fabrizio Zilibotti
Yale University
Agree
6
Bio/Vote History