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Soc Indic Res (2017) 131:659680

DOI 10.1007/s11205-016-1270-0

Easy Come, Easy Go? Economic Performance


and Satisfaction with Democracy in Southern Europe
in the Last Three Decades

Mario Quaranta1 Sergio Martini2

Accepted: 8 February 2016 / Published online: 11 February 2016


 Springer Science+Business Media Dordrecht 2016

Abstract In the literature on political support, much empirical effort has been devoted to
the link between economic performance and satisfaction with democracy. Nevertheless,
analyses are often inconclusive in their findings. This study tries to renew the interest in the
topic by using multilevel models to analyse 108 surveys from the repeated cross-sectional
Eurobarometer data between 1985 and 2013, and focuses on southern European countries
which share political and economic characteristics. Thus, the article links economic trends
to changes in satisfaction with democracy in Greece, Italy, Portugal and Spain, also
emphasizing the relevance of transformations in their political systems. The results
demonstrate that low economic performance seems to negatively affect citizens satis-
faction with democracy in the four countries and across the whole period analysed. This
also holds true for different model specifications and when other potential factors such as
the format and the performance of the institutional context are controlled for. By providing
empirical evidence based on a longitudinal analysis, this article contributes to the wider
debate on how economic conditions influence opinions about democracy.

Keywords Satisfaction with democracy  Economic performance  Political institutions 


Political support  Southern Europe  Multilevel modelling

Electronic supplementary material The online version of this article (doi:10.1007/s11205-016-1270-0)


contains supplementary material, which is available to authorized users.

& Mario Quaranta


mquaranta@luiss.it
Sergio Martini
sergio.martini@upf.edu
1
Department of Political Science, LUISS Guido Carli, Via di Villa Emiliani 14, 00135 Rome,
Italy
2
Department of Political and Social Sciences, Universitat Pompeu Fabra, Merce Rodoreda Building
(Ciutadella Campus), Office 24.413, Ramon Trias Fargas, 25-27, 08005 Barcelona, Spain

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660 M. Quaranta, S. Martini

1 Introduction

That economic conditions have a role in strengthening democracy is a well-established


argument in comparative politics. In fact, many scholars suggest that economic per-
formance may be crucial for democratic consolidation and regime survival (see Dia-
mond 1999). Following this view, an economic downturn is likely to undermine
popular satisfaction with the functioning of democracy. Over the years, there has been
a gradual accumulation of empirical analyses connecting the status of the economy to
political support. However, the findings are often contradictory, and when economic
factors reach statistical significance the coefficients are weak in magnitude (see Dalton
2004).
The year 2008 is commonly indicated as the beginning of the worst global financial
crisis since World War II. The recession was particularly severe in southern Europe,
leading to deep political repercussions. The national executives in Greece, Italy, Spain and
Portugal came under great stress, as they had to implement harsh financial cuts in order to
deal with a loss of international market confidence. Among others, one result was the joint
downfall of the four governments in 2011 (see Bosco and Verney 2012). The level of
conflict rose as social movements and protest against austerity measures spread (Anduiza
et al. 2014; also see Quaranta 2015). New political formations capitalizing on anti-party
sentiments and demanding changes to increase citizen participation in decision-making
gained consensus (Bordignon and Ceccarini 2013). Insecurity made these polities vul-
nerable to xenophobia and the rise of new far-right extremism (Ellinas 2013). Lastly, the
economic crisis also impacted on the well-being of citizens, who saw their quality of life
deteriorating (see Somarriba Arechavala et al. 2015).
Without doubt, the crisis is a good opportunity to re-evaluate the economic underpin-
nings of support for the functioning of democratic systems. These seem to be even more
relevant in those political systems that have undergone intense challenges in their recent
history, such as regime transition and consolidation, as well as profound instability and
system restructuring (see Morlino 1998). In short, southern European countries offer a
unique context in which to further test the above argument, as they show similarities in
their political development and analogous structural financial problems. However, they
differ in terms of the democratic regime types established along the way and present
different timings in the expansion of their market economies. Therefore, this study intends
to renew interest in several important questions, such as: What has been the impact of
economic performance on citizens satisfaction with democracy in southern Europe? Do
supportive attitudes follow the economic conditions in this area? Does this association vary
across southern European countries?
Unlike previous research, we use multilevel models to analyse 108 surveys from the
repeated cross-sectional Eurobarometer surveys from 1985 to 2013, and add interesting
new insights to the literature. In fact, we find that low economic performance seems to
relevantly affect citizens satisfaction with democracy in the four countries. In other words,
when the economy runs badly people are far more critical of the way the system works,
with resulting political turbulence and problems for democratic quality (Morlino 2011). It
is worth noting that our findings are not only limited to periods of recession but are
generalizable to a wide time-span. We provide the first and most comprehensive analyses
of trends in satisfaction with democracy and its determinants in southern Europe. More-
over, in methodological terms, we comply with recent calls for the use of multilevel

