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The roots of polarization: Institutions, media and geography

19th National Competition for Economic Research Grants

Applied Economics

Senior Researcher : Agustín Casas

Research Centre or Institution : Colegio Universitario de Estudios Financieros (CUNEF)

Abstract

 We examine empirically to what extent public and private institutions affect preference formation in general, and polarization in particular. We focus on three different empirical exercises -- with an emphasis on Spanish organizations—centered around the effect of the media, the effect of the Constitutional Court and the effect of geographical relocation. Methodologically, we combine quasi-natural experiments and surveys to identify their causal effect on polarization.

More generally, during the recent decades polarization has become noticeable: extremism, populism and civil conflict are ubiquitous, not only in Spain but the World. These manifestations of polarization have large political and, especially, economic costs.

Arguably, polarization has prevented parties to reach agreements to form governments (see NYTimes; Persson et al., 2000, and references therein), it has fueled political and civil conflict (see Blattman and Miguel, 2010; Ray and Esteban, 2017), it has threatened institutions (see Acemoglu et al., 2013), and it has excluded citizens from democratic rights (see Alesina et al., 2003 and references therein).

Our work is sustained on the empirical implications of political economy models. One of the most important aspects of political economy is to understand how institutions shape economic and political incentives (North, 1992; Ostrom, 1991; Williamson, 2000). In particular, a large body of the literature studied how the rules of the game may be the cause of polarization. On its classical approach, by which preferences are given, has proven very useful to understanding how private and public organizations shape policies. However, new theoretical research has been more fruitful in explaining extremism in the positioning and intensity of preferences (i.e. polarization). We build up on this frontier to investigate the effect of institutions on polarization, with a focus on Spain.

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