Populism and impatience

Abstract We develop a model where highly impatient voters are more likely than others to be subject to institutional frictions in the form of binding borrowing constraints. As impatient, borrowing-constrained voters cannot move long-term policy gains to the present, they turn to short-sighted, typically populist agendas, to politically obtain what the credit market denies them, namely relief from a short-term sacrifice. Empirical analyses based on German and British data show that there is indeed an association between impatience and the likelihood of preferring a populist party which remains substantial even after controlling for life outcomes, as well as across a number of sensitivity analyses. A comparison between populist parties within the German data reveals that impatience is associated with right-wing populism, but not left-wing populism. The results also confirm that the relationship between impatience and the likelihood of preferring a populist party is indeed attributed to voters who are likely borrowing-constrained. We conclude that institutional frictions can lead voters to support short-sighted policy agendas.