Andreas Wiedemann

Book

Wiedemann, Andreas. 2021. Indebted Societies: Credit and Welfare in Rich Democracies. Cambridge Studies in Comparative Politics Series. New York: Cambridge University Press

In many rich democracies, access to financial markets is now a prerequisite for fully participating in labor and housing markets and pursuing educational opportunities. Indebted Societies introduces a new social policy theory of everyday borrowing to examine how the rise of credit as a private alternative to the welfare state creates a new kind of social and economic citizenship. Andreas Wiedemann provides a rich study of income volatility and rising household indebtedness across OECD countries. Weaker social policies and a flexible knowledge economy have increased costs for housing, education, and raising a family - forcing many people into debt. By highlighting how credit markets interact with welfare states, the book helps explain why similar groups of people are more indebted in some countries than others. Moreover, it addresses the fundamental question of whether individuals, states, or markets should be responsible for addressing socio-economic risks and providing social opportunities.
[⇨ Cambridge University Press]
[⇨ Amazon]

Publications

Hilbig, Hanno, and Andreas Wiedemann. Electoral Constraints on Affordable Housing. American Journal of Political Science (conditionally accepted)

Housing shortages and rising rents have increased demands for affordable housing. In this paper, we examine whether electoral constraints can undermine local politicians' incentives to build public housing. Empirically, we draw on the full-count census of all housing built in Germany, data on 19,685 local elections between 1989 and 2011, and an original survey. Using a difference-in-differences design, we demonstrate that incumbents are not rewarded, but rather experience moderate electoral losses after constructing new public housing. We then show that these losses are not primarily driven by homeowner opposition or native-foreigner competition. Instead, electoral punishment is largest in economically disadvantaged municipalities with relatively affordable housing, as voters prioritize spending in other local policy areas that are crowded out by public housing. Survey evidence demonstrates that electoral constraints emerge when voters' short-term spending preferences conflict with municipalities' long-term goals to provide affordable housing.
[⇨ PDF]

Wiedemann, Andreas. 2024. Redistributive Politics Under Spatial Inequality. Journal of Politics

Most research on redistributive politics has neglected the spatial concentration of rising inequality and its consequences on political preferences and electoral politics. In this paper, I argue that the geographic distribution of inequality undermines the political logic of redistribution when elections are held under plurality rule. When inequality in the median electoral district is lower than in the nation as a whole, demand for redistributive policies and voting for left-leaning parties is concentrated in a few districts. This limits the legislative power left parties can amass while disincentivizing left parties from offering pro-redistributive platforms. I provide empirical evidence to support my argument using cross-national data on regional inequalities, local-level administrative and geocoded survey data from the United Kingdom, and comparative manifesto data. The findings offer a new explanation of why rising inequality has not led to more redistribution, which suggests that political geography can weaken political responses to inequality and electoral representation.
[⇨ Publisher's version]
[⇨ PDF]

O'Grady, Tom, and Andreas Wiedemann. 2024. How the Geographic Clustering of Young and Highly-Educated Voters Undermines Redistributive Politics. Journal of Politics

We compare support for welfare and redistribution across time and space in Great Britain. Using multilevel regression and post-stratification with historical data and an original survey, we show that a virtually identical majority of people supported those policies in the mid-1990s and in 2020, but patterns of support were very different. Young and highly-educated people are now the strongest supporters, as are the youngest and most highly-educated geographic areas, mirroring divides over 'second-dimension' issues like Brexit. However, young and highly-educated voters are clustered in a small number of places, with the Labour party struggling to win moderately-educated and moderately-young areas. Thus the Left's problem in majoritarian systems is not the rise of second-dimension politics per se, but rather how its supporters are distributed spatially along that dimension. A majority of voters in favor of welfare and redistribution no longer translates as easily into winning a majority of places in support.
[⇨ Publisher's version]
[⇨ PDF]

Wiedemann, Andreas. 2024. "The Electoral Consequences of Household Indebtedness under Austerity." American Journal of Political Science 68 (2): 354-371

What are the political consequences of rising household debt in the context of fiscal austerity? As governments scale back the welfare state, many voters address ensuing financial shortfalls by borrowing money. I argue that debt individualizes and re-commodifies, and shifts electoral support away from incumbents to opposition and anti-establishment parties by triggering feelings of political neglect, provoking anger and resentment, and increasing economic insecurity. I examine this argument by leveraging spatial and temporal variation in the rollout of Universal Credit, a large-scale welfare reform in the United Kingdom. Using fine-grained administrative data on unsecured debt, I demonstrate that fiscal austerity generated an increase in indebtedness, strengthened voter turnout and support for UKIP while lowering support for the incumbent Conservatives. I then use individual-level survey data to explore the mechanisms that link debt and political behavior. The results suggest that rising indebtedness increases the political costs of welfare retrenchment and creates new political cleavages.
[⇨ Publisher's version]
[⇨ PDF]

