Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 26/2011: Knowledge is Power: A Theory of Information, Income, and Welfare Spending

Jo Thori Lind () and Dominic Rhoner ()
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
Dominic Rhoner: Department of Economics, University of Zurich

Abstract: No voters cast their votes based on perfect information, but better educated and richer voters are on average better informed than others. We develop a model where the voting mistakes resulting from low political knowledge reduce the weight of poor voters, and cause parties to choose political platforms that are better aligned with the preferences of rich voters. In US election survey data, we nd that income is more important in a ecting voting behavior for more informed voters than for less informed voters, as predicted by the model. Further, in a panel of US states we nd that when there is a strong correlation between income and political information, Congress representatives vote more conservatively, which is also in line with our theory.

Keywords: Redistribution; Welfare Spending; Information; Income; Voting; Political Economics

JEL-codes: D31; D72; D82; H53

33 pages, November 28, 2011

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