The Economic Consequences of Political Partisanship

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I’ve mentioned the tribal nature of politics before and its tendency to make us mean and dumb. Now check out the findings from a new paper:

In the first experiment, carried out in a nationwide online labor market, we assess whether partisan congruence between employer and employee influences the willingness of the latter to work, as well as the quality of work they perform. We do so by tracking the wage proposals and task performance of freelance editors when the document they edit indicates whether their employers are co-partisans or supporters of the out-party. Study 2 examines whether partisan considerations also affect consumer behavior. Specifically, we explore whether people are less likely to pursue an attractive purchasing opportunity if the seller is affiliated with the out-party, and more likely to do so if the seller is a co-partisan. We conducted another field experiment that uses an online marketplace to study this question in a more naturalistic setting, albeit one that relies on ecological inferences. Finally, we replicate these patterns in the context of an incentivized, population-based survey experiment, where we find that fully three-quarters of respondents are willing to forego higher personal remuneration to avoid benefitting the opposing party.

Taken together, our studies offer substantial evidence that partisanship shapes real-world economic decisions. All four experiments offer evidence that partisanship influences economic behavior even when there are real pecuniary or professional costs. Although the effect sizes vary somewhat across contexts, in some situations, they are quite large. For example, the effect of partisanship on reservation wages in the labor market experiment is comparable to the effect of task-relevant skills such as education and experience. In the marketplace, consumers are much more likely—almost two times as likely—to engage in a transaction when their partisanship matches that of the seller. In our survey experiment, three quarters of all subjects forego a higher monetary payment to avoid helping the other party. We show that these effects of partisanship are at least as large as the effects of religion, another well-known and salient social cleavage. Even among weak or leaning partisans, fully two-thirds of them reject the partisan offer. In sum, partisanship’s effect on economic decisions is not only real but often also sizable, extending throughout the electorate.

…The results underscore the power of partisanship as a social identity in an era of polarized parties—partisanship can shape apolitical behavior, including economic transactions. The results also call for paying greater attention to potential discrimination based on partisan affiliation. To date, few social norms are in place to constrain it, as they are with respect to unequal treatment along other social divides (e.g., race and gender). Our analysis suggests that partisan-based discrimination may occur even in the most basic economic settings, and as such should be the subject of more systematic scrutiny (pgs. 3-5).

Hooligans in action.