American elections depend substantially on the vitality of the national economy. Prosperity benefits candidates for the House of Representatives from the incumbent party (defined as the party that controls the presidency at the time of the election), whereas economic downturns enhance the electoral fortunes of opposition candidates. Short-term fluctuations in economic conditions also appear to affect the electorate's presidential choice, as well as the level of public approval conferred upon the president during his term. By this evidence, the political consequences of macroeconomic conditions are both pervasive and powerful. But just how do citizens know whether the incumbent party has succeeded or failed? What kinds of economic evidence do people weigh in their political appraisals? The purpose of our paper is to examine two contrasting depictions of individual citizens – one emphasizing the political significance of citizens' own economic predicaments, the other stressing the political importance of citizens' assessments of the nation's economic predicament - that might underlie the aggregate entwining of economics and politics. Ours is an inquiry into the political economy of individual citizens.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0007123400002544

Sociotropic Politics: The American Case

It is widely assumed that political action is motivated most powerfully by issues that impinge immediately and tangibly upon private life. For example, this assumption pervades the aggregate research that has reported consistent relationships between general economic conditions and congressional election outcomes (e.g., Kramer, 1971). Our analysis of individual-level data, however, indicates that voting in congressional elections from 1956 to 1976 was influenced hardly at all by personal economic grievances. Those voters unhappy with changes in their financial circumstances, or those who had recently been personally affected by unemployment, showed little inclination to punish candidates of the incumbent party for their personal misfortunes. The connection between economic conditions and politics was provided, instead, by judgments of a more general, collective kind -- e.g., by judgments regarding recent trends in general business conditions, and, more powerfully, by judgments about the relative competence of the two major parties to manage national economic problems. These collective economic judgments had little to do with privately experienced economic discontents. Rather they stemmed from voters' partisan predispositions and from their appraisal of changes in national economic conditions.

Economic Discontent and Political Behavior: The Role of Personal Grievances and Collective Economic Judgments in Congressional Voting

The nature of the relationship between personal economic well-being and political behavior has been an object of much theory and research in the social sciences. A growing number of studies of survey data have concluded, however, that there is little or no relationship in the U.S. between financial well-being and political attitudes and behavior. This paper offers an explanation for these findings based on the way people perceive the nature of their financial well-being. The analysis shows that belief in economic individualism leads people to accept personal responsibility for their economic conditions, which in turn eliminates any connection between personal well-being and political evaluation. I discuss the role of political culture and belief in the assessment of "self-interest" and "rationality" in political behavior in light of these findings.

Economic Self-Interest and Political Behavior

We offer an explanation of government's preference for discretionary policy action. The main elements are asymmetric information and the ability and desire of governments to maximize reelection prospects. Discretionary policy imposes a social cost. We show that the cost is eliminated if all voters have the same information as the government. An optimal, state contingent policy rule that precommits government through a constitution eliminates the cost by removing government's opportunities to exploit its informational advantage. Rules of this kind, and constitutional restrictions, are difficult to enforce in the presence of uncertainty and different information available to government and the public.

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A positive theory of discretionary policy, the cost of democratic government and the benefits of a constitution

This paper critically reviews the extensive literature on retrospective voting in response to economic conditions. Each of the major types of analyses which have been performed — time-series analyses of national vote totals, presidential popularity, and cross-sectional analyses of individual survey responses — has raised several interesting and important questions. The answers that have been obtained, however, are only partial and limited, as each of these approaches entails serious problems of estimation and interpretation. Further progress in this area, we argue, requires explicit treatment of conceptual and statistical issues that have hindered previous research: the dynamic formulation of expectations and preferences, the incidence of policy (and nonpolicy) effects across the population, and notions of incumbency and political responsibility.

A retrospective on retrospective voting

THREE strands of thought and conjecture contribute to the belief that economic conditions play an important, and perhaps decisive role in elections. Recent theories of rational voting behavior-Buchanan and Tullock' or Riker and Ordeshook2 are examples-treat votes and voting as the outcome of a rational calculation of marginal costs and benefits. Prosperity, rising real income and increased employment may, in this framework, yield benefits to the individual that can be translated into votes for the party or candidate. Related, yet distinct, is the growing body of conjectures about a "political business cycle." High employment and low inflation in election years are followed by anti-inflation policies that temporarily lower employment and the rate of inflation in succeeding years. These policies work gradually and are replaced by policies to stimulate the economy, so the candidate or party can boast of prosperity and lower inflation at the next election. The conjecture arises also from casual and impressionistic evidence and from some studies of voting. Perhaps the most widely cited recent example is the Kennedy-Nixon election of 1960 when a small plurality and rising unemployment seemed to support the conjecture. Econometric studies of voting behavior provide, at most, mixed support. Most of the evidence comes from time series studies of Congressional elections. Kramer, Stigler, and Arcelus and Meltzer used different methods and reached different conclusions.3

Marc Vellrath

Papers

The Effects of Economic Policies on Votes for the Presidency: Some Evidence from Recent Elections: Reply