Weekly Top 5 Papers – July 10th 2017

1. Why Not Taxation and Representation? A Note on the American Revolution by Sebastian Galiani (University of Maryland – Department of Economics) and Gustavo Torrens (Indiana University)

“Why Not Taxation and Representation? A Note on the American Revolution” began a couple years ago, as our airport project. For personal and professional reasons, we were both traveling a lot. Somehow, between unintelligible boarding announcements, we started reading about colonial America and the American Revolution. (For us some of the most exciting research questions emerge from a dialogue between history and economic theory.) Eventually, two issues pop out from our readings. First, how little was written about the British perspective on the matter. Second, it was never clear to us why Britain and the American colonies were unable to reach an agreement that would have avoided war and independence. The paper grew as an attempt to solve this puzzle.

Our answer is simple. Granting American colonies representation in the British Parliament would have shifted the balance of power within Britain in favor of radical political reform. American representatives would have formed a coalition with the incipient democratic movement in England (they could not commit to a different course of action), which would have posed a serious threat to the position of the landed gentry. Fearful of this outcome, the British chose to go to war rather than grant parliamentary representation to the American elites.

We hope the paper triggers a new perspective on the American Revolution and, more importantly, on the way we understand independence processes. This is crucial to improve our understanding of the long run institutional paths followed by different countries after independence (the long shadow of colonial history on economic and political institutions). – Gustavo Torrens and Sebastian Galiani

2. A Brief Introduction to the Basics of Game Theory by Matthew O. Jackson (Stanford University – Department of Economics)

3. A Century of Evidence on Trend-Following Investing by Brian Hurst (AQR Capital Management, LLC) and Yao Hua Ooi (AQR Capital Management, LLC) and Lasse Pedersen (AQR Capital Management, LLC)

4. Battlefield Casualties and Ballot Box Defeat: Did the Bush-Obama Wars Cost Clinton the White House? by Douglas Kriner (Boston University – Department of Political Science) and Francis Shen (University of Minnesota Law School)

We have been writing about the causes and political consequences of inequality in military sacrifice for more than a decade. But the issue typically gets overlooked, and this was the case with analysis of the 2016 presidential election. Few commentators argue that antiwar sentiment was a key to Trump’s victory. But we think that’s a credible argument, and this paper lays out the data to support it.

As we write at the start of the paper: Imagine a country continuously at war for nearly two decades. Imagine that the wars were supported by both Democratic and Republican presidents. Continue to imagine that the country fighting these wars relied only on a small group of citizens—a group so small that those who served in theater constituted less than 1 percent of the nation’s population, while those who died or were wounded in battle comprised far less than 1/10th of 1 percent of the nation’s population.  And finally, imagine that these soldiers, their families, friends, and neighbors felt that their sacrifice and needs had long been ignored by politicians in Washington. Would voters in these hard hit communities get angry? And would they seize an opportunity to express that anger at both political parties? We think the answer is yes. And the proof is the 2016 victory of Donald J. Trump.

Trump’s campaign rhetoric was well-crafted to appeal to voters in communities that have borne the brunt of fifteen years of fighting.  He pledged both to rebuild the military, and to be more restrained in its use – to avoid the “stupid” wars of his predecessors.   Our analysis suggests that this gambit may have tilted the election.  Even controlling in a statistical model for many other alternative explanations, we find that there is a significant and meaningful relationship between a community’s rate of military sacrifice and its support for Trump. Our statistical model suggests that if three states key to Trump’s victory – Pennsylvania, Michigan, and Wisconsin – had suffered even a modestly lower casualty rate, all three could have flipped from red to blue and sent Hillary Clinton to the White House. We argue that politicians from both parties would do well to more directly recognize and address the needs of those communities whose young women and men are making the ultimate sacrifice for the country. -Francis Shen

5. Taking Corrections Literally But Not Seriously? The Effects of Information on Factual Beliefs and Candidate Favorability by Brendan Nyhan (Dartmouth College) and Ethan Porter (George Washington University) and Jason Reifler (University of Exeter) and Thomas Wood (Ohio State University (OSU))

This paper is the result of two research teams working together to further our understanding of the U.S. public’s willingness to accept factual corrections of their political leaders. Brendan and Jason have written about the risk that factual corrections will inspire “backfire” among survey respondents when the respondent shares the ideological affiliation of the corrected politician. By contrast, Tom and Ethan conducted a series of studies which found that people are typically willing to accept factual corrections even when the content of the correction is ideologically challenging. During the 2016 presidential campaign, the role of facts was the subject of intense debate, which inspired a joint research project asking the following questions: Would people accept factual corrections about statements made by their preferred candidate? Or would they reject empirical evidence, choosing loyalty to party and candidate instead? Finally, would they demonstrate factual backfire, where corrective information might make them systematically less informed?

To find out, we ran two experimental studies about two misleading statements made by then-candidate Donald Trump – his speech at the Republican National Convention suggesting crime was rising dramatically and a statement during the first debate suggesting major job losses in Michigan and Ohio. Encouragingly, we found that exposing people to corrective information after showing them one of these statements increased the accuracy of their beliefs on average even among Trump supporters. The corrections did not backfire. However, people did not change their minds about the candidates either. Supporters of President Trump didn’t become any less supportive of him even as they otherwise rejected his misstatements. Based on this paper, it seems that Americans are willing to accept factual corrections, but we shouldn’t expect those corrections to affect which candidates they support. – Ethan Porter