Indication of Economic Populism in Local Governance: A New Approach for Classifying Populist Behaviour

Abstract

Purpose: The extant literature on populism posits that populists frequently find themselves at odds with the neoliberal economic paradigm, as evidenced by rising debt, a public-investment deficit, and substantial deficit-financed government spending. Populist decision-making is characterised by short-termism and can, therefore, be distinguished from non-populist governance through economic variables. This study introduces an innovative quantitative approach that analyses local-government financial data to classify populist economic behaviour.
Design/Methodology/Approach: Adhering to the scholarly consensus that short-termism is a fundamental indication of populism, we operationalise economic populism with five financial variables, scrutinised using cointegration analysis and a probabilistic approach. The selected variables are grounded in the literature on economic populism. The underlying data are publicly available for Czechia—the country examined— and for many other states. We verify the methodology by analysing governing coalitions in major municipalities.
Findings: Examination of 6,240 municipalities in post-communist Czechia between 2002 and 2021 reveals indications of economic populism in 6.2 % of cases. Result verification shows that these municipalities are frequently governed by populist parties or varied local initiatives, rather than by established non-populist parties.
Academic contribution to the field: This study employs an innovative quantitative assessment of financial indicators, diverging from mainstream populism research, which is usually based on qualitative assessment of sources such as statements, narratives and historical context. Moreover, it emphasises the local level of government in the study of economic populism—a phenomenon typically assessed at the centralgovernment level.
Research implications/limitations: The findings suggest that populism may represent a strategic approach for certain local governments, particularly in smaller towns and villages where limited fiscal discipline can impede development. Some identified financial patterns may stem from incompetence or lack of expertise rather than intentional populism. Additionally, many municipalities in the sample are governed by a ‘grey zone’ of local initiatives, complicating result verification. Because the methodology is novel at the local level, there are virtually no comparable studies; consequently, our findings are considered alongside various Central European studies on populism.
Originality/Value: This study develops an original quantitative approach applicable at the local-government level to analyse extensive datasets. It enriches discourse on economic populism by examining the phenomenon through the lens of short-termism in financial data.