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Does enfranchisement affect fiscal policy? Theory and empirical evidence on Brazil

Abstract

This paper studies the effect of political participation on public spending at the local level in Brazil. In particular, we look at the phased-in implementation of electronic voting in the late 1990s—which enfranchised poorer voters by decreasing the number of invalid votes—to identify the causal effect of political participation on public spending. We build a theoretical political economy model which allows voters to cast, not purposefully, an invalid vote, and show that when poorer voters’ likelihood of casting a valid vote increases, public social spending increases as well. We test this prediction empirically using a difference-in-differences model where municipalities using electronic voting constitute our treatment group. We find that an increase of 1 percentage point in the valid vote to turnout ratio for state representatives increases health spending by 1.8%; education by 1.4%; public employment by 1.25%; intergovernmental transfers by 1%; and local taxes by 2.6%.

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Notes

  1. 1.

    In Fujiwara (2015), the Brazilian states are the unit of analysis and the impact of poor citizens’ enfranchisement is measured against health spending and health outcomes only.

  2. 2.

    For empirical research measuring the effect of voting costs on electoral outcomes, see, for instance, Lott (2009) and Schneider and Senters (2018).

  3. 3.

    Both municipal and federal elections grant a 4-years terms to the ones elected (except senators that get 8-year terms). In addition, a 2 years distance separates these two elections.

  4. 4.

    These 57 municipalities had more than 200,000 voters, which is significantly more than the municipal average number of voters in Brazil at the time—just over 16,000 voters—, and are therefore excluded from our analysis.

  5. 5.

    It is also important to note that the government, at the time, produced TV ads that taught voters how to vote using the new system and trained people to help voters if something went wrong during the voting process in the election day.

  6. 6.

    There is a large literature that explains people’s decision to vote. The motives include a sense of civic duty (Blais and Young 1999), group peer presure (Schram and Van Winden 1991; Schram and Sonnemans 1996), altruism (Edlin et al. 2007), and ethics rules (Feddersen and Sandroni 2006).

  7. 7.

    Alternatively, and more precisely, we could consider \(\kappa _i\) to be an additional cost the citizen has to incur in order to cast a valid vote, in a mandatory voting regime.

  8. 8.

    For the sake of simplicity, we rule away the possibility of a purposeful blank vote as a political statement, i.e., in the present model, a citizen will cast an invalid vote only if she/he decides not to incur the cost of preparing for voting.

  9. 9.

    See Ferejohn (1986), Bugarin (1999) or Bugarin (2003) for a discussion on the “sociotropic” (economic) versus “ideological” components of a voter’s utility function.

  10. 10.

    Analogous results would be obtained if we had set the bias with respect to party A due to the symmetry of the bias.

  11. 11.

    See “Poll Analyses”, Section “Gallup Poll News Service”, The Gallup Organization, http://www.gallup.com, 09/24/2001.

  12. 12.

    See Fujiwara (2015) or Hidalgo (2012), for example, or the data available at the Brazilian Superior Electoral Court (http://www.tse.jus.br).

  13. 13.

    The Brazilian National Treasury publishes detailed annual municipal expenditures. All variables on spending are in per capita values and have been deflated using the IGPM index (1994 is the base year).

  14. 14.

    See Ferreira and Bugarin (2007), Brollo and Nannicini (2012), and Bugarin and Marciniuk (2017).

  15. 15.

    As we show in the Appendix, Table 6, valid votes to turnout ratio for municipal councils were also positively affected by EV usage.

  16. 16.

    Blank votes are votes cast on purpose for no candidates by pressing a white button on the electronic voting machine. Null votes are votes that are cast to a candidate that does not exist (i.e., to cast a null vote, one should type a number that represents no candidate and press the green button to confirm).

  17. 17.

    If we were to consider all municipalities that used EV in 1998, our treatment group would have municipalities where the number of eligible voters would vary from 947 to 7,131,342. On the other hand, the control group would have, at most, 40,499 eligible voters.

  18. 18.

    See Angrist and Krueger (1999) for a complete discussion on the DID methodology.

  19. 19.

    Fujiwara (2015) explains the selection of the four states as follows: “Two remote states largely covered by the Amazon forest (Amapá and Roraima) were chosen to check the electoral authority’s ability to distribute EV in isolated areas, while the states of Rio de Janeiro and Alagoas had areas where the army provided security to election officials, allowing an opportunity to check the logistics of distributing the electronic devices jointly with the military” (p. 431).

  20. 20.

    According to IBGE (the Brazilian institute of geography and statistics), municipalities with less than 5,000 citizens, between 1998 and 2000, got on average 57.3% of their revenue from FPM.

  21. 21.

    Bugarin and Marciniuk (2017) also conclude for the neutrality of the FPM in their study of partisan transfers in Brazil.

  22. 22.

    This assumes that the increase in public spending caused by EV is solely driven by enfrnachisement in legislative elections. If one considers the federal representatives’ elections instead, then the conclusion would be that an increase of 1 percentage point in the valid vote to turnout ratio for federal representatives increases health spending by 1.13%; education by 0.9%; public employment by 0.81%; intergovernmental transfer by 0.63%; and local taxes by 1.63%.

  23. 23.

    This table is available upon request.

  24. 24.

    A parametric fuzzy RDD estimation, which considers the entire sample of municipalities, reports an increase close to 11 percentage points in the number of valid votes to turnout ratio for municipal representatives due to the EV usage. This estimation is similar to the one reported in Table 6 considering only the State of São Paulo.

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Acknowledgements

We are very grateful to the co-editor, Marko Koethenbuerger, and the anonymous referee for their insightful comments and suggestions. We also thank Rebecca Thornton, Daniel Bernhardt, Daniel McMillen, Jake Bowers, José Cheibub for their detailed feedback and support. This paper also benefited from comments by participants at the 9th Midwest Graduate Student Summit in Applied Economics, Regional and Urban Studies; the 2016 Midwest International Economic Development Conference; the 2016 LACEA-LAMES Annual Meeting; the 2017 North American Summer Meeting of the Econometric Society; the 2017 European Meeting of the Econometric Society; the 45th ANPEC Annual Conference and the UIUC graduate seminars. All errors are our own.

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Correspondence to Rodrigo Schneider.

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Schneider, R., Athias, D. & Bugarin, M. Does enfranchisement affect fiscal policy? Theory and empirical evidence on Brazil. Econ Gov 20, 389–412 (2019). https://doi.org/10.1007/s10101-019-00230-6

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Keywords

  • Electronic voting
  • Political participation
  • Social public spending
  • Difference-in-differences

JEL Classification

  • H21
  • H4
  • H5
  • H7