Export Shocks, Insurance Schemes and Political Behavior in Brazil

Economic shocks have important implications for political behavior. Yet, similar shocks lead to different political outcomes. The question is why. Combining insights from political behavior and public economics, I argue that reliance on either public or private insurance schemes helps explain heterogeneous political consequences of economic shocks. Examining three Presidential elections in Brazil, I find that the electoral response to export shocks in the 2010s varies at the regional level. By analyzing survey data, I show this is mainly due to Evangelicals and conditional cash transfers beneficiaries responding differently to the shock. These findings suggest that whether individuals and communities rely on welfare state benefits or church services to overcome economic hardship helps explain heterogeneity in the political consequences of economic shocks.