Endogenous Preferences: The Political Consequences of Economic Institutions

This paper attempts to explain cross-national voting behavior in 18 Western democracies over 1960-2003. A new data set for the median voter is introduced that corrects for stochastic error in the statistics from the Comparative Manifesto Project. Next, the paper finds that electoral behavior is closely related to the salience of particular economic institutions. Labour organization, skill specificity, and public sector employment are found to influence individual voting behavior. At the country level, this paper suggests that coordinated market economies move the median voter to the left, whereas liberal market economies move the median voter to the right. The empirical analysis employs cross-sectional and panel data that are instrumented with the level of economic structure circa 1900 to estimate the net effect of economic institutions on the median voter. Significant results show that revealed voter preferences are endogenous to the economic institutions of the political economy. This paper places political economy at the heart of voting behavior and implies the existence of institutional advantages to partisan politics.