RESEARCH REPORT Johannes Meya, Panu Poutvaara and Robert Schwager How Important are Pocketbook Voting, Social Preferences and Expressive Motives in Referenda?* Pocketbook voting, defined as voting for the alter- ABSTRACT native that benefits the voter the most financially, is the starting point in models of income redistribution that build on Meltzer and Richard (1981) and on the Economic models on voting usually assume that voters max- theory of probabilistic voting (Lindbeck and Weibull imize their own material interests. Yet there is convinc- 1987, 1993; Dixit and Londregan 1996). While econo- ing evidence that people also tend to care about fairness mists have found support for pocketbook voting (see and the common good. Furthermore, some voters may de- Levitt and Snyder 1997; Vlachos 2004; Manacorda et al. 2011; Elinder et al. 2015), there is also evidence that rive utility from the act of voting in a certain way, inde- pocketbook voting and social motivations may coex- pendent of whether their vote affects the actual outcome. ist, as shown by Fiorina (1978) for the United States To evaluate the importance of these motives, we studied and by Carlsson and Johansson-Stenman (2010) for voting in student referenda on whether to collectively pur- Sweden. In this article, we summarize Meya et al. chase a public good, such as a regional train ticket. Most (2020) that studies voting among German students. students voted in line with their pocketbook interests and It contributes to this literature by providing the first analysis of individual-level voting in referenda using reported that their own willingness to pay was more impor- an objective measure of monetary benefits and costs tant in their vote choice than others’ willingness to pay. and also asked respondents directly about how they weighted self-interest as opposed to the interests of other students. tation or cultural amenities. Since buying a ticket University of Goettingen holds referenda among becomes compulsory for every student if the major- students on whether they should collectively purchase ity vote in favor of it, these tickets share essential flat rate tickets, called “Semestertickets.” The price features with tax-financed public projects or local of a ticket is very attractive compared with prices for public goods. individual use; however, once a ticket is accepted in We conducted two surveys on individual voting the referendum, buying becomes compulsory for all decisions and the underlying motives. Investigating students. Usually, these referenda are held yearly in these referenda is promising because they involve January on campus, with the option of voting by mail. easy-to-understand public policy decisions. In our set- If passed, these tickets give all students the right to ting, the voters knew exactly what a ticket would cost unlimited use of a facility, such as public transpor- and the benefits were clearly defined. In contrast, if the vote had involved, for example, a large infrastruc- * Acknowledgment: Johannes Meya coauthored this paper in a pri- ture project, then the costs and benefits would have vate capacity and the results are exclusively the authors’ responsibili- ty and do not in any way reflect the position of Bundesnetzagentur. been more widespread and uncertain. Different voting Johannes Meya Panu Poutvaara Robert Schwager is Economic Advisor at Bun- is Director of the ifo Center for is Professor of Economics at desnetzagentur. His research International Institutional Com- Georg August University Göttin- field is public economics. parisons and Migration Research gen. His research field is public and Professor of Economics at economics, with special empha- the University of Munich. His sis on fiscal federalism, taxation, research focuses on migration, voting behavior and education political economics and public policy. economics. CESifo Forum 4 / 2021 July Volume 22 31 RESEARCH REPORT decisions could also then reflect different subjective An empirical investigation of the model tests expectations and differences in risk attitudes. whether the measure of monetary gains and varia- The motives we consider are pocketbook voting, bles that represent social or expressive motives pre- social preferences and expressive concerns. Pocket- dict the likelihood of voting in favor of the ticket. The book voting refers to voting in line with one’s own theory entails two kinds of hypotheses. The presence monetary interests. The latter two motives both of pocketbook voting will be established by rejecting capture how the issue voted upon is seen related to Hypothesis H1: A voter whose net monetary gain other people but differ in one crucial aspect: Voters from the ticket is large is not more likely to vote in with social preferences want to affect the outcome favor of the ticket than a voter whose net monetary of the vote, for example, because they have altruis- gain is small. tic or paternalistic feelings toward other members of The presence of social preferences and expressive society, or because they care for the common good. motives is tested by a list of hypotheses, one