Inter-American Development Bank
facebook
twitter
youtube
linkedin
instagram
Abierto al públicoBeyond BordersCaribbean Development TrendsCiudades SosteniblesEnergía para el FuturoEnfoque EducaciónFactor TrabajoGente SaludableGestión fiscalGobernarteIdeas MatterIdeas que CuentanIdeaçãoImpactoIndustrias CreativasLa Maleta AbiertaMoviliblogMás Allá de las FronterasNegocios SosteniblesPrimeros PasosPuntos sobre la iSeguridad CiudadanaSostenibilidadVolvamos a la fuente¿Y si hablamos de igualdad?Home
Citizen Security and Justice Creative Industries Development Effectiveness Early Childhood Development Education Energy Envirnment. Climate Change and Safeguards Fiscal policy and management Gender and Diversity Health Labor and pensions Open Knowledge Public management Science, Technology and Innovation  Trade and Regional Integration Urban Development and Housing Water and Sanitation
  • Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Ideas Matter

  • HOME
  • CATEGORIES
    • Behavioral Economics
    • Environment and Climate Change
    • Macroeconomics and Finance
    • Microeconomics and Competitiveness
    • Politics and Institutions
    • Social Issues
  • Authors
  • Spanish

Why Don’t Voters Demand More Public Investment?

April 14, 2022 by Razvan Vlaicu Leave a Comment


For decades economists have warned that low levels of public investment in education, health, infrastructure, and security would weaken a country’s economic growth and delay its social development. Unfortunately, that describes many Latin American and Caribbean countries. From 1980 to 2016, public investment in the region grew by almost 10 percentage points slower than in advanced economies, according to a recent IDB flagship report. Staying on the current course would jeopardize the region’s prosperity and the wellbeing of its citizens.

One possible explanation for the phenomenon is that many governments lack the technical capacity to plan public investments, causing them to prioritize simpler but less effective forms of spending, such as cash transfers or subsidies. Another possibility is that voters may themselves prefer less public investment. That premise is explored in a new study that finds that voters with low trust in others, doubting promises made to them, and voters who are impatient, opting for smaller short-term benefits over higher long-term gains, place fewer demands on their governments to invest. Low trust and high impatience turn out to be salient characteristics of the average voter in many Latin American and Caribbean countries.

A Survey of Spending Preferences

The study is based on an original survey of voter spending preferences that was fielded in seven Latin American capitals through the Latin American Public Opinion Project (LAPOP) at Vanderbilt University. Voters were asked about their preferences for three types of public spending: spending with immediate and certain benefits, such as direct monetary transfers; short-term public goods (or public consumption), with immediate but uncertain benefits, such as the purchase of new equipment; and long-term public goods (or public investment), with uncertain and future benefits, such as training programs and infrastructure investments. The survey offered respondents binary choices of hypothetical spending options, varying the uncertainty and timing of their benefits. For example, respondents chose between a tax credit that would allow them or their families to spend more on education (more certain benefits), and a tax increase that would fund public education (more uncertain benefits). They also chose between spending on hiring additional public employees (current benefits) and training existing employees (future benefits).

The data show that in two separate policy domains, education and security, respondents with low political trust or low interpersonal trust are more supportive of transfers at the expense of public goods. Respondents with high impatience are similarly more supportive of transfers. And they prefer short-term spending (transfers and public consumption) over long-term spending (public investment). In the absence of transfers, on the other hand, political mistrust and risk aversion can shift voter demand from current to investment spending, e.g., from teacher hiring to teacher training, because their impact is higher in the short term. Finally, low-income voters are less willing to support public investment because they need short-term cash transfers more.

Experiments with Public Investment

Two randomized experiments designed to increase demand for public investment generate further evidence on the role of trust and patience. Mistrustful and impatient voters should be relatively less responsive to improvements in public investment because they value the additional benefits less. The experimental evidence supports that idea. In the first experiment, respondents were randomly assigned a treatment in which they were told that public investment spending has a relatively higher return. The results show that low-trust respondents are less sensitive to the treatment, registering a smaller shift in their demand for investment, about half the size. In the other experiment, respondents were randomly assigned different time horizons (two or four years) for receiving the same benefits from public investment spending. Impatient respondents were less willing to increase their support for the public investment with faster (two year) returns.

