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An experimental study of democracy breakdown, income and inequality

Published online by Cambridge University Press:  14 March 2025

Dmitry Ryvkin  and
Anastasia Semykina
Dmitry Ryvkin*
Affiliation:
Department of Economics, Florida State University, 32306-2180 Tallahassee, FL, USA
Anastasia Semykina*
Affiliation:
Department of Economics, Florida State University, 32306-2180 Tallahassee, FL, USA
*
[email protected]
[email protected]
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Abstract

Many empirical studies investigate the relationships between economic development, inequality, and democracy survival; however, establishing causal links with naturally occurring cross-country data is problematic. We address this question in a laboratory experiment, where in democracy citizens can invest in profitable projects and vote on income taxation. In the alternative regime—autocracy—efficient investment levels and equitable redistribution are implemented exogenously, but there is a risk of resources being partially expropriated. Citizens can voluntarily switch from democracy to autocracy by a majority vote, which mimics recent historical examples, where voters voluntarily delegate political powers to an autocrat in exchange for a promise of high taxation and redistribution. We find that the likelihood of democracy breakdown increases with the degree of inequality but does not vary with productivity. The link between productivity and democracy survival depends critically on the degree of sophistication of the median voter.

Keywords

Democracy breakdownProductivityInequalityVotingExperiment

JEL classification

P48: Political Economy • Legal Institutions • Property Rights • Natural Resources • Energy • Environment • Regional Studies C92: Laboratory, Group Behavior D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Type
Original Paper
Information
Experimental Economics , Volume 20 , Issue 2 , June 2017 , pp. 420 - 447
Copyright
Copyright © 2016 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-016-9490-3) contains supplementary material, which is available to authorized users.

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