for each In this sense, social preferences, such as pocketbook such motive. For example, altruism toward other stu- motives, are instrumental. In contrast, the theory of dents is established by rejecting. expressive voting, proposed by Tullock (1971) and Hypothesis H2: A respondent who considers the further developed by Hillman (2010), posits that vot- benefits of other students in his or her vote and ex- ers derive utility from the act of voting in accordance pects students to gain (lose) on average from the with what they think is socially good or morally just ticket is not more likely to vote in favor of (against) or good for their self-image, independent of whether the ticket than a voter who does not consider the their vote affects the actual outcome. benefits of other students. Although the theory of expressive voting has The implications of possible outcomes of the em- gained prominence in the public choice community, pirical analysis are collected in Table 1. If hypothesis a challenge so far has been how to test its validity H1 is rejected but H2 is not, voting is exclusively based in a way that is distinguishable from altruistic voting on monetary considerations (see bottom left cell in that aims to benefit others. A proponent of expres- Table 1). Rejecting H2 shows that social preferences, sive voting would typically interpret any claims of expressive motives, or both, affect the voting decision, voting according to social preferences as cheap talk, but does not allow discrimination between these two arguing that such voting is expressive. To address this motives. According to our theory, however, the out- dilemma, we developed a theory on the individual come of the test of hypothesis H1 helps to do so, since voting and turnout decisions as a function of the size the instrumental nature of social preferences creates of monetary gains or losses conferred by the public a link between both kinds of hypotheses. good, the strength of social or expressive motives and Failure to reject H1 would reveal that voters the perceived probability of changing the referendum consider the probability of changing the outcome to outcome. We then derived conditions under which it be negligible. Consequently, voters should also not is possible to test whether voting is expressive. expect to affect the outcome for others, hence, re- jecting H2 could not be due to social preferences but THEORY would be evidence for expressive motives (see top right cell in Table 1). If, instead, we find evidence for We model a voter’s decision about whether to partic- pocketbook voting by rejecting hypothesis H1, there ipate in the referendum on a ticket and if so, how to are two possible interpretations. First, voters may vote. In this model, the net monetary gain procured consider the probability of affecting the outcome to by the ticket is given by the benefit from having ac- be non-negligible. In this case, rejecting H2 is consist- cess to unlimited use of the facility for the one-off ent with instrumental social preferences but could price of the ticket, compared to paying for each sin- also be due to expressive concerns (see bottom right gle use. In line with standard economic theory, we cell in Table 1). While consistent with the existence of assume that the voter’s utility strictly increases in expressive motives, this outcome nevertheless con- this gain. Social preferences or expressive motives tradicts a theory of purely expressive voting, which are described by variables such as the net monetary maintains that voters consider their impact on the benefits accruing to other students, or the impact of outcome to be zero (see Hillman 2010, p. 415). Second, the referendum outcome on the environment. The with a negligible subjective probability of changing voter supports the ticket if the gain in expected utility the outcome, monetary benefits have no impact on from voting in favor of the ticket rather than against expected utility and, hence, any expressive concerns the ticket is positive or zero and votes against the would dominate the voting decision. Finding pock- ticket otherwise. In this calculation, the monetary gain etbook voting in this case therefore implies that ex- and social preferences are weighted with the voter’s pressive concerns are absent, again contradicting a subjective probability to cast the decisive vote, since theory of purely expressive voting. these items relate to the actual outcome. The impact To summarize, expressive voting can be shown to of expressive motives, in contrast, is independent of exist, in a way that is not observationally equivalent to this probability. social preferences, only in the case where pocketbook 32 CESifo Forum 4 / 2021 July Volume 22 RESEARCH REPORT Table 1 Implications of Possible Outcomes from Testing Hypotheses H1 and H2 Hypothesis H2 Fail to reject Reject Fail to reject Model invalid Expressive voting Hypothesis H1 Pocketbook voting and social preferences Reject Pure pocketbook voting or expressive motives (observationally equivalent); pure expressive voting ruled out Source: Authors' elaboration.