Ballots, Budgets and Bricks: Brexit and the Polarisation of Individual Economic Behaviours

Speaker: WEI Zhiwu

Venue: 7-426, Chenjun Court, Zijingang Campus

Abstract: Does political polarisation influence actual economic behaviours? Using British nationally representative surveys and administrative data, we document how the Brexit referendum triggered stark divergences in individual micro and macro expectations between Leave and Remain supporters. Compared to existing research, we show how these polarising effects were mostly unrelated to traditional partisan identities. We also show how these diverging beliefs influenced major real financial decisions. Leavers became more likely to purchase durables and engage in housing transactions, and areas with higher proportions of Leave voters experienced increased housing transaction volumes and rising prices. Our findings highlight the heterogeneous response of households to the Brexit vote, offering a potential explanation for why many economists' pessimistic forecasts regarding Brexit’s short- and medium-term economic con sequences have not fully materialized.