“Biased Forecasts to Affect Voting Decisions? The “Brexit” Case”

with André Reslow


This paper introduces macroeconomic forecasters as political players and suggests that they use their forecasts in order to influence voting outcomes. We develop a probabilistic voting model in which voters do not have complete information about the future states of the economy. The model predicts that it is optimal for forecasters with economic interest (stakes) and influence to publish biased forecasts prior to a referendum. We test our theory using high-frequency data at the forecaster level in the occasion of the “Brexit” referendum. The results show that forecasters with stakes and influence released much more pessimistic estimates for the following year GDP growth rate than the other forecasters. The realization of the GDP growth rate in 2017 clarifies that forecasters with stakes and influence were also more incorrect than other institutions, and that the “propaganda bias” explains up to 50% of their forecast error.