Incumbent Party’s Expected Vote Margin = 1.14 −.83 × (Years in Office) +4.51 × (4th-Year Income Growth) +1.66 × (3rd-Year Income Growth) −1.04 × (2nd-Year Income Growth) −2.34 × (1st-Year Income Growth)
Most of the ingredients in this recipe for success at the polls are very familiar to students of American presidential elections. The incumbent party tends to do less well the longer it has held the White House. Robust income growth in the year of the election provides a huge boost to the incumbent’s electoral prospects. Income growth in the preceding year matters much less.
The final two terms in this model are more surprising. Income growth in the second year of a president’s term is negatively (albeit weakly) related to his party’s subsequent electoral fortunes, while income growth in the year of his inauguration has a strong—and statistically reliable—negative effect.
If true, this is very good news for Barack Obama, because the year of his inauguration, 2009, was one of the worst years on record for American income growth. According to data from the Bureau of Economic Analysis, real disposable income per capita (including wages, investment income, and government transfers, subtracting taxes, and adjusting for inflation) shrank by 3.2% in 2009—the largest decline, by far, in the past half-century. The statistical model implies that that income loss will translate into a gain of more than 7 percentage points in Obama’s expected vote margin in next year’s election.
Additional statistical analyses (pdf)—all but one focusing on the 16 presidential elections from 1948 through 2008—compare a variety of models including various combinations of explanatory factors, including real income growth in various years and a variety of other prominent economic indicators, including GNP growth, unemployment, and inflation. (As in most analyses of this sort, those additional indicators have little or no consistent independent impact on election outcomes.) For each model, I have calculated Obama’s expected popular vote margin assuming that economic conditions remain unchanged from now through next year’s election. I am not an economist, and THIS IS NOT A FORECAST; more optimistic or pessimistic economic scenarios will, of course, imply more optimistic or pessimistic electoral prospects from the incumbent’s perspective.
My aim is simply to underline the dramatic political implications of believing or disbelieving that voters are responsive to inauguration-year income growth. In every instance in which first-year income growth figures in the analysis, the results suggest that Obama is very likely to win even if economic conditions do not improve between now and Election Day. In every model ignoring first-year income growth, the results imply that he is very likely to lose unless the economy rebounds dramatically in the coming year.
Cheerleaders for the wisdom of the masses may be tempted to interpret this pattern of results as evidence of sophisticated thinking on the part of American voters. Rather than simply (and simple-mindedly) responding to income growth in the run-up to the election, perhaps voters use inherited economic conditions as a benchmark for evaluating election-year performance. That may seem sensible in 2012, since economists have noted that financial crises like the one Obama inherited often produce long periods of slow growth. However, the same logic seems much less sensible for the post-war period as a whole. Income growth rates are virtually uncorrelated from one year to the next (−.06 over the entire post-war period, +.09 since 1980); thus, there is no reason to expect the growth rate three years earlier to have any effect, one way or the other, on the election-year growth rate, or to provide a plausible benchmark for assessing whether the election-year growth rate is higher or lower than “expected.” Nor does the difference between the two growth rates accurately reflect the cumulative economic performance of the incumbent administration, since it ignores gains or losses in the intervening years. (Cumulative real income growth over the president’s entire term, whether including or excluding the inauguration year, has no significant impact on election outcomes.)
Elsewhere, I have argued that presidents’ economic policies are likely to take effect with some lag; thus, voters might plausibly attribute inauguration-year income growth to the previous president and think of the comparison between current growth and inauguration-year growth as shedding light on the relative competence of the two competing parties. Unfortunately for this interpretation, inauguration-year growth rates seem to have a negative effect on the president’s electoral prospects even in cases where the White House was held by the same party—or even by the same person—in the preceding term.
While the psycho-logic by which voters punish incumbents for good inherited conditions (or reward them for bad inherited conditions) may be obscure, the statistical evidence suggests that some process connects temporally remote economic conditions with choices at the polls. This empirical pattern is an embarrassment to analysts—including me—who have argued that voters are overwhelmingly focused on the here and now.
The apparent negative effect of inauguration-year income growth is surprisingly robust in statistical terms. It persists (with magnitudes ranging from −2.12 to −2.65) when various combinations of election-year GNP growth, unemployment, and inflation are included in the model. (Some of these analyses are presented in columns {6} through {9} in the tables of statistical results.) It persists (with a magnitude of −1.64) even when second- and third-year income growth are omitted from the model (in column {3}). It persists (with magnitudes ranging from −2.04 to −2.72) when any single election is dropped from the analysis. (The analysis reported in column {5}, omitting the 1948 election, represents the low end of this range.) Including inauguration-year growth improves the statistical fit of the models by 10% to 20%. And the partial regression plot (pdf) showing the relationship between inauguration-year income growth and vote margins, controlling for the other explanatory variables in the model, depicts a reassuringly consistent negative relationship.
Of course, there are still plenty of grounds for skepticism regarding the reality of this apparent effect. In a field where scores of statistical models have been estimated using the same 16 (or even fewer) observations, any one—and especially any new one—must be taken with a large grain of salt. The high ratio of parameters to data is bound to be troubling, especially when the key empirical result lacks a clear theoretical rationale. Moreover, the fact that real income growth in 2009 was so much lower than in any other inauguration year in the post-war era requires us to extrapolate well beyond the observed data in gauging the implications of the analysis for 2012. And the fact that that result seems to provide significant hope for a Democratic president facing substantial public disaffection in the midst of a prolonged economic slump may strike unsympathetic observers as suspiciously convenient.
Whatever evidentiary weight one assigns to the empirical analyses reported here, they do underline a fundamental issue in next year’s election. If President Obama is judged primarily on the state of the economy in 2012, the verdict of the electorate is very likely to be a negative one. But if voters, for whatever reason, take into account the disastrous economic conditions Obama inherited from his predecessor, then he is likely to prevail. And if past election outcomes are a reliable guide, voters may indeed temper their unhappiness with economic conditions in 2012 by recalling how much worse things were in 2009.
