Endogenous Preferences: The Political Consequences of Economic Institutions Jan-Emmanuel De Neve∗y November 5, 2009 Abstract This paper attempts to explain cross-national voting behavior in 18 West- ern democracies over 1960-2003. A new data set for the median voter is intro- duced that corrects for stochastic error in the statistics from the Comparative Manifesto Project. Next, the paper finds that electoral behavior is closely re- lated to the salience of particular economic institutions. Labour organization, skill specificity, and public sector employment are found to influence individual voting behavior. At the country level, this paper suggests that coordinated market economies move the median voter to the left, whereas liberal market economies move the median voter to the right. The empirical analysis employs cross-sectional and panel data that are instrumented with the level of eco- nomic structure circa 1900 to estimate the net effect of economic institutions on the median voter. Significant results show that revealed voter preferences are endogenous to the economic institutions of the political economy. This paper places political economy at the heart of voting behavior and implies the existence of institutional advantages to partisan politics. Keywords: Comparative Political Economy, Median Voter, Voting Behav- ior, Panel Data, Instrumental Variables JEL Classification Numbers: C23, D72, H5, J24, J51, O57, P51 . ∗London School of Economics and Political Science, Department of Government, Houghton Street, London WC2A 2AE, United Kingdom (email:
[email protected]). yFor their time and generous data sharing, the author would like to thank Simon Hix, Jonathan Hopkin, Peter Hall, Torben Iversen, Lane Kenworthy, Duane Swank, Daniel Gingerich, Pepper Culpepper, Piero Stanig, Slava Mikhaylov, Johannes Spinnewijn, and Richard Fording.