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Distributive Politics and Economic Ideology

This paper presents a theoretical model to investigate the effect of heterogeneous ideological preferences over the public provision of goods on both the scope of government spending and the electoral competition among political parties. The proposed model points out that the presence of both ideological politicians who compete for office and electoral uncertainty generate a partisanship effect on economic policy. In particular, pro-market (right-wing) politicians commit to lower public provision of goods and income taxation schedules that implement larger income inequality than pro-government (left-wing) politicians. The model also predicts that the public funding of goods through income taxation confers an electoral advantage to pro-market ideological positions. In fact, pro-market politicians can court moderate pro-leftist voters by promises of higher net income that pro-government politicians are not willing to fund. As a result, a right-wing party exhibits larger chances of winning elections, and its policy proposal determines lower ideological sacrifice than for the left-wing party.