The quality of institutions and satisfaction with democracy in Western Europe — A panel analysis

Political support in hard times: Do people care about national welfare?

“…Our results at the aggregate level are broadly consistent with studies by other authors. Growth is significantly positive, unemployment and inflation are significantly negative (compare for instance Wagner et al, 2009;Clarke et al, 1993). Looking at columns (2) to (3), a one percentage point increase in growth is associated with an increase in the share of the population stating that they are satisfied with democracy of about 1.2 percentage point.…”

“…5 Furthermore, there is hardly any systematic evidence on the role of macroeconomic factors. Using national-level data, Wagner et al (2009) find significant effects of institutional quality on the satisfaction with democracy and Clarke et al (1993) document effects of inflation and unemployment. We are aware of only two studies in SWD employing individual-level data: Halla et al (2011) investigate the role of environmental policy for individuals' satisfaction with democracy, while Wells & Krieckhaus (2006) study the effect of corruption on democratic satisfaction.…”

“…Since a large literature on the relationship between democracy and economy focusses on GDP (e.g Acemoglu & Robinson, 2006;Przeworski, 2000), we use GDP per head as starting point. Our main interest, however, lies in growth, inflation, and unemployment, which vary substantially over time and have been proved influential in previous studies on SWD (Wagner et al, 2009) and right-wing extremism (Knigge, 1998;Brückner & Grüner, 2010). Furthermore, these variables are more responsive to economic policy in the short to medium run and are more likely to be targeted by policy makers.…”

“…We transform GDP per head to GDP per head in 1000 US$ (constant prices, constant PPPs), for ease of interpretation of coefficients. Since the distribution of inflation is very skewed we would like to use a log-transformation as, e.g., Wagner et al (2009) do but a log-transformation is only feasible for positive observations. Around 2009 and 2010, however, Belgium, Ireland, Portugal, and Ireland experienced negative inflation rates.…”

“…6 To the best of our knowledge only Halla et al (2011) use a long time dimension combined with individual level data but their data ends in 2001 and thus excludes the recent years. Wagner et al (2009) and Halla et al (2011) do include several macro-economic indicators simultaneously but do not discuss the economic relevance and relation between those. 7 In this paper we build on these studies and extend them in several dimensions.…”