When Are Monetary Policy Preferences Egocentric? Evidence from American Surveys and an Experiment

Abstract

This article enters the international/comparative political economy debate about whether individual-level macroeconomic policy preferences are egocentric and, if so, on what basis (factors, sectors, or firms). It argues that contextual information may function as a precondition for the emergence of egocentric preferences. With a focus on the trade-off between using monetary policy for a domestic or an international goal, it presents evidence from three original American surveys using informative vignettes to show how monetary policy preferences exhibit firm-based egocentric variation: Individuals whose employer does most of its business in overseas markets have a lesser preference for domestic monetary autonomy. It also presents evidence from a survey experiment to show how the strength of this egocentric relationship depends on the informative power of the vignette: A more contextually informative vignette produces a stronger relationship between overseas business activity and a preference against domestic monetary autonomy. R egardless of the issue area, a complete political economy model of policymaking, especially in a democratic context, must characterize individual-level preferences over policy. 1 If we think that politicians take at least some cue for their policy choices based on the preferences of potential voters, then we need to know both what citizens want in terms of economic policy and on what basis their policy preferences are formed. The former is easy to ascertain, but the latter is not. While individual-level preferences in all issue areas exhibit some variation, it has proven hard to explain and predict this variation. The search for a framework to understand the variation in individual-level preferences across different macroeconomic issue areas leads to the long-running political economy behavior debate, now in its second wave. for helpful comments. A codebook with a replication data set and associated do file can be found at http://dx.doi.org/10.7910/DVN/MWNBXO.

Why Don't Trade Preferences Reflect Economic Self-Interest?

“…Hermann 2017. 45. For work on the connection between economic knowledge and preferences in these policy domains, see Bearce and Tuxhorn 2017;Prather 2015;and Tomz 2004;but compare Curtis, Jupille, and Leblang 2014. 46. See, for example, Chwieroth and Sinclair 2013;and Drezner and McNamara 2013. from paying sufficient attention to the role of prevailing ideas.…”

Survey Experiments in International Political Economy: What We (Don't) Know About the Backlash Against Globalization

“…Similarly, for benchmarking economic self-interest in immigration policy, scholars use a factor proportions model, in which natives face labor market competition against immigrants with similar skill level (often measured by educational attainment). For benchmarking economic self-interest in the monetary policy domain, Bearce & Tuxhorn (2017) base their measurements of covariates on the factor-, sector-, and firm-based models of monetary policy preferences (to be discussed in detail below).…”

“…By contrast, the bulk of findings from survey experiments lend support for noneconomic sources of support for protectionism, such as other-regarding preferences (Naoi & Kume 2011, Lü et al 2012, Chilton et al 2020, nationalism, and ethnocentrism (Margalit 2012, Mansfield & Mutz 2013. In fact, survey experimental studies have rarely found support for economic self-interest as a driver of opposition to globalization [exceptions include studies by Rho & Tomz (2017) and Bearce & Tuxhorn (2017), which I discuss in detail below]. Furthermore, these findings from survey experiments corroborate the findings from nationally representative public opinion data that the salience of trade and other globalization-related issues has been extremely low in the public mind, even at the height of the China import shock (mid-2000s; see Guisinger 2009Guisinger , 2017Cramer 2016) and during the Great Recession, the largest economic contraction since the Great Depression (Naoi 2018).…”

How Do People Evaluate Foreign Aid To ‘Nasty’ Regimes?

“…3 Among many, see Dietrich (2013), Bush (2015), Reinsberg (2015), and Winters & Martinez (2015). 4 See examples concerning immigration policy (Scheve & Slaughter 2001a, Facchini & Mayda 2009, trade policy (Scheve & Slaughter 2001b, Hays, Ehrlich & Peinhardt 2005, monetary policy (Bearce & Tuxhorn 2017), economic sanctions (Heinrich, Kobayashi & Peterson 2016), diplomacy (Tanaka 2015), counterterrorism (Garcia & Geva 2016), and the use of the military (Tomz & Weeks 2013, Johns & Davies 2014.…”