ICES Experimental Economics Brown Bag Lecture
Sanction Salience Through Real Stakes - Signaling, Threat Activation, and Electoral Backlash Effects of Threatening to Withdraw Funding
Friday, October 23, 2026 4:00 PM to 5:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), Room 5075
The Interdisciplinary Center for Economic Science (ICES) presents an ICES Brown Bag Lecture featuring:
George Mason University
Sanction Salience Through Real Stakes - Signaling, Threat Activation, and Electoral Backlash Effects of Threatening to Withdraw Funding
Abstract
In this paper I attempt to separate the signaling and activation effects of sanctions from their real stakes electoral effects by exploiting a two-period sanctioning event within the European Union (EU), specifically the 2017 to 2023 episode during which the EU accused Poland of violating rule-of-law principles, judicial independence, and anticorruption rules. As a result, a legal process was started which at first began with signaling and demands to the national government, escalated to national-level fines by 2019, and lead to an imposition of a funding freeze for EU-funded projects in Poland in 2022. The incumbent government did not comply with the demands, but was ousted electorally after the 2022 real stakes sanction were imposed. However, as this was the first election following COVID, the Ukrainian war escalation, and subsequent refugee flows, it is unclear what the causal relationship between the sanctions and the electoral outcomes is. I test this relationship using a difference-in-difference methodology, exploiting the differential distribution of EU funds in relation to the local economy to construct a treated and a reference group, testing the effects of the sanctions on the more and less exposed counties. I find that the above-median-exposed counties move more in favor of the incumbent party (PiS) by 2.12pp (p<0.001) following the 2017 sanction, with findings consistent with a threat activation - higher for more previously supportive counties. I additionally find that the 2022 real stakes sanction leads to no statistical change in PiS vote share (-0.17pp, p=0.523), however with large heterogeneity by prior support, leading to a reversion of the 2019 support-response gradient. These results are robust to a number of specification tests, including the functional form of the difference-in-difference and excluding various subsets of counties. I additionally provide descriptive evidence about the continuous effect of the exposure to treatment and its interactions with several predetermined categories, alternative outcome explanations, and compensation mechanisms.
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