Determinants of Voting Behavior in Post-Communist Romania (1995-2001)
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Central European University Department of Economics PhD Dissertation OBJECTIVE FACTORS OR SUBJECTIVE PREFERENCES? DETERMINANTS OF VOTING BEHAVIOR IN POST-COMMUNIST ROMANIA (1995-2001) by Dana Mihaela Popa Supervisor: Professor Ugo Pagano June, 2006 © Copyright by Dana Popa 2006 All rights reserved OBJECTIVE FACTORS OR SUBJECTIVE PREFERENCES? DETERMINANTS OF VOTING BEHAVIOR IN POST-COMMUNIST ROMANIA (1995-2001) Abstract This dissertation builds upon the topic of economic -and econometric- modeling of the political process, regarded here as the interaction between voters’ aggregated preferences and the policymakers’ ability to promise that what the majority of the electorate desires. The country of study is Romania during the first decade of post-communist transition, with elections taking place in 1996 and 2000. The dissertation investigates the evolution of the (subjective and objective) factors determining the electoral preferences and the electoral swings between 1995-2001. The core of the analysis is the rapport linking the public’s political support to the (real and perceived) economic outcomes . Chapter 1 reviews the existing literature on voting behavior, matching the classic literature based on the assumption of rationality with less orthodox views (incomplete information, subjective choices or plain irrational errors). Chapter 2 introduces a model of voting behavior that accounts for the effects of (economic, ideological or social) ex-ante cleavages and of the irrecoverable social costs of change on the electoral outcomes. The model is based on three main pillars: the majority rule, the concept of sunk costs and the voters’ uncertainty regarding the post-electoral distribution of Winners and Losers. The model thus evaluates the conditions that would make an electoral reform (i.e. a change of the policymakers) in the same time efficient (for the society as a whole) and acceptable (for the individual voter). Three implications emerge from this model: a) the conflict between the electoral reform’s acceptance and efficiency when sunk costs are high; b) the role played by the electoral manipulation in overcoming the ‘ status quo ’ (the case when optimal reforms in terms of global efficiency are blocked ex ante ) and c) the role played by the rule of allocation of sunk costs in promoting free riding and inefficient reforms. Chapter 3 begins with a concise review of Romania’s post-communist political transformation, in relation with the period’s main economic developments (1995-2001). It then analyses the link between the (real and perceived) economic performance of the country and the corresponding support granted by the electorate to the government. At this stage, the analysis uses macroeconomic data, comparing the country’s real economic performance to the public’s perceptions over the economy, as reflected by the results of a time-series of opinion polls. Chapter 4 analyses the survey data at individual level, by setting a number of (heteroskedastic) probit specifications. The goal is to identify those characteristics of the electorate that define the cleavages along which voting preferences are formed. Precisely, there are two directions of research: a) to identify the characteristics of the population that determine support for the incumbent party and b) similarly, to determine the factors that prompt support for the Left (or Right) wing parties. As the results unfold, they are compared to the classic hypotheses of the voting behavior theory (the ‘incumbency’ theory, the ‘issue priority’ assumption, the ‘rally-along-the-flag’ hypothesis, the egotropic vs. the sociotropic voter, etc). Heteroskedastic probit models further identify the strength (or the ambivalence) of preferences within certain population cleavages. A concluding discussion looks at the factors identified as representative in defining support for the incumbent/for the Left, attempting to answer the initial question, i.e. whether the substance of these factors has an objective or subjective nature. We find that the characteristics that determine the electorate’s preferences mainly have an objective nature : support for incumbents is mostly determined by objective evaluations of the country’s economic performance, while support for Left is mostly influenced by objective socio-demographic cleavages. However, we find that preferences are not evenly distributed within the various groups of electoral supporters (pro or against the incumbent/Left). It is here that the subjective (behavioral) factors impact the political process, by creating, within the cleavage groups, more or less ambivalent preferences towards the political candidates. 