Preconditions for Strong Voter Demand

Policymakers seeking to maximize social welfare need to understand what causes low trust in politicians’ electoral promises and the factors that might mitigate it. This year’s IDB flagship report shows that some of these determinants operate at the individual voter level, while others may be more systemic. When it comes to individual preferences, a lack of accurate information could be pivotal. Therefore, behavioral interventions, such as reminding voters of how public investments are critical to economic growth and social development, could make a difference.   The systemic component seems more complex. It may be rooted in norms of social trust shaped by historical experiences, such as violence. Or, it may be explained by perceptions of low government performance. Low trust in the ability of government to fulfill promises over the long-term may give political candidates electoral incentives to adopt short-term policies, even if they are less efficient. Or it may cause only candidates who prefer short-term inefficient policies to enter politics.  Low government performance in turn reinforces voters’ low trust.

At the same time, a stable macroeconomic environment — i.e., low inflation, low unemployment, low crime and financial and political stability — can positively affect individuals’ risk aversion and time impatience. Income can also be a significant factor explaining a preference for short-term monetary transfers, as these solve the most basic and urgent needs. Governments that increase incomes in an equitable way might reduce citizens’ focus on short-term transfers. But ultimately the main lesson from this research is that when citizens perceive that the government is operating efficiently and can deliver public goods effectively, they are more likely to vote for candidates that favor high public investment.


Filed Under: Politics and Institutions Tagged With: #PublicInvestment

Razvan Vlaicu

Razvan Vlaicu is a senior economist in the Research Department at the Inter-American Development Bank. His research interests are in public economics and political economics, with a focus on the role of governance and institutions in economic development. He received his Ph.D. in Economics from Northwestern University, taught economics at the University of Maryland, and held short-term positions at the Kellogg School of Management and the World Bank. His research has been published in journals such as the Review of Economic Studies, American Political Science Review, Journal of International Economics, and Journal of Public Economics.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Follow Us

Subscribe

Search

Related posts

  • What Do Voters Want: Help or Skills?
  • Can Democracy Reduce Inequality?
  • The Governance Dimension of Persistent Inequality in Latin America
  • Greater Efficiency and the Path to a Prosperous Future for Latin America and the Caribbean
  • Testing the Impact of Social Media on Trust

About this blog

The blog of the IDB's Research Department shares ideas that matter on public policy and development in Latin America and the Caribbean.

Footer

Banco Interamericano de Desarrollo
facebook
twitter
youtube
youtube
youtube

    Blog posts written by Bank employees:

    Copyright © Inter-American Development Bank ("IDB"). This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives. (CC-IGO 3.0 BY-NC-ND) license and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC- IGO license. Note that link provided above includes additional terms and conditions of the license.


    For blogs written by external parties:

    For questions concerning copyright for authors that are not IADB employees please complete the contact form for this blog.

    The opinions expressed in this blog are those of the authors and do not necessarily reflect the views of the IDB, its Board of Directors, or the countries they represent.

    Attribution: in addition to giving attribution to the respective author and copyright owner, as appropriate, we would appreciate if you could include a link that remits back the IDB Blogs website.



    Privacy Policy

    Copyright © 2025 · Magazine Pro on Genesis Framework · WordPress · Log in

    Banco Interamericano de Desarrollo

    Aviso Legal

    Las opiniones expresadas en estos blogs son las de los autores y no necesariamente reflejan las opiniones del Banco Interamericano de Desarrollo, sus directivas, la Asamblea de Gobernadores o sus países miembros.

    facebook
    twitter
    youtube
    This site uses cookies to optimize functionality and give you the best possible experience. If you continue to navigate this website beyond this page, cookies will be placed on your browser.
    To learn more about cookies, click here
    X
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Non-necessary
    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
    SAVE & ACCEPT