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The political economy of risk and ideology

By Matthew Dimick and Daniel Stegmueller


This paper argues for the central role of risk aversion in shaping political ideology. We develop a political economy model, which makes explicit the link between risk aversion, the labor market, government policy, and ideology. Our model distinguishes the effects of risk aversion from unemployment risk and our evidence sheds light on debates over explanations for the welfare state. We test our model using a large-scale household panel with an experimentally validated measure of risk aversion. We find that risk aversion is a systematic and important determinant of political-economic attitudes and is at least as important as, if not more so, an individual's position in the income distribution

Topics: ddc:330
Publisher: Berlin: Deutsches Institut f\ufcr Wirtschaftsforschung (DIW)
Year: 2015
OAI identifier: oai:econstor.eu:10419/129733
Provided by: EconStor

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