Ryan Reaction

Here.  (I didn't pick the headline).

It's (Not) the (State) Economy, Stupid!

A couple of weeks ago I saw another story about about how the economies in swing states were improving at a faster clip than the rest of the country, and this might very well be the key to President Obama's re-election prospects.  I understand the appeal of this type of argument; after all, if the public is constantly being exposed to the old refrain, "It's the economy, stupid," it may seem natural to expect that voters living in states with more rapidly improving economies would be more likely than voters who live in states with weaker economies to support incumbent party candidates.  It also makes sense that so much attention has been paid to  the unemployment rates in the states, given the overall high levels of unemployment.   However, I did some work on this a long time ago (dissertation, actually) and found that what appeared to be state-level economic effects in a pooled vote model vanished in the presence of controls for the state of the national economy.  And even though others (see Campbell and Klarner) have found significant state-level economic effects in more recent pooled models that used broad indicators such as change in income and change in economic output, I'm still skeptical that state-to-state variations in economic conditions--especially those based on unemployment--have much to do with presidential election outcomes.

Let's take the 2008 election as a case in point.  The first figure posted below shows the relationship between the September unemployment rate and the Republican percent of the two-party vote in the states in 2008.  As would be expected under the economic voting argument, there is a negative pattern to the data, indicating that John McCain (the incumbent party candidate) did worse in states with higher levels of unemployment.  The relationship is not particularly strong, but it is just barely statistically significant (p=.04, one-tail).   The second graph shows the relationship between the change in unemployment from January to September, and the relationship is of roughly the same magnitude. 

Although these relationships are not particularly strong, they are consistent with the state-level economic voting thesis and might be taken to indicate that my skepticism is uncalled for.  But let's take a closer look.

In the top graph, if you look in the upper left-hand corner--low unemployment and strong support for McCain, you find a collection of mostly Republican states: Wyoming, Oklahoma, Nebraska, North and South Dakota, Utah.  In the lower right-hand corner--high unemployment and low support for McCain, you find a collection of Democratic and competitive states: Michigan, Rhode Island, California, Oregon, and Nevada.  And the same pattern holds for the bottom figure.  In other words, what appears to be a relatively weak, negative relationship between unemployment and support for the incumbent party candidate, likely just reflects the coincidental overlap of unemployment and partisan tendencies.  Indeed, both relationships are spurious and disappear once you take into account the partisan predispositions (Republican share of the 2008 vote) of the states.  In fact, the partial correlation for the September unemployment rate is positive (ryx,z=.20), though not significant.

And it turns out the 2008 is not the only instance of null effects from unemployment.  The Table below provides some findings from simple regression models in which the incumbent party vote share is regressed on either the September unemployment rate or the change in the unemployment rate between January and September (separate models), along with the statewide vote share for the incumbent party candidate in the previous election.  The cell entries are the unstandardized regression coefficients for each year, along with an asterisk to indicate if the slope is significant at the .05 level.

Simply put, there is nary a shred of evidence to suggest that the unemployment outlook in the states has anything to do with state-level outcomes in presidential elections.

In fact, there are only two cases of significant effects--both for the September unemployment rate--and one of those is a positive coefficient, suggesting that the incumbent candidate, Jimmy Carter, benefited from higher unemployment!  While one could make a policy-oriented argument in favor of this, it seems like a bit of a stretch.  Te most obvious conclusion to draw from this table is that state-to-state variations in unemployment are not likely to have much impact on how the states vote this November.

This is not to say that unemployment doesn't have electoral repercussion.  In fact, as I showed last summer, changes in the national unemployment are closely tied to election outcomes.  Simply put, presidential elections are national elections and it is national conditions--not state-level variation around those conditions--that drive them. 

Veepstakes and Candidate Sex

Check it out.

The Bloom Index

In the category of "I wish I'd thought of that," check out the Bloom Index.

That was fun

Central Division champions!

More on Unemployment and Elections

In my last post I focused on how ill-advised it is to make any predictions for 2012 based on unemployment rates in the summer of 2011.  As it turns out, even when measured closer in time to the election, the unemployment rate still is not a good predictor of election outcomes.  As the figure below shows, there is no relationship between the unemployment rate in July* of election years and the performance of the president's party in the November election.  It is just not a good predictor.

The problem with the unemployment rate is that it doesn't tell us much about the direction of the economy, and this is what seems to matter most in forecasting models.   One need look no farther then the 1984 election for an illustration of this point.  The unemployment rate in July of 1984 (7.5%) was very high  compared to other election years, but it was down significantly from 9.4% just twelve months earlier in July 1983.  This change in the unemployment rate signified a rapidly improving economy, which aided the Reagan landslide victory over Mondale.  But the 7.5% unemployment rate did not really speak to the changing economy, at least not on its own.

As it turns out, while the level of unemployment is not particularly relevant to election outcomes, the change in unemployment during the election year or so preceding the election is much more relevant.

