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we're here with Wharton finance
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professor Eric gilja to talk about one
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of his research papers which actually
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found a link between voter preferences
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and the shale boom that's really quite
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timely at this time when the election
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seems to be very raucous and very
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interesting so welcome professor thank
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you for having me so tell us about your
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paper so basically what we try to do is
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to try to we try to trace out how
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political change occurs in the US
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electoral system and so the basic idea
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here is there were kind of two sets of
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hypotheses one is that when voter
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preferences shift your elected officials
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change their positions to adapt to the
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new preferences the other is when voter
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preferences shift they throw out their
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old elected representative and bring in
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somebody new and so we kind of test each
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of these two hypotheses within the
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context of shell discoveries so she'll
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discoveries are interesting place to
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look at this because when these
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discoveries occur there's a large change
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in voter preferences to become more
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conservative and supportive of issues
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that will help underpin the development
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of shale and so what we see overall is
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that there's a shift in voting for more
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conservative political candidates
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Republican candidates and that linked
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with this rather than existing
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Democratic candidates changing their
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views to adapt that in fact they they
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lose their jobs and Republican
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candidates replace them and so in terms
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of which of these two hypotheses seem to
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dominate it's the case that you
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basically find a new representative that
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fits your preferences as opposed to
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Europe right your elected representative
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adapting their preference towards your
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views which is kind of interesting when
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we typically think of politicians is
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kind of saying whatever they need to say
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to get elected this evidence would
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suggest otherwise so you actually gather
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data from seven states I understand
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those are red states some of them are
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read some of them are I guess purple you
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have Pennsylvania West Virginia North
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Dakota Arkansas oh cool
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Louisiana Texas and many of these states
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actually were maybe not always
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considered red states certainly prior to
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shale discoveries so what are some key
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takeaways from your paper yeah so I
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think the key takeaways are this that in
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essence you see that that the mechanism
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through which the political change
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occurs is through bringing in new
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representatives and that that we find
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several other effects in that when you
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bring in a new representative you get a
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lot of other things with that not just
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people that help protect shale but also
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people that may vote differently on
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social issues or other issues that are
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unrelated to shale and then lastly we
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kind of have a final result in the paper
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where we show that even the the
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Democrats that had adjusted their voting
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record slightly to become more
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conservative still lost their jobs
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suggesting that maybe they couldn't kind
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of credibly convey that they had adapted
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to the new preferences of their
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congressional districts I think what
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really grabbed me about your paper was
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your major ah-ha finding which was you
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know when there's a major big economic
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positive economic shock to an area that
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actually more Democrats become
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Republicans and can you tell me why that
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is yeah and so this is one interesting
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aspect of the analysis where we're
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actually able to obtain access to exit
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poll data and so some people might say
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well this result was driven by the
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change changes in electoral makeup
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people moving into the area but in fact
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through this exit poll data people are
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asked about their prior political
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preferences and and we actually show
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that people that tended to be
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self-identify as historically being more
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liberal shift to become more
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conservative when these shell
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discoveries occur and it's not maybe
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surprising when you think about the
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positions at each of these political
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parties have tended to have on energy
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development in shale that you have in
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these areas large increases in income
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large increases in job growth and that
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basically you know people in these areas
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adapt their preferences to try to
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protect
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and ensure that this development
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continues and now that historically the
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Republican Party is being more
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consistent with doing that with energy
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development so I have to ask this
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question and that is so can you think
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you can handicap the race for us this
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election year well I think what the
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results suggest is not necessarily that
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that you know let's say one presidential
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candidate versus another because the
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results are really at the congressional
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district level but they suggest that the
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the magnitude of the shift that's
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occurred that has occurred that's linked
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to shell discoveries are quite large and
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so in our paper we talked about that in
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aggregate since the beginning of the
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shale boom 17 Democratic seats have
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switched to Republican and that that is
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in terms of kind of economic magnitudes
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that's half of the current Republican
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majority in Congress so to me what it
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suggests is that if the Democratic Party
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does not kind of adapt its views or seek
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out these energy voters in a way that
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they haven't been before that
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particularly gaining control of the US
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House of Representatives will be
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challenging for them because you know
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there's a large asset large component of
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the majority that the Republicans have
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that exists due to their preference and
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support of shale development and so
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until that part of the Democratic
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platform maybe changes or adapts to that
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aspect of the electoral calculus I think
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it will be challenging on at least the
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house side for Democrats to make
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significant headway did that come as a
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surprise to you the magnitude certainly
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came as a surprise I think I think we
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expected to see your some shift towards
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Republicans but when you actually trace
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out the effect on how seats compare that
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to the current majority in Congress what
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ends we were you end up seeing is that
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this was quite important for the shift
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in the US House that we've seen over the
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last 15 years and and this is linked
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with both you
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oil and shale gas development
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essentially when we plot this out we see
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one shift occurs from shale gas
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development happens in the mid 2000s and
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then and then and then another one that
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occurs later on in 2010 2011 2012 when
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shale oil development really gets going
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whether other thing finding said
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surprise to you I think the the last
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finding that i mentioned that that even
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those representatives that try to adapt
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in altering their voting records work to
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be more conservative and so for this we
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look at different interest groups
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scoring of congressmen and we find is
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even those that adapt just a little you
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know adapt a little bit are not able to
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maintain their their seats and so to me
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that suggests that kind of more
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significant more significant steps would
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need to be taken to kind of demonstrate
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that they've adapted to their new voter
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preferences so what are some practical
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implications of your findings yeah i
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mean i would say in practice what it
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documents a few things first it shows
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that there are a lot of spillover
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effects into other policy areas when one
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policy area changes so shift in energy
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preferences by voters leads to shifts in
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other areas social issues tax issues
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that maybe you know you may not have
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expected and i would say that's probably
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one of the kind of most interesting
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practical aspects of of it so what sets
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your research apart from prior work in
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this area yeah i would say prior work by
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and large has not focused on the
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spillover effects so they've looked at
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whether a change in voter preferences
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can be observed you can observe
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something in the data to see whether
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people actually change their votes one
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way or another we're showing that
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because of the electoral system that we
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have that having elected representative
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you kind of
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you know they have their views and if
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you you basically kind of rank how
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important your views are and you may end
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up getting some things in there with
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that electoral representative that you
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may not have anticipated and then the
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other aspect which is new is to show
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that even those who do shift more to the
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right it doesn't seem to matter for
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voters that much and so it's either a
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question of credibility they can't
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incredibly shift or a question of the
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the nature of the party structure that
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even if they do shift the rest of the
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party which is going to manage you know
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bills in the seniority system and
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committees may not be conducive to
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advancing the voter preferences that
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have now changed in these districts how
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are you going to follow up your research
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well there are a couple different
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avenues we're exploring so one avenue
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would be to look at what are the sorts
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of people that seem more apt to shift
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their preferences their particular
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characteristics or demographics there
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another is to look at how this political
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change spills over and affects firms and
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so you might imagine that firms are
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working to build political relationships
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to get favors of some sort or
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preferences of some sort in different
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aspects of government whether it's
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regulation or laws and now you have a
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shift that's occurred because of these
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the energy issue and so you might expect
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that some firms are not going to be more
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out of favor because they were connected
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to politicians that lost their seats
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some other firms may be more in favor
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because now they've they're connected to
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politicians that are in power thank you
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very much thank you
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you
