Mind the Gap: Why Wealthy Voters Support Brexit

Abstract

Does insurance alter voters' decisions to support the status-quo? Since wealth provides a cushion against financial risk, which in turn decreases risk-aversion, wealth increases support for a change to the status quo. This is because a wealthy, less risk averse individual places a lower weight on costs than on benefits. We apply these insights to referendums where voters weigh perceived costs, benefits and also risks, and test our theory in the case of Brexit, which has been characterized as a vote by economically left-behind voters. Our results show that individuals who lacked wealth are less likely to support leaving the EU; they are more biased to the status quo. We corroborate our theory using two separate panel surveys, accounting for unobserved individual level heterogeneity, and using a survey experiment. The findings have implications for the role of wealth-as-insurance in electoral behavior and important implications for understanding the Brexit case.