Economic Policies of Heterogeneous Politicians

This paper studies how a politician’s preferences and abilities to influence public and private sector productivity affect her choices over economic policies. Extremism between policies of leftand right-wing incumbents increases with ability, because voters are more willing to re-elect competent politicians. Positive correlations between certain ability dimensions and preferences amplify politicians’ relative extremism, because different ability dimensions affect the marginal tradeoff between private and public sectors differently. Moreover, a competent politician is less willing to adopt policies that increase economic productivity if they render her political advantage obsolete. Conversely, economic growth may foster the selection of better politicians. JEL classification: D72, H31, H41.