The Effect of (some) Economic Indicators on Presidential Elections

Silver offers a rigorous exploration of the central point made in the NYT article I linked for the post I wrote yesterday.  He approaches the question on the relationship between the unemployment rate and the vote for the incumbent President (or party) from several different angles, including the basic unemployment rate, the change in said rate, limiting the analysis to post-war or back to 1912, etc.  Furthermore, where I said “While the 7.2% figure is arbitrary, and this election might not hinge on the usual simple domestic economic factors,”, his narrative was more expansive and informative.  The arbitrariness of 7.2%, for example; Ronald Reagan won re-election in 1984 by 18% while presumably hobbled by 7.2% unemployment.

Silver basically finds nothing, and in those few bivariate models where there was an observable correlation, the relationship was highly dependent upon one or two cases.

That said, and as Silver correctly points out, this alone is not a reason for optimism.  Intuitively and theoretically, the higher the unemployment rate, the lower the probability of Obama’s re-election, even if a relationship is not clear in a simple bivariate analysis of past presidential elections.  The reality of modelling presidential elections is complex, and as cases are so rare, the predictive value of said models is contingent.

This highlights the analytical risks associated with a focus on one measure.  While this is but one measure, as Bartels (1997) suggests, the economic context does matter:

“The clearest and most significant implication of aggregate election analyses is that objective economic conditions — not clever television ads, debate performances, or the other ephemera of day-to-day campaigning — are the single most important influence upon an incumbent president’s prospects for reelection.  Despite a good deal of uncertainty regarding the exact form of the relationship, the relevant time horizon, and the relative importance of specific economic indicators, there can be no doubt that presidential elections are, in significant part, referenda on the state of the economy.”

Furthermore, and germane to this discussion, unemployment is of relatively lesser explanatory power than other measures of economic context:

“Most of the available evidence suggests that voters weigh recent changes in economic conditions more than temporally distant changes — and more than absolute levels of economic well-being. It also suggests, though rather less clearly, that changes in disposable income matter more than changes in GDP (which are presumably less tangible), which in turn matter more than changes in unemployment (which produce relatively few direct losers) and inflation (which produce many losers but also a good many winners).”

Unemployment is but one piece of the puzzle when we attempt to operationalize the concept of “economic conditions” into measures that are useful in modelling presidential elections.  All this said, I’d still be more comfortable if unemployment was going down.

Unfortunately, I anticipate we’ll be hearing the opposite today.