Polarization among the poorest can both increase and decrease support for reform

Evidence

In this case an increase in the degree of polarization ∆would have an ambiguous effect on insulation. On the one hand, if we abstracted from its negative effect on the expected return from the reform (λm(1 −∆) + λ∆) , an increase in polarization would increase insulation as formally proven in Appendix. This choice would be justified to avoid opposition to reform by the lower tail of the preference distribution. On the other hand, the fact that more polarization at the bottom also reduces the expected reform outcome leads to an ambiguous overall effect of downward polarization on insulation; this latter effect is eliminated in the case analyzed above where polarization occurs symmetrically at both ends of the preference interval and individuals are risk-neutral. — Philippe Aghion, Alberto Alesina, and Francesco Trebbi, Endogenous Political Institutions, 95

Categorization

• DEEPTHINKING: Captures a genuinely two-sided mechanism: polarization at the bottom shelters the median from opposition but simultaneously drags down the expected reform payoff, so the net effect on insulation is indeterminate until risk aversion is specified.