Patrimony at Risk: Market Uncertainty and Right-Wing Voting

Abstract

The current literature suggests that financial assets push investors to vote for conservative parties given that right-wing policies are said to generate higher returns. Another popular argument is that wealth reduces demand for welfare spending given that private assets can be used as a substitute for social benefits. What I ask in this study is if asset owners always support right-wing parties and a trimmed welfare state. I argue that owners of financial assets become less tempted by free-market policy offerings when there is uncertainty in financial markets. The dot-com bubble, the financial crisis, and most recently the massive impact on financial markets of the coronavirus show that savings can evaporate in a matter of days. I show that the support for right-wing parties decreases in areas with much financial assets under such conditions.