DP12407 A Model of Focusing in Political Choice

Author(s): Salvatore Nunnari, Jan Zapal
Publication Date: October 2017
Keyword(s):
JEL(s): D03, D72, D78
Programme Areas: Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12407

This paper develops a theoretical model of voters' and politicians' behavior based on the notion that voters focus disproportionately on, and hence overweight, certain attributes of policies. We assume that policies have two attributes-benefits and costs-and that voters focus more on the attribute in which their options differ more. First, we consider exogenous policies and show that voters' focusing polarizes the electorate. Second, we consider the endogenous supply of policies by office-motivated politicians who take voters' distorted focus into account. We show that focusing leads to inefficient policies, which cater excessively to a subset of voters: social groups that are larger, have more distorted focus, and are more sensitive to changes in a single attribute are more influential. Finally, we show that augmenting the classical models of voting and electoral competition with focusing can contribute to explain puzzling stylized facts as the inverse correlation between income inequality and redistribution or the backlash effect of extreme policies.