1 Acknowledgements The road to a PhD Degree is long, lonely and twisted, and without some guidance along the way, one may easily get lost. Finding myself at the end of this journey, I look back and wish to express gratitude to those people who provided me with the advice and direction I needed along this path. In the first place, I would like to thank my supervisor, Professor Ugo Pagano, for the generosity with which he allowed me the freedom to pursue my stubborn research interest. His sensible comments on my work helped me find a balance between my interest into this topic and the interest the rest of the world could feel for it. The final version of this Dissertation owes a lot to Professor John Earle. His advice and his carefully written notes on an earlier version taught me lessons about perfectionism and dedication to research. This final version also benefited from wise comments expressed by Professors Gábor Kézdi and Jan Fidrmuc, who kindly accepted to be members of my Oral Examination Committee. There are numerous other people to whom the writing of this Dissertation owes some credit. Mainly, I am grateful to the founder of the Central European University and to the staff of the Economics Department for giving me the opportunity to pursue here my MA and PhD Studies. I am especially indebted to Professor Mark Harris, for the endless patience and the sense of humor with which he managed to convey to me the intricacies of the heteroskedastic probit model. I thank Professor Jacek Rostowski not only for his comments on an early version of my Dissertation, but also for being an academic model to me. I am also thanking Professor Lászlo Mátyás for giving me second chances in the early years of my PhD Studies. I am grateful to my PhD colleagues, especially Miklos Szalay, Adam Reiff and Gheorge Silberberg, for their kindness in sharing their incredible knowledge with me. The PhD room has been a special space mostly because of them. I find it difficult to express my true gratefulness to Daniela Langusi, the ultimate friend who stood and suffered by my side for each twist and turn of (all) my studies at CEU. Above all, I want to thank my family, Emil, Angela and Crina for their unconditional love, for their endless support in no matter what enterprise I chose to undertake, and for always believing in me more than I do. Also, I thank Loránd, with whom “I never walk alone”. 2 Statement Hereby I testify that this thesis contains no material accepted for any other degree in any other institution and that it contains no material previously written and/or published by another person, except where appropriate acknowledgment is made. _______________________ Dana Popa 3 INTRODUCTION 6 CHAPTER 1. BACKGROUND LITERATURE: ECONOMIC THEORIES OF THE POLITICAL PROCESS 9 1.1. THE RATIONALITY FRAMEWORK 9 1.1.1. THEORETICAL FUNDAMENTS: CONCEPTS , DEFINITIONS , HYPOTHESES , QUESTIONS TO ADDRESS 9 1.1.2. THE EVIDENCE : VOTING -POPULARITY FUNCTIONS , MULTIVARIATE ANALYSES . RESULTS IN TRADITIONAL VS . TRANSITIONAL DEMOCRACIES 14 1.1.3. EXTENSIONS TO THE RATIONALITY ASSUMPTION : THE CASE OF INCOMPLETE INFORMATION . UNCERTAINTY AND CREDIBILITY ISSUES 21 1.2. QUESTIONING THE ASSUMPTION OF RATIONALITY : IMPERFECT DECISIONS AND BEHAVIORAL RESPONSES 22 1.2.1. IMPERFECT CHOICE AND RULE -GOVERNED BEHAVIOR 22 1.2.2. BEHAVIORAL RESPONSES : A TYPOLOGY OF VOTERS 28 1.2.3. EXIT , VOICE , LOYALTY . OPPORTUNISM AND VOTING 29 CHAPTER 2. A (SIMPLE) MODEL OF VOTING WITH SUNK COSTS 31 2.1. BACKGROUND 31 2.2. SETUP OF THE MODEL 32 2.3. EFFICIENCY AND ACCEPTANCE OF REFORM 37 2.3.1. CONDITIONS FOR REFORM ACCEPTANCE 37 2.3.2. CONDITIONS FOR REFORM EFFICIENCY 38 2.4. IMPLICATIONS OF THE MODEL 44 2.4.1. STATUS QUO VS . REFORM . THE CONFLICT BETWEEN REFORM ’S ACCEPTANCE AND REFORM ’S EFFICIENCY 44 2.4.2. IMPORTANCE OF ELECTORAL MANIPULATION AND OF FAKE PROMISES 45 2.4.3. THE IMPORTANCE CARRIED BY SUNK COSTS AND THE IMPORTANCE OF WHO IS BEARING THEM . MINIMIZING EX POST REGRET 48 2.5. CONCLUSIONS 50 CHAPTER 3. ROMANIA IN TRANSITION: THE POLITICAL PROCESS VS. REAL AND PERCEIVED ECONOMIC OUTCOMES – 1990-2001 51 3.1. THE POLITICAL BACKGROUND 52 3.2. A BIRD ’S EYE VIEW INTO THE ROMANIAN DATA : ECONOMIC PERFORMANCE (ACTUAL AND PERCEIVED ) VS . THE CORRESPONDING SUPPORT FOR THE GOVERNMENT 55 3.2.1. THE RELATION BETWEEN THE ROMANIANS ’ SUPPORT FOR THE GOVERNMENT AND THE OBJECTIVE ECONOMIC PERFORMANCE 58 3.2.2. THE RELATION BETWEEN THE ACTUAL ECONOMIC PERFORMANCE IN ROMANIA AND THE POPULATION ’S PERCEPTIONS OVER THE ECONOMIC AND SOCIAL ISSUES , AS REFLECTED IN SURVEYS 60 3.2.3. THE RELATION BETWEEN THE SUPPORT FOR THE GOVERNMENT AND THE SUBJECTIVE PERCEPTIONS AND EVALUATIONS OF THE STATE OF THE COUNTRY ’S ECONOMY 63 3.3. THE QUESTIONS TO ADDRESS 65 CHAPTER 4. ECONOMIC VOTING IN ROMANIA - EMPIRICAL EVIDENCE 68 4.1. INTRODUCTION 68 4.2. METHODOLOGICAL ISSUES 69 4.2.1. DATABASE DESCRIPTION , THE SURVEY QUESTIONS 69 4.2.2. THE MODEL : PROBIT ANALYSIS WITH HETEROSKEDASTIC EXTENSIONS 74 4.2.3. THE VARIABLES 77 4.3. THE EMPIRICAL STUDY . RESULTS 84 4.3.1. THE ROLE OF NON -RESPONSES : PRE -TESTING FOR A POTENTIAL SAMPLE BIAS 84 4 4.3.2. SUPPORT FOR THE INCUMBENT PARTY OF COALITION 85 4.3.3. SUPPORT FOR LEFT -WING VS . SUPPORT FOR RIGHT -WING PARTIES 90 4.4.