Anna Cieslak is an Associate Professor of Finance at The Fuqua School of Business at Duke University.

Kai Li is a Professor of Finance at UBC Sauder School of Business.

Title: Modeling and Measuring Affective Polarization of the Society Abstract: Politically divided societies are also often divided emotionally: people like and trust those with similar political views (in-group favoritism) while disliking and distrusting those with different views (out-group animosity). This phenomenon, called affective polarization, influences individual decisions, including seemingly apolitical choices such as whether to wear a mask or what car to buy. We present a dynamical model of decision-making in an affectively polarized society, identifying three potential global outcomes separated by a sharp boundary in the parameter space: consensus, partisan polarization, and non-partisan polarization. Analysis reveals that larger out-group animosity compared to in-group favoritism, i.e. more hate than love, is sufficient for polarization, while larger in-group favoritism compared to out-group animosity, i.e., more love than hate, is necessary for consensus. We also show that, counter-intuitively, increasing cross-party connections facilitates polarization, and that by emphasizing partisan differences, mass media creates self-fulfilling prophecies that lead to polarization. Affective polarization also creates tipping points in the opinion landscape where one group suddenly reverses their trends. We also propose a principled framework to measure the in-group favoritism and out-group animosity of the society via social media. Our findings aid in understanding and addressing the cascading effects of affective polarization, offering insights for strategies to mitigate polarization.

Gilles Chemla is a Professor of Finance at Imperial College Business School.

Haiqing Xu is an Associate Professor of Economics at The University of Texas at Austin.

Alex Chudik is an Economic Policy Advisor at the Federal Reserve Bank of Dallas.