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Does the consumption of ideologically congruent news on social media exacerbate polarization? I estimate the effects of social media news exposure by conducting a large field experiment randomly offering participants subscriptions to conservative or liberal news outlets on Facebook. I collect data on the causal chain of media effects: subscriptions to outlets, exposure to news on Facebook, visits to online news sites, and sharing of posts, as well as changes in political opinions and attitudes. Four main findings emerge. First, random variation in exposure to news on social media substantially affects the slant of news sites that individuals visit. Second, exposure to counter-attitudinal news decreases negative attitudes toward the opposing political party. Third, in contrast to the effect on attitudes, I find no evidence that the political leanings of news outlets affect political opinions. Fourth, Facebook’s algorithm is less likely to supply individuals with posts from counter-attitudinal outlets, conditional on individuals subscribing to them. Together, the results suggest that social media algorithms may limit exposure to counter-attitudinal news and thus increase polarization.

Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. We rely on this logic to explain the different support of populist parties among European countries in response to the globalization shock and to the 2008–11 financial and sovereign debt crisis. We predict a greater success of populist parties in response to these shocks in Eurozone (EZ) countries, and our empirical analysis confirms this prediction. This is consistent with voters’ frustration for the greater inability of the EZ governments to react to difficult-to-manage globalization shocks and financial crises. Our evidence has implications for the speed of construction of political unions. A slow, staged process of political unification can expose the European Union to a risk of political backlash if hard to manage shocks hit the economies during the integration process.

Linear regressions with period and group fixed effects are widely used to estimate treatment effects. We show that they estimate weighted sums of the average treatment effects (ATE) in each group and period, with weights that may be negative. Due to the negative weights, the linear regression coefficient may for instance be negative while all the ATEs are positive. We propose another estimator that solves this issue. In the two applications we revisit, it is significantly different from the linear regression estimator.

We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy. To reduce measurement error, we introduce a new indicator of democracy that consolidates previous measures. Our baseline results show that democratizations increase GDP per capita by about 20 percent in the long run. We find similar effects using a propensity score reweighting strategy as well as an instrumental-variables strategy using regional waves of democratization. The effects are similar across different levels of development and appear to be driven by greater investments in capital, schooling, and health.

Is support for democracy in the United States robust enough to deter undemocratic behavior by elected politicians? We develop a model of the public as a democratic check and evaluate it using two empirical strategies: an original, nationally representative candidate-choice experiment in which some politicians take positions that violate key democratic principles, and a natural experiment that occurred during Montana’s 2017 special election for the U.S. House. Our research design allows us to infer Americans’ willingness to trade-off democratic principles for other valid but potentially conflicting considerations such as political ideology, partisan loyalty, and policy preferences. We find the U.S. public’s viability as a democratic check to be strikingly limited: only a small fraction of Americans prioritize democratic principles in their electoral choices, and their tendency to do so is decreasing in several measures of polarization, including the strength of partisanship, policy extremism, and candidate platform divergence. Our findings echo classic arguments about the importance of political moderation and cross-cutting cleavages for democratic stability and highlight the dangers that polarization represents for democracy.

We explore how support for radical parties of both the left and right may be shaped by what we call ‘positional deprivation’, where growth in income of individuals at a given point in the income distribution is outpaced by income growth elsewhere in that distribution. We argue that positional deprivation captures the combination of over-time and relative misfortune that can be expected to distinctly spur support for radical left and right parties. We explore this possibility by matching new measures of positional deprivation to individual-level survey data on party preferences in 20 European countries from 2002 to 2014. We find that positional deprivation is robustly correlated with supporting radical populist parties. First, positional deprivation generally, measured as average income growth across deciles of a country’s income distribution minus a respondent’s own decile’s growth, is associated with respondents’ retreat from mainstream parties and with support for both radical right and, particularly, radical left parties. Second, positional deprivation relative to the highest and the lowest ends of the income spectrum play out differently for radical right and for radical left support. A respondent’s positional deprivation relative to the wealthiest decile’s growth in his or her country tends to spur support for radical left but not radical right parties. In contrast, positional deprivation relative to the poorest decile’s growth in a respondent’s country tends to spur support for radical right but not left parties. The results suggest that the combination of over-time and relative economic misfortune may be key to how economic experience shapes radical backlash of the left and right.

We show that there is cross-sectional variation in the quality of shareholder proposals. On average, proposals submitted by the most active individual sponsors are less likely to receive majority support, but they occasionally pass if shareholders mistakenly support them and may even be implemented due to directors’ career concerns. While gadfly proposals destroy shareholder value if they pass, shareholder proposals on average are value enhancing in firms with more informed shareholders. We conclude that more informed voting could increase the benefits associated with shareholder proposals.

\"Nudges\" are being widely promoted to encourage energy conservation. We show that the popular electricity conservation \"nudge\" of providing feedback to households on own and peers' home electricity usage in a home electricity report is two to four times more effective with political liberals than with conservatives. Political conservatives are more likely than liberals to opt out of receiving the home electricity report and to report disliking the report. Our results suggest that energy conservation nudges need to be targeted to be most effective.

We examine conventional approaches to evaluating the economic impact of protectionist trade policies. We illustrate these conventional approaches by applying them to the tariffs introduced by the Trump administration during 2018. In the wake of this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.

We adapt simple tools from computational linguistics to construct a new measure of political risk faced by individual U.S. firms: the share of their quarterly earnings conference calls that they devote to political risks. We validate our measure by showing that it correctly identifies calls containing extensive conversations on risks that are political in nature, that it varies intuitively over time and across sectors, and that it correlates with the firm’s actions and stock market volatility in a manner that is highly indicative of political risk. Firms exposed to political risk retrench hiring and investment and actively lobby and donate to politicians. These results continue to hold after controlling for news about the mean (as opposed to the variance) of political shocks. Interestingly, the vast majority of the variation in our measure is at the firm level rather than at the aggregate or sector level, in the sense that it is captured neither by the interaction of sector and time fixed effects nor by heterogeneous exposure of individual firms to aggregate political risk. The dispersion of this firm-level political risk increases significantly at times with high aggregate political risk. Decomposing our measure of political risk by topic, we find that firms that devote more time to discussing risks associated with a given political topic tend to increase lobbying on that topic, but not on other topics, in the following quarter.