Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 23/2003: Does permanent income determine the vote?

Jo Thori Lind ()
Additional contact information
Jo Thori Lind: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: I study to what extent voters are forward looking and how future income affects the voting decision. Particularly, I estimate the effect of both transitory and permanent income on preferences for different parties using a panel data set from the Norwegian Election Study. To construct a proxy for permanent income, I use stated expectations about the future economic situation and an estimate of how this affects future income. It turns out that once we include the proxy for permanent income, transitory income has no explanatory power on voting behaviour, supporting the hypothesis of forward looking voting. As expected, a high expected permanent income leads to Conservative voting and a low income to Socialist voting.

Keywords: Voting; permanent income; redistribution

JEL-codes: C25; D31; D72; D91; H11; H53

32 pages, October 28, 2004

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