Economic Models of Voting Term Paper

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Economic Models of Voting

It is generally believed that the more the economy grows (or slows down), the more all voters reward (or punish) the incumbent party for improving (or worsening) their economic situation. Presidential approval ratings often drive the results of the economic models of voting. These approval ratings are typically conceptualized as capturing both non-economic factors and other economic factors beyond near-election economic growth. This paper will discuss two major economic models of voting -- both of which show how economic outcomes may affect party choice.

Economic Models of Voting

The competency model holds that voters reward the present political party for favorable economic outcomes and punish him for unfavorable outcomes (Vanderzee, 1997). More than 25 years ago, this hypothesis was first tested (Kramer, 1970 and Mueller, 1970), and more recently have Rogoff and Sibert (1988) provided a choice theoretical foundation for it. The basic idea behind their model is that parties may differ in their ability to generate favorable (economic) outcomes: some parties are simply more competent than other parties.

Rogoff and Sibert assume two things about competency. The first assumption is that voters cannot observe competency directly. As a result, to assess the competency of political parties voters must rely on outcomes. The second assumption is that competency is partially lasting: politicians who are able to generate favorable economic outcomes today are likely to be able to generate favorable economic outcomes tomorrow. Together, these assumptions imply the responsibility hypothesis.

Application of the competency model to a two-party system with one party in office and one party in opposition is simple. The incumbent party benefits from favorable economic outcomes and the opposition party suffers from them.

Basically, according to the competency model of voting, voters reward administrations that generate high real output growth rates without increasing debt or inflation. On the other hand, voters reward administrations if they reduce inflation or debt without reducing economic growth.

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The policy oriented voter model describes how changing economic conditions affect election outcomes when different political parties have opposing objectives. The basic idea behind the policy oriented voter model is that voters care about permanent economic growth and distributive policies.

According to this model, changing economic conditions, which jeopardize economic growth prospects, increase the utility voters receive from policy of one party relative to the utility he receives from another party. Thus, the costs of distributive policies in terms of utility decrease with permanent real output growth. As a result, unfavorable economic growth prospects decrease the demand for distributive policies, and support for political parties which supply relatively distributive policies reduces as economic growth prospects become less favorable to voters.

The relationship between economic outcomes and voting is a complicated one. The extent to which a political party benefits from favorable economic outcomes depends on many other variables, not just economic ones. Still, it is apparent that voters reward the government for favorable economic outcomes and punish it for unfavorable economic outcomes.

Case Study

Economic models of voting are widely recognized paradigms in political science.

In its original form, economic voting models assume that voters evaluate the current government in terms of the outcomes produced by its policies, with the economy being a policy outcome of popular interest. Basically, economic voting is a type of policy voting.

For instance, Kramer (1971) and Stigler (1973) state that voters hold governments responsible for their policies rather than simply reacting in an emotional way to changes in the economy.

Recent studies use the economic voting model to explain cross-national variation in democratic satisfaction (Anderson and Guillory, 1997) and public support for the European Union (EU) (Anderson and Kaltenthaler 1996). While these studies examine international results, they adopt "peripheral"….....

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