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Easy Come, Easy Go? Economic Performance and Satisfaction 661

models (Anderson and Singer 2008) and the need to exploit data variation over time (Linde
and Ekman 2003).
The article proceeds as follows. We first review the empirical literature on the rela-
tionship between the economy and satisfaction with democracy. Next, we present the cases
selected, focus on their political and economic characteristics, and link them to changes in
satisfaction with democracy over the last three decades. Then, we introduce the data and
measures employed in the models. In the final sections, we discuss our findings and
conclude our work.

2 An Overview of the Association Between the Economy and Satisfaction


with Democracy

According to Easton (1975), an important characteristic of political systems is that they


depend on the political support of citizens. Understanding what people think about the
political process is therefore an essential indicator to assess a democracys state of health.
Political support may be oriented towards different objects: the political community; the
principles of the regime; the norms and procedures of the regime; its institutions; and the
political authorities (Dalton 2004, pp. 2224). Furthermore, it is important to distinguish
evaluative beliefs, where support is more specific and citizens express a judgment on the
perceived outputs of a particular object, from affective beliefs, where support is diffuse and
captures the meaning given to the object and identification with it. Seen in this light,
citizens satisfaction with democracy is an evaluation of the functioning of the regime
procedures in practice and what the regime delivers in terms of policies, implying per-
ceptions of the ability of the political system to solve problems. In this way, satisfaction is
a rational response to the outputs of the system which does not explicitly gauge the popular
legitimacy of democracy, i.e. an acceptance of democracy as a principle (Torcal and
Montero 2006). However, prolonged discontent with the performance of a regime may
suggest an erosion of its consolidation in the long run, or deep criticism and support for
reform within the democratic framework (Linde and Ekman 2003).
Among the factors that are acknowledged to explain satisfaction with democracy, the
economy has not always had a prominent position. Nevertheless, previous research has
shown that the electorate tends to punish incumbents as a function of their economic record
and that government popularity follows economic cycles (Alesina and Wacziarg 2000;
Duch and Stevenson 2008). Building on this view, satisfaction with democracy may follow
macro-economic conditions. When economic performance falls below citizens expecta-
tions supportive attitudes may also fall. The basic argument is that citizens translate a
worsening of economic conditions into critical attitudes towards the political system. This
may be expected, as in citizens opinions the notion of a democratic regime often
overlaps with the belief that it should be able to guarantee acceptable levels of affluence
and prosperity (Thomassen 1995). In brief, as Clarke et al. (1993) argue, unfavourable
economic conditions may produce feelings of insecurity and reduce disposable income,
which in turn translate into critical attitudes towards the functioning of the democratic
system.
Although the connection between economic conditions and satisfaction with democracy
appears to be intuitive, previous empirical results are far from conclusive. For instance, a
cross-sectional analysis based on twenty European countries between 2002 and 2003 does
not find a significant link between economic growth and satisfaction with democracy

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662 M. Quaranta, S. Martini

(Anderson and Singer 2008). Similar results are found in another study of forty-one
countries, which does not find support for the hypothesis that economic growth influences
satisfaction with democracy (Huang et al. 2008). The same study also shows that neither
the level of inflation nor that of unemployment seem to affect peoples support for the
system. More recent contributions show, on the one hand, that unemployment is not
relevant to satisfaction with democracy (Dahlberg and Holmberg 2014) and, on the other
hand, that economic growth is associated with it (Curini et al. 2012). Longitudinal studies
available on the topic seem to provide some support for the hypothesis linking economic
performance and satisfaction with democracy. In their analysis of eight European coun-
tries, Clarke et al. (1993) show that macro-economic indicators are associated with sat-
isfaction, although their impact is limited. In a more recent comprehensive investigation of
European democracies, the evidence seems to be more distinct for unemployment and
economic growth, while the role of inflation is still not completely clear (Wagner et al.
2009; Bellucci and Memoli 2012; Ezrow and Xezonakis 2011; Armingeon and Guthmann
2014).
To sum up, although considered crucial in channelling peoples satisfaction, the role of
economic factors is not completely clear in the literature. This uncertainty may be