Michael S. Lewis-Beck

Economics and Elections: The Major Western Democracies

A cross-national study of the effect of economic conditions on voting behavior in the United States and the Western democracies

Comparative Democracy: The Economic Development Thesis.

In comparative politics, an established finding—that economic development fosters democratic performance—has recently come under challenge. We counter this challenge with a dynamic pooled time series analysis of a major, but neglected data set from 131 nations. The final generalized least squares-autoregressive moving averages estimates (N = 2,096) appear robust and indicate strong economic development effects, dependent in part on the nations position in the world system. For the first time, rather hard evidence is offered on the causal relationship between economics and democracy. According to Granger tests, economic development “causes†democracy, but democracy does not “cause†economic development. Overall, the various tests would seem to advance sharply the modeling of democratic performance.

Economic voting: an introduction

The group does not include everybody active in the field,but they are the lion’s share of the leaders. Still, we are sure that there are newresearchers in the field, whom we will soon learn about, hopefully as a result of thisscholarly exchange. Our volume is a sequel to Norpoth et al. (1991), based upon asimilar conference roughly 10 years before ours.Economic voting is a field that mixes economics and political science and doesso by means of econometrics. Political scientists analyze elections, and economistsroutinely use macro welfare functions, with little empirical basis. Further, for thepolitical scientist it is wonderful to have explanatory variables that are well known,carefully collected and quantitative. For the economist, voting forms an importantlimiting case where people decide while having only a small and “intangible” interestin the outcome. Hence, it is no surprise that the subject has attracted many researchersfrom both disciplines. Indeed, more than 200 relevant books and papers have beenpublished. The main findings from this literature are summarized in Table 1.The last item on the list reveals the main reason why this research has shown notendency to die. Many nice VP-functions have been found over the years, only tosuddenly disappear. Several such relations exist in the social sciences (the Phillips

National Economic Voting in U.S. Presidential Elections

National economic conditions regularly influence outcomes in U.S. presidential elections. However, beyond this simple finding, much remains unclear. How large are national economic effects? Which macroeconomic indicators? Subjective or objective measures? Retrospective or prospective? What is the role of institutions? In our analysis of the American National Election Studies, 1956-1996, we employ a National Business Index (NBI), an aggregate measure that amalgamates individual voter perceptions of the collective economy. It outperforms other national economic measures and reveals that effects have been underestimated. The assumption of strong retrospective economic voting is tested under different institutional hypotheses. Contrary to expectations, it is not found to be influenced by divided government, but it is heavily influenced by incumbency, meaning in practice whether a popularly elected president is running. Moreover, this incumbency variable highly conditions the time horizon of national economic voting. When a popularly elected president is not running, such voting is almost entirely prospective. These conditional effects go a long way toward explaining certain enduring controversies in the literature.

Comparative Economic Voting: Britain, France, Germany, Italy*

likelihood of a vote for the incumbent coalition. In contrast, personal economic circumstances, no matter how measured, demonstrate nonexistent to weak effects on vote choice. Overall, economic conditions emerge as a relatively important vote determinant. When a more properly specified, general multi-equation model of the vote is estimated, economics shows itself to be as powerful as traditional factors used to explain the Western European vote. In particular, economic variables exceed the impact of partisan identification in Britain, and roughly equal it in Germany. Moreover, the economic variables exercise more influence than the social cleavages of class and religion everywhere except Italy.

Election Forecasting: Principles and Practice

To forecast an election means to declare the outcome before it happens. Scientific approaches to election forecasting include polls, political stock markets and statistical models. I review these approaches, with an emphasis on the last, since it offers more lead time. Consideration is given to the history and politics of statistical forecasting models of elections. Rules for evaluating such models are offered. Examples of actual models come from the United States, France and the United Kingdom, where this work is rather new. Compared to other approaches, statistical modelling seems a promising method for forecasting elections.

