Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2008:7: Selfish and Prospective Theory and Evidence of Pocketbook Voting

Mikael Elinder (), Henrik Jordahl () and Panu Poutvaara ()
Additional contact information
Mikael Elinder: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Henrik Jordahl: Research Institute of Industrial Economics, Postal: Box 55665, SE-102 15 Stockholm, Sweden
Panu Poutvaara: University of Helsinki and CEBR, Postal: Department of Economics, P.O. Box 17 (Arkadiankatu 7), FIN-00014, University of Helsinki, Finland

Abstract: We present and test a theory of prospective and retrospective pocketbook voting. Focusing on two large reforms in Sweden, we establish a causal chain from policies to sizeable individual gains and losses and then to voting. The Social Democrats proposed budget cuts affecting parents with young children before the 1994 election, but made generous promises to the same group before the 1998 election. Since parents with older children were largely unaffected we use a difference-in-differences strategy for identification. We find clear evidence of prospective pocketbook voting. Voters respond to campaign promises but not to the later implementation of the reforms.

Keywords: Elections; Economic voting; Pocketbook voting; Self-interest; Prospective voting; Retrospective voting; Child care

JEL-codes: C21; D72; H50

31 pages, October 14, 2008

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