Do voters' biases impede future‐oriented policy‐making?

Abstract

In research on public economics, climate politics and the welfare state, voters' informational and cognitive biases are commonly understood as impeding future‐oriented policy‐making, by incentivizing policymakers to trade off long‐term investments against short‐term consumption when facing competitive elections or liquidity constraints. Yet, the assumptions about how policymakers perceive these alleged trade‐offs have not yet been verified. This study reports results from a survey of Swedish local government politicians, centring around experiments about environmental‐friendly public investments. We find that most politicians perceive that electoral competition stimulates rather than impedes investments. Politicians are, however, less supportive of investments if these need to be financed through absolute losses rather than gains foregone, which illustrates the relevance of endowment effects in long‐term governance. We furthermore show that our micro‐level observations are consistent with macro‐level investment expenditure patterns. These findings demonstrate that accounting for policymakers' own perceptions is important for advancing our understanding of future‐oriented policy‐making.