Local politicians’ perceptions of financial conditions – do they align with financial indicators?

ABSTRACT

Throughout history, critics of democracy have doubted people’s ability to govern themselves. For example, are local politicians – who often lack any formal training in accounting or economics – really able to comprehend complex financial information? Previous studies addressing this issue are in short supply, and their results are generally pessimistic. The aim of this paper is to test which – if any – financial indicators are related to local politicians’ perceptions of financial conditions in the setting of Swedish municipalities, thus extending earlier studies to a European context. Our analysis shows strong and significant correlations between most of the financial indicators tested and politicians’ perception of their municipality’s financial condition, including financial indicators capturing the levels of net income, equity ratio and tax rates. These findings provide optimism and strengthen arguments for the defenders of democratic government.

KEYWORDS:

• financial condition
• politicians
• local government
• local democracy
• Sweden

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/03003930.2022.2158184.

Notes

1. One municipality, the island of Gotland, was included in the survey but excluded in these analyses due to its extraordinary status as both a municipality and a region. The results are thus based on 289 municipalities. See the Appendix for further explanation.

2. A multi-level regression analysis (null model) reveals that 34% of the variation in responses is at the municipal level and 66% is at the individual level, which is an exceptionally high proportion at the municipal level compared with other questions in the survey. Perception of the financial condition is thus something on which local politicians agree more than they do on most other matters. That said, there is still considerable variation within municipalities at the individual level. This variation could not be explained by financial indicators and may instead be explained by the divergent characteristics of members within a council, at the individual level. However, the individual level is not within the scope of the analysis in this paper.

Additional information

Funding

The work was supported by the Vetenskapsrådet [2017-02169].