Machiavellian Fair Play: Electoral Incentives to Implement Programmatic Transfers

Abstract

If a welfare transfers policy is programmatic (it is non-partisan, transparent and persisting), is it irrelevant for politicians' electoral fortunes? I show that the answer is no with a political agency model where politicians' competence is uncertain to all. In my set-up, an incumbent politician can allocate a budget to public goods, which are informative about his competence, and programmatic transfers, which are not. When the incumbent increases the budget to public goods by reducing transfers, two effects arise: his performance in office today would reveal more information about his ability (an informativeness effect), and voters' anticipation of narrow transfers tomorrow would increase the salience of political selection (an stakes effect). I show that, from the incumbent's viewpoint, these two effects move in opposing directions and, consequently, the strategic allocation of the budget weakly helps him to advance his electoral fortunes —with the stakes effect broadly dominating the informativeness effect in equilibrium. Finally, I explain how existing studies on the effects of programmatic transfers are unlikely to be able to measure its electoral impact.