When Is Myopic Retrospection Rational? Christopher H. Achen Princeton University September 2012

Myopic Retrospection Is Not a New Idea President James Buchanan on the 1858 midterm election in Pennsylvania Prime Minister Benjamin Disraeli in 1879 Several brilliant articles by Harold Gosnell in the 1930s and early 1940s Then with modern computing tools: Kramer in 1971 in APSR.

Kramer vs. Bartels on Myopia Kramer: the voters look back one year—“a reasonable and convenient hypothesis….[The voters] are not ‘irrational,’ or random…” Bartels (2010): But myopia is incompetent and irrational: Incumbents should be judged over the full term. Otherwise they will exploit you relentlessly for the first three years, democratic control will evaporate, and you won’t even notice because your fourth year was fine.

How to Adjudicate? Option 1: Assume the problem away, as in the political economy literature (Alesina and Rosenthal; Alesina and Roubini; Duch and Stevenson): – competence is MA(1), e.g., c(t) = d(t) + rd(t-1) – the voters learn last period’s competence with certainty – Hence myopia is fully rational and exhausts all the information available about future performance

Another Option Taken Here Stick with MA(1) Stick with rest of political economy model, but: Let perceptions of competence be noisy Then: See whether the conventional models blow up with this change Replace them with a new model if not Check whether any surprising implications of the new model are verified.

The Math

Where to Look for Big Income Changes From 1948 to 2007 in the U.S., real annual income change per capita never reached 6% nor fell below -4%. The Depression was much more dramatic: 1930: -8% 1931: -6% 1932: -14% Individual states, especially farm states, went through even worse drops (and big rises in subsequent years).

Data Issue: No County Income Data But some states are heavily dependent on one crop in many counties We do have production data by county and crop prices => we can estimate the main source of income Montana has 56 counties--mining and timber in the west, but mostly it grew wheat in the Thirties The state had 31 counties averaging 16 acres of wheat cultivation per capita, producing >100 bushels of wheat for every man, woman, and child: Those 31 counties over time are the dataset.

Politics Hoover carried all 31 of these counties in Incomes were up dramatically in 1932 from the 1931 drought. Even relative to 1930, incomes were up. Hoover should have won easily under myopia. But Hoover was crushed: He dropped on average 25 points in these counties in 1932, and lost all but one. Why the Republican electoral disaster when myopia favored them?

Conclusion Extend the model: intercept term, AR(p) for competence,… Additional empirical tests More political sophistication—see comparative politics literature Kicking-the-dog models? Value of rationality assumptions in thinking about voters