Crisis & Belief – The Behavioral Political Economy of Recession

Abstract

The link between crisis and permanent increases in public spending has been investigated from the perspective of interest groups, bureaucratic growth, etc., while a demand perspective, i.e. the question of changing voter preferences, has been ignored. Survey data suggests that individuals become temporarily more in favor of government intervention in the aftermath of an economic crisis. The relationship is tested by an experiment in which salience of economic crisis generates favorable attitudes toward intervention for crisis related and unrelated topics.