Jensen, Amalie Sofie, and Andreas Wiedemann. 2023. "Cross-National Support for the Welfare State under Wealth Inequality. Comparative Political Studies 56 (13): 1959-2127

Wealth is often more unequally distributed than income, and there are considerable differences across countries. In this paper, we argue that wealth inequality helps explain cross-national variation in support for (and the size of) the welfare state because assets serve as private insurance. When wealth, particularly liquid assets, is unequally distributed across the income spectrum and high-income groups hold most assets, strong reinforcing preferences in favor of or against social policies result in antagonistic welfare politics and less government spending. When assets are more equitably distributed across the income spectrum, cross-cutting preferences emerge as more people support either insurance or redistribution. Welfare politics is consensual and facilitates a broader welfare coalition and more government spending. We analyze original cross-national survey data from nine OECD countries and provide evidence in support of our argument. Our findings suggest that wealth inequality reshapes the role of income in structuring welfare politics.
[⇨ Publisher's version]
[⇨ PDF]

Wiedemann, Andreas. 2023. "A Social Policy Theory of Everyday Borrowing: On the Role of Welfare States and Credit Regimes." American Journal of Political Science 67 (2): 324-341

Debt has become an essential part of many people's daily lives. This article develops a new comparative political economy perspective on the relationship between welfare states and household borrowing. I argue that the ways in which welfare states distribute benefits, and credit regimes provide access to credit, affect how individuals address social risks and, as a consequence, shape patterns of indebtedness. Permissive credit regimes substitute for social policies in limited welfare states, pushing economically disadvantaged groups into debt. Alternatively, credit markets complement social policies in the provision of financial liquidity in comprehensive welfare states, protecting vulnerable groups through government benefits while allowing less-protected affluent groups to borrow money. In restrictive regimes, people instead rely on savings, expenditure cuts, and family support. I test these arguments using an original measure of credit regime permissiveness, cross-national survey data, and full-population administrative records from Denmark and panel data from the United States.
[⇨ Publisher's version]
[⇨ PDF]
[⇨ Data for Credit Regime Scores]

Wiedemann, Andreas. 2022. "How Credit Markets Substitute for Welfare States and Influence Social Policy Preferences. Evidence from U.S. States." British Journal of Political Science, 52 (2): 829-849

What is the relationship between debt and the welfare state? Recent arguments suggest that credit markets fill gaps left by limited social benefits but often rest on thin empirical grounds. This article makes two contributions to this debate by using micro-level panel data and leveraging variation in welfare state generosity across US states and over time. First, it shows that households that experience unemployment borrow significantly more in states where unemployment benefits are low compared to states where benefits are high. A 10-percentage-point decrease in unemployment replacement rates increases debt levels by about 30 per cent, or $5,300. Secondly, the article documents that rising indebtedness in the context of weak social policies has political consequences and increases support for a stronger safety net. One explanation is that voters seek social protection against downstream debt-induced economic risks. These findings suggest that welfare states can play a critical role in mitigating growing indebtedness.
[⇨ Publisher's version]
[⇨ PDF]

Reisenbichler, Alexander, and Andreas Wiedemann. 2022. "Credit-Driven and Consumption-Led Growth Models in the United States and United Kingdom." In Lucio Baccaro, Mark Blyth, and Jonas Pontusson, eds., Diminishing Returns: The New Politics of Growth and Stagnation. Oxford: Oxford University Press, 213-237

This book chapter examines the foundations and politics of credit-driven, consumption-led growth models in the United States and United Kingdom. We first identify two distinct channels through which these models generate domestic demand: a housing channel, in which house prices influence private consumption through credit and wealth effects; and an income-maintenance channel, in which credit markets functionally substitute for wage growth and government transfers, enabling households to borrow money to smooth income losses and address rising expenditures. We then show that these models are reinforced by a political coalition of producer groups in the financial and real estate industries, mainstream political parties, and asset-owning voters. Our analysis focuses on how US and UK policymakers have shaped these channels through fiscal, regulatory, and credit policies from the late 1970s until after the financial crisis of 2008-09. The chapter concludes with discussing vulnerabilities of these growth models, including financial instabilities and distributional inequalities.
[⇨ Oxford University Press]
[⇨ PDF]

Thelen, Kathleen, and Andreas Wiedemann. 2021. "The Anxiety of Precarity: The United States in Comparative Perspective." In Frances Rosenbluth and Margaret Weir, eds., Who Gets What? The New Politics of Insecurity. New York: Cambridge University Press, 281-306

