How does Economic Crisis Influence Politicians’ Environmental Policy Positions?
Thursday, 26 February, 2015

On February 25th, ISET hosted Riikka Savolainen, Ph.D. from the Aalto University, Finland. Dr. Savolainen holds a master’s degree from the Helsinki School of Economics. Her research interests include applied microeconometrics and political economy and, more specifically, intra-party heterogeneity and candidate strategies. Her general interests include history and political philosophy.

At ISET, Dr. Savolainen presented her job market paper “How does Economic Crisis Influence Politicians’ Environmental Policy Positions?”

The behavior of voters in response to a change in micro and macroeconomic environments is well researched and studied. But Dr. Savolainen is interested in whether changes in municipal unemployment make the Finnish municipal elections candidates more willing to prioritize employment over environmental protection?

Municipalities of Finland, which include cities and other (rural) municipalities, are the basic local administrative units of the country. Most basic services are provided by the municipalities and are bound to do so by law. Municipalities have a council-manager government, where the council (valtuusto) is the highest authority. The new council is elected every four years. As Dr. Savolainen defined, being an elected council in the municipality in Finland is the desired pre-requisite in a political career and thus individual candidates may more likely become office-motivated (oriented to win elections), rather than policy-motivated (handling specific policy ideas and principles).

To bring the light to the behavior of candidates, Dr. Savolainen tested two hypotheses: (i) Change in unemployment makes both voters and politicians re-optimize their ideal degree of environmental protection; and (ii) Office-motivated candidates target the new optimum more precisely than policy-motivated ones. Using econometric panel regression and ordered logit models, she ended up with the main findings – an increase in municipal unemployment makes local politicians more willing to prioritize employment over environmental protection. Moreover, the electorate does not punish politicians for becoming less environmentally friendly. But candidates with most to gain from strategic behavior do not target the general opinion more precisely. That result is a piece of evidence in favor of policy-motivated candidates.