The figure above shows this relationship for presidential elections from 1948 to 2008.  The correlation (-.61) is fairly strong, though there is clearly still a good deal of error in the prediction.  Still, this provides some illustration of how we might best think about the role of unemployment in the 2012 election.  Suppose the unemployment rate drops to  8.1% by next summer.  By historical standards this would be a very high unemployment rate in an election year, which might lead one to expect bad things for the Obama campaign (that is if you didn't know that the unemployment rate is unrelated to election outcomes).  But it would also mean that the unemployment rate had fallen by a full point, which would represent one of the largest election year drops in unemployment in modern times (only to be out-done by 1984).  Viewed from the perspective of change, and with the information presented above, an 8.1% unemployment rate next summer would be really good news for the Obama campaign.

Of course, there is no reason to expect a drop in unemployment of that magnitude. In fact, unemployment could even increase in the next year.  If that happens, then the task before the Obama campaign becomes very imposing. 

The take away point is that if you really want to focus on unemployment as a predictor, what's really important for the 2012 election is the direction of the economy, which is better reflected in the change in unemployment than in the unemployment rate.  At the same time, there are better measures of the direction of the economy, such as change in GDP or change in per capita income, both of which have a longer and stronger track record in forecasting models.  But, since unemployment is getting a lot of attention these days, it is best to know how it is likely to relevant to the 2012 election.

*I use July as the reference point because it is the month for which we have the most recent data, and also because I tend to favor using summer conditions to provide a little lead time in predictions.  For what it's worth, the relationship is no stronger if the September unemployment rate is used.

Early Prediction Rant

A full fifteen months out from the 2012 election we are starting to see a bit of hand-wringing among Democrats and signs of optimism among Republicans, largely on the basis of President Obama's tepid approval numbers and the downward stickiness of the unemployment rate.  In the spirit of "Don't Get your Pants in a Twist" (Democrats) and "Don't Count Your Chickens" (Republicans),  I'd like to say a bit about what current conditions might tell us about the the 2012 presidential election.

I suppose it is understandable to focus on Obama's approval rating, though I think it is silly to put too much stock in it this far before the election.  Also, given its prevalence in the media, I suppose it is not surprising that some have focused on the unemployment rate, both nationwide and in key states.  To say this is not surprising, however, is not the same thing as saying it is a good idea.  In fact, academic election forecasters pay relatively little attention to the unemployment rate when predicting election outcomes, generally focusing on broader indicators, such as change in GDP or change in per capita income.  But, more importantly, it is just not a good idea to read too much into any current conditions (whether unemployment, presidential approval, or anything else) this far ahead of the election.  As Seth Masket points out, Obama is much more likely to be held accountable for economic conditions a few months prior to the election than for those we are currently experiencing.

Just how well can you predict election outcomes this far (fifteen months) ahead of time?  Let's look at some data.  First, consider the relationship between presidential election outcomes from 1948 to 2008 and the unemployment rate in July of the year before the election.  I think the bottom line from this figure should be loud and clear: DON'T EVEN TRY TO PREDICT THE 2012 ELECTION WITH CURRENT (July, 2011) UNEMPLOYMENT DATA!  (Sorry for shouting). There is hardly any relationship (r-squared=.07), and slight pattern that does exist is nonsensical, indicating that Obama's best strategy would be to increase unemployment as much as possible.

In fact, looking at the individual observations, it is hard not to notice that the only president with a higher unemployment rate fifteen months prior to the election was Ronald Reagan, who went on to win the 1984 election in a landslide.  By the way, the X on the prediction line represents the current (July) unemployment rate, 9.1%.

Okay, so predicting with unemployment this far out is a risky enterprise. But what about presidential approval? Surely, Obama's lackluster approval numbers must presage something about his prospects next year. Right?  Well, actually, not so much.

The data below show that while summer (averaged June, July, and August) approval (Gallup) in the year before the election is a better predictor of election outcomes than the unemployment rate is, I wouldn't bet the farm on any such predictions.  Here we at least have a relationship that makes sense: presidents with high approval numbers in the summer of the year before the election generally do better (or their party does better) than than those with relative low levels of approval.  Having said that, the relationship is not very strong (r-squared=.20), and there are certainly a number of exceptions to the general pattern.  Once again, X marks the spot (Obama's summer average, 45.2%).

Just to reinforce the silliness of trying to predict from these data, it is noteworthy that Obama's average approval rating thus far in the summer of 2011 (45.2%) is close to those of Johnson (1967), Ford (1975), Clinton (1995), Reagan, (1983), and Nixon (1971); and this group of elections turned out to be either narrow losses or substantial victories for the incumbent party.

Look, it's perfectly natural to gnash your teeth or get all giddy about your party's prospects based on how things are going now.  I certainly do that.  The point is that you should spare yourself the emotional energy and wait until we get closer to the election.  Then, you can start to worry (or celebrate), depending on how things are going. 

Notes: I could not find July 1947 unemployment data, so I used the unemployment rate for the entire year.  Also, the summer 1963 approval rate is for President Kennedy, not President Johnson.  If the 1964 election is dropped from the analysis the approval relationship becomes somewhat weaker.