Departmental Seminar Speaker Series with Daniela Campello and Cesar Zucco

Our speakers this week are Daniela Campello (http://www.fgv.br/professor/daniela.campello/) and Cesar Zucco (http://www.fgv.br/professor/cesar.zucco/) from Getulio Vargas Foundation in Brazil. Their paper is titled "Rewarding Merit or Luck? The Competency Signal in Comparative Perspective.”

This paper revisits models of economic voting to argue that when alternative sources of information about incumbent competence (merit) are not available, it may be rational for citizens to cast an economic vote even if the economy is mostly determined by exogenous factors (luck). This vote, however, is unlikely to promote democratic accountability. We subsequently show that this is precisely what happens in most developing countries, where exogenous factors such as commodity prices and international costs of capital are far more relevant to explain economic outcomes than in developed ones. As a result, by sanctioning and selecting incumbents based on the economy citizens are more likely to reward merit in developed nations, but luck elsewhere. Our findings suggest that the economic vote is a poor instrument of democratic accountability in developing nations.