This book chapter develops a new perspective on the dynamics of precarity and socio-economic risk across the most advanced industrial countries by introducing the concept of "risk amplification." A growing number of people are experiencing heightened risk relating to trends in labor markets, social policy regimes, and in some cases in personal finance. We situate developments in the United States in a broader comparative framework to identify the characteristics it shares with other rich democracies as well as the distinctive ways in which precarity manifests itself in the American context. We argue that the US stands out for the way it combines uncommonly high levels of individual-level exposure to risks of various sorts with low levels of collectively provided insurance to mitigate the impact of these risks. Moreover, we show that the institutions of the American political economy if anything operate to compound risk, actively promoting what we call risk amplification, as misfortune in one arena spreads to foment misfortune in others.
[⇨ Cambridge University Press]
[⇨ PDF]

Working Papers

Housing Financialization and Its Political Consequences (with Rafaela Dancygier; Revise & Resubmit, American Journal of Political Science)

Institutional investors in residential real estate have become targets of political backlash against unaffordable housing. We argue that this backlash is not only about economic issues such as rising rents; it reflects a fundamental rejection of "financialized capitalism" that turns housing from a basic need into a speculative asset. Using novel geo-coded real estate transaction data, we document the extent of housing financialization cross-nationally and over time, and demonstrate that neighborhood-level exposure to financialization alone is insufficient to explain the widespread support to expropriate corporate landlords in a historic 2021 Berlin referendum. We then develop a nationally-representative survey to show that German citizens conceptualize housing as a social right and hold the state responsible for its under-provision. We demonstrate experimentally that arguments about housing financialization significantly raise support for expropriation beyond rent effects. Our findings suggest that financialized capitalism can unite diverse groups of voters in favor of housing socialism.

How Welfare and Credit Regimes Shape Economic Policies During Times of Crisis: The Case of Covid-19 (with Marie-Lou Laprise; Revise & Resubmit, Socio-Economic Review)

When the Covid-19 pandemic hit the globe in late-2019 and early 2020, the world faced one of the most severe health and economic crisis in decades. Yet governments differed widely in how much direct support they provided to households to cushion the blow of restrictive measures, and what form it took. We argue that the pre-existing institutional regimes that organized social insurance and credit provision in each country help explain cross-national differences in direct economic support to households during the crisis. Because they determined what benefits different groups were entitled to, how easy and costly access to credit is, and much debt they could carry, these regimes shaped the needs and resources of households across the income spectrum. We contribute to incipient scholarship on the policy dimension of the Covid-19 pandemic by offering an alternative explanation of why countries selected a specific policy mix to respond to the crisis. To do so, we build on past work about the interaction of welfare and credit regimes, which we extend by considering how different regimes perform under the stress test of a major, global emergency, and how they constrain governments’ policymaking during a crisis. To illustrate our argument, we discuss the policy choices of five high-income countries that exhibit a variety of institutional regimes: the U.S., the U.K., Germany, Denmark, and Sweden.
[⇨ PDF]

Investing in Unity? The Political Consequences of Place-based Policies in Germany (with Vincent Heddesheimer and Hanno Hilbig)

Place-based economic policies are increasingly seen as tools to counter political discontent in economically depressed regions. Do changes in regional investment subsidies affect populist voting? We evaluate this question in the context of Germany's single-largest regional investment program (GRW). Leveraging an exogenous subsidy reduction between 2013 and 2017, we demonstrate that cuts in subsidies to manufacturing firms reduce voting for the far-right AfD while increasing support for the incumbent Christian Democrats. We then show that subsidy cuts trigger two important local counterreactions. Local firms invest more in human capital; and, more importantly, local governments invest more in local infrastructure and public goods. Voters see these dynamics as visible cues that local governments are responsive and care about their residents, undermining populist appeals. Our findings suggest that the political consequences of place-based policies -- and austerity measures more broadly -- cannot be understood without considering counteractions by local firms and governments.

The Life-Cycle of Delegated Welfare (with Tess Wise)

Delegation to private actors is a defining feature of the American welfare state, but the conditions under which delegation is adopted, persists, and collapses remain unclear. This paper develops a life-cycle theory of delegated welfare, arguing that market logics and policy feedback strengthen institutional business power while shifting policy choices into an "electoral blind spot" removed from voter scrutiny. We analyze congressional speeches to illustrate our theory through case studies of the Low-Income Housing Tax Credit (LIHTC) and the Federal Family Education Loan Program (FFELP). Contrasting the divergent development of both programs after the Great Recession, we show that market failure allows the state to reclaim delegated policies – but it succeeds only when the policy becomes electorally salient. This dynamic explains the collapse of FFELP and the continued persistence of LIHTC. Our argument emphasizes the role of electoral blind spots beyond institutional business power as a force behind delegated governance.