Decomposing Partisan Optimism

Last registered on April 15, 2025
View Trial History

Pre-Trial

Trial Information

General Information

Title
Decomposing Partisan Optimism
RCT ID
AEARCTR-0015652
Initial registration date
April 02, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
April 15, 2025, 1:16 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Finland
Region

Primary Investigator

Name
Mikael Paaso
Affiliation
Erasmus University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Deniz Okat
PI Affiliation
Hong Kong University of Science and Technology
Contact Investigator
PI Name
Sami Torstila
PI Affiliation
Aalto University
Contact Investigator

Additional Trial Information

Status
In development
Start date
2025-04-06
End date
2027-04-01
Keywords
Finance & Microfinance
Additional Keywords
Partisan expectations, blind party loyalty, small business economics
JEL code(s)
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
Abstract
This trial is related to another registered trial (AEARCTR-0015646) in that we use the same survey: https://www.socialscienceregistry.org/trials/15646
This trial is related to an existing project based on observational data, which we are now supplementing with experimental data (this pre-registration relates to the experimental analysis).

Previous research has documented that people tend to be more optimistic in their economic decision-making when the party they support is in power. However, it is not clear whether this effect is driven by "blind party loyalty" or the fact that people tend to vote for parties whose economic policies they agree with. We test these theories in the context of the investment decisions of Finnish entrepreneurs. Using observational data on entrepreneurs running for municipal council seats, we have shown that Finnish entrepreneurs invest more when the party they support holds a greater share of seats in government, but that this effect is driven by ideological alignment on the economic dimension.

Now we plan to extend this analysis using a survey of 1000 Finnish SMEs (mainly owner-managed ones). The goal of this experiment is twofold: First, to provide external validity to our analysis on observational data. Second, to shown in an experimental context that our effects are not driven by differences in economic performance between right-wing and left-wing governments.

We first collect data on the party alignment and ideological views of Finnish entrepreneurs using similar measures of ideology as in our previous analysis. We then run regressions of investment on the share of seats in the government held by the entrepreneur's preferred party and ideological distance (on economic and social dimensions) between the entrepreneur and the government.

Next, in the experimental part of the paper, we perform two analyses. First, we present participants with one hypothetical government composition and ask whether, if this government took power in 2027 (next parliamentary elections in Finland) their expectations about the economy and investment plans would change. We can then regress planned investment on both ideological distance to the government as well as whether one's preferred party is included in it. We also perform a conjoint analysis (primarily for the other project mentioned above on public debt) where the governing coalition is one randomized feature.
External Link(s)

Registration Citation

Citation
Okat, Deniz, Mikael Paaso and Sami Torstila. 2025. "Decomposing Partisan Optimism." AEA RCT Registry. April 15. https://doi.org/10.1257/rct.15652-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2025-04-06
Intervention End Date
2025-06-01

Primary Outcomes

Primary Outcomes (end points)
Plans to invest (hypothetical gov't experiment)
Choice of better economic environment for investing (conjoint)
Primary Outcomes (explanation)
We plan to measure the first variable with a 5-point Likert scale (less likely to invest -> more likely to invest)
The second one is the choice made in a conjoint experiment comparing two hypothetical states of the economy

Secondary Outcomes

Secondary Outcomes (end points)
Economic expectations (hypothetical scenarios)
Secondary Outcomes (explanation)
We will measure economic expectations using Likert-scale questions

Experimental Design

Experimental Design
We have two experiments which essentially test the same thing.
We first solicit a set of economic expectations and investment plans from each participant prior to treatment.
Hypothetical government composition: Participants are presented with a randomized hypothetical future government for Finland (a list of parties) and are asked to imagine that the next government consists of these parties. There is no traditional control group here, instead, the randomization means that each participant receives a random "future government" they have to imagine. The lists of parties are made up of somewhat plausible combinations of parties that might govern Finland in the next elections. We then ask about whether their economic expectations for 2030 (5 years from now) and investment plans change if this government takes office in 2027 (next elections).
We then run a conjoint experiment which we are also using for another project (see project description for link to pre-registration). In this, we show participants two hypothetical states of the economy in the future in which various features (GDP per capita, prev. year GDP growth, prev. year inflation, several tax rates, government composition, debt-to-GDP) are randomized. Participants are presented with 5 sets of 2 states-of-the-world and have to choose which one is more conducive to investment.
We plan to study whether a) people report more optimistic expectations and investment plans when the party they support is part of the ruling coalition and b) whether ideological distance on the economic dimension (measured using parties' ideological position from the 2021 parliamentary elections) explains this.
For apportioning ideology across parties in our hypothetical governments, we will assume that, if we present participants with a 3-party coalition, the largest party will hold 25% of seats in parliament, the second largest will hold 20% and the third 18%. In case of a 4-party coalition, we will apportion seats 22.5%-20%-10%-10% and in case of a 5-party coalition, 20%-18%-15%-10%-5%
Experimental Design Details
Not available
Randomization Method
Done by the survey company. Note that there is no "control" group in either of our experiments - all participants see a randomized hypothetical government composition and are asked a bunch of questions based on this.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Aiming for 1000 firms/entrepreneurs
Sample size: planned number of observations
1000 in most cases, more in the conjoint
Sample size (or number of clusters) by treatment arms
Hypothetical governments: There are 4 hypothetical government compositions, so each should be seen by about 250 participants. However as our analysis uses heterogeneity in both participant characteristics as well as the randomized governments, we have a bit more power than if the "treatment" affected everyone equally.
Conjoint: Each respondent sees 5x2 hypothetical states of the future economy, each with several randomized features
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Rotterdam School of Management IRB-E
IRB Approval Date
2024-09-13
IRB Approval Number
ETH2425-0100
Analysis Plan