The Thinning of Social Ties: Electoral Consequences of Indebtedness under Austerity

Abstract

What are the political consequences of rising household debt in the context of fiscal austerity? As governments scale back the welfare state, many voters address ensuing financial shortfalls by borrowing money. I argue that debt individualizes and undermines turnout and support for incumbents by triggering feelings of political neglect, breeding anger and resentment, and weakening social ties that are necessary for political engagement. I examine this argument by leveraging spatial and temporal variation in the rollout of Universal Credit, a large-scale welfare reform in the United Kingdom. Using fine-grained administrative data on unsecured debt, I demonstrate that fiscal austerity generated an increase in indebtedness and lowered voter turnout and support for the Conservatives. I then use individual-level survey data to explore the mechanisms that link debt and political behavior. The results suggest that rising indebtedness de-mobilizes voters, which reduces the political costs of welfare retrenchment but creates new political cleavages.