Does Economics Still Matter? Econometrics and the Vote

Evans and Andersen make the provocative argument that the effects of economic perceptions on political support are greatly exaggerated, owing to the endogeneity of economic perceptions with respect to partisanship. I question their claim, for several reasons. First, the dependent variable measure of popularity is unusual. Second, the causal modeling is based on debatable assumptions that could be behind these surprising results. Third, in the United Kingdom and the United States, evidence suggests that national economic perceptions reflect closely the real economy. There may well be an endogeneity problem in economic voting studies, but it more likely runs from economic perceptions to partisanship, rather than vice versa. Panel studies, available for both the United Kingdom and the United States in national election surveys, offer ideal databases for testing these rival claims in the future. Great care must be given to exogenize properly the partisanship variable.

Can Government Regulate Safety? The Coal Mine Example

With the 1970 passage of the Occupational Safety and Health Act (OSHA), federal regulation reached the American workplace. Given the newness of the legislation, any firm conclusion on its effectiveness seems premature. However, there is ample evidence on federal safety regulation of a specific workplace: the coal mine. The federal government has been directly involved in coal mining safety for over 35 years, operating under three major pieces of legislation, enacted in 1941, 1952, and 1969. Opposing opinions regarding the effect of this legislation can be grouped into three categories: radical, reactionary, and reformer. A multiple interrupted time-series analysis indicates that, in fact, the 1941 and 1969 regulations significantly reduced the fatality rate in coal mining. Certain conditions seem related to the effectiveness of this safety legislation: birth order, provisions, enforcement, target population, and goals. The first two conditions would appear to work for the success of the OSHA, the latter three conditions to work against it.

Economics and Elections Revisited

The economics and elections connection has been heavily investigated, although mostly through single-country studies. The first comparative, survey-based research on economic voting, by Lewis–Beck, found serious effects. Subsequently, other comparative scholars have explored this terrain. The most recent, and most ambitious, examinations are by Duch and Stevenson and by van der Brug et al. These impressive efforts arrive at opposing conclusions about the importance of economic voting. We carry out another major examination, with an eye to reconciling these differences. A carefully specified model of vote choice is estimated on a balanced survey pool (N > 40,000) from 10 Western European nations. Special pains are taken with issues of economic measurement, estimation, and endogeneity. The finding is that economic perceptions are formed from economic reality, and importantly influence vote choice. Besides enhancing our understanding of comparative political behavior, the strong result speaks to the functioning of government accountability in advanced democracies.

The Economic Vote in Transitional Democracies

For the advanced industrial democracies, the link between economics and elections has been much studied. Indeed, this research enterprise has become something of a cottage industry. A current literature review estimates there are upwards of 400 books and articles on the subject (Lewis-Beck & Stegmaier, 2007). Much has been learned from this wealth of investigation. In particular, the classic economic voting hypothesis has been consistently supported. That hypothesis is one of reward or punishment for the ruling party (or party coalition), with the voter responding to economic conditions. Boom encourages government support, economic bust discourages it. This “economic vote”, as it has come to be called, may take different forms. Traditionally, it is retrospective (Key, 1966; Fiorina, 1981). That is, the elector judges past economic performance, and on the basis of that assessment votes for or against the political incumbent. Some scholars, however, have identified a prospective component, where voters act on the economic promises of candidates (Downs, 1957; Clarke & Stewart, 1994). Besides the time horizon, the evaluative object may change. Voters can look at the economic well-being of the nation itself, as well as their own personal circumstances. The former has been labeled sociotropic voting, the latter pocketbook voting (Kinder & Kiewiet, 1981; Kiewiet, 1983). These various forms of economic voting occur with regularity in the elections of Western Europe and the United States, although there is some controversy over which of the forms are dominant (Lewis-Beck, 1988). It seems fair to say that, generally, sociotropic concerns outweigh the pocketbook. This is because voters are typically more ready to attribute responsibility to the government for the economic state of the nation than for the state of their personal finances. Thus, a necessary psychological mechanism for economic voting – the voter must blame (or praise)