The Global Economy, Competency and the Economic Vote Ray Duch & Randy Stevenson APSA Annual Meeting 9/1/2006

Three Interesting Puzzles How to measure it? How to explain its contextual variation – theory! Some – hopefully – convincing evidence.

Measuring the Economic Vote 163 voting studies; 18 countries; 20 years Two stage method Magnitude of economic vote (individual-level) Contextual effects (aggregate-level) Hierarchical models

Predicted Vote Equivalent evaluation question in each country study Similar set of control variables in each country study

Economic Vote Magnitude of Economic Vote

Summary of Method Comparable questions on vote choice and economic perceptions. Similar control variables. MNL estimation. 4. Simulate difference in predicted vote – sum over sample.

Second Stage Results

There is an economic vote Median economic vote is about 4.4%. Point estimates range from -18 to 4%. 70% of EV fall below 0.

Often there is NO economic vote! UK: 1992 and 1997 Germany: 1987 US Congressional elections US presidential elections (1988 & 2000) Point out that this is consistent with other empirical research

Rational Retrospective Voting Rational Expectations Maximize their expected utilities and form expectations optimally. Persson and Tabellini (1990); Alesina and Rosenthal (1995)

Competency Model Variance in the incumbent’s “Competency Signal” competence shock. “Competency Signal” Equilibrium economic performance. Known competence at previous time point. Utility of casting economic vote for the incumbent. Variance in exogenous shocks to economy. Utility of casting economic vote for the opposition.

Signal from Global Economy? Variation in domestic economy deviates from global economy = strong competency signal.

Hypotheses: Domestic and global economies are informative. Pay attention to fluctuations in economies. Opinions reflect actual economic outcomes. EV is conditioned by economic signals.

Six nation study of voters Denmark, UK, France, Germany, Spain and Italy Test assumptions regarding voter knowledge of fluctuations in domestic/global economy Test hypothesis that they use these cues to condition their economic vote

Domestic versus Global Distinguish between domestic versus global economic shocks. Perceptions grounded in actual outcomes.

Variance in Domestic/Global Economy

Signal conditions economic vote

Macro-contextual evidence Test assumption that the domestic/global economies are informative. Test the argument that these signals condition the EV.

Macro-economic signals

Signals condition economic vote

Signal conditions economic vote

Conclusions A competency signaling model explains contextual variation in EV Voters are up to the information requirements of a competency model. Both micro and macro-evidence indicates competency signals condition EV