Why do politicians perceive the same financial conditions differently?

Behavioral public administration research has provided empirical evidence of several perception biases when individuals process information. Building on these findings, we seek to advance the literature by analyzing politicians' financial perceptions of their own government. Drawing on the theory of motivated reasoning, we examine the context of Swedish municipalities and find financial perception gaps associated with politicians' party affiliation (establishment or anti‐establishment), parliamentary position (opposition or governing party), and formal hierarchical rank. Specifically, politicians representing anti‐establishment and opposition parties, as well as those occupying lower positions in the political hierarchy—and thus having less influence over and less responsibility for municipal affairs—tend to perceive the financial situation more negatively. These findings suggest the presence of a motivationally driven bias in politicians' perceptions of financial conditions; moreover, they illustrate that these perceptions are influenced by factors beyond the traditional financial, socioeconomic, and demographic ones examined in previous research.