Electoral Opportunism: Disentangling Myopia and Moderation

A central component of representative democracy, competitive elections imply that incumbents face uncertainty about being re-elected into office. This study jointly considers two opportunistic behaviors that may be triggered by such uncertainty—policy myopia and policy moderation—which hitherto have been the focus of separate research traditions. Disentangling the two behaviors theoretically and empirically, we evaluate their prevalence in economic policy–making among Swedish local governments. We apply a new measure of electoral competitiveness that captures the incumbent government’s re-election probability, for which plausibly exogenous variation is generated by exploiting national-level polls. We find a substantial moderating effect of competitiveness on incumbents’ tax rate decisions—shifting policy towards the political center—but little evidence of policy myopia whether in taxation, budget balance, or public investment. Corroborated by original survey evidence on politicians’ perceptions of their re-election prospects and opportunistic policy options, these findings thus caution against the popular understanding of democratic policy-making as inherently short-sighted.