CFDP 2279R

Retrospective Voting Versus Risk-Aversion Voting: A Comment on Pástor and Veronesi (2020)


Publication Date: March 2021

Revision Date: July 2021

Pages: 12


According to retrospective voting, a bad economy hurts the incumbent party and vice versa. According to risk-aversion voting as discussed in Pástor and Veronesi (2020), high risk aversion favors the Democrats over the Republicans and vice versa. If high risk aversion is associated with a bad economy, then risk-aversion voting implies that a bad economy favors the Democrats and vice versa. The two theories thus have different implications for the Democrats. This paper tests both theories under the assumption that high risk aversion is associated with a bad economy. The results provide no support for risk-aversion voting under this assumption.

Keywords: Retrospective voting, Risk-aversion voting

JEL Classification Codes: E00

JEL Classification Codes: E00

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