Political consequences of (consumer) debt relief


Aidt, Toke ; Asatryan, Zareh ; Badalyan, Lusine

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URN: urn:nbn:de:bsz:180-madoc-676536
Document Type: Working paper
Year of publication: 2024
The title of a journal, publication series: ZEW Discussion Papers
Volume: 24-030
Place of publication: Mannheim
Edition: This version: March 6, 2024
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: G51 , D72,
Keywords (English): consumer debt relief , US student debt , distributive politics , vote buying , elections
Abstract: Many governments operate consumer debt relief programs, often timed to match the election cycle, but their political effects are not well understood. We ask if debt relief can influence elections in democracies. Our motivating exercise is the Biden administration’s promise to relieve student debt. We utilize quasi-experimental variation generated by another very large debt relief program enacted in the Republic of Georgia that, similar to USA, affected every sixth voter. We estimate that the program helped the incumbent candidate win that election, and that its effects persisted. Overall, we show how economic power can translate into political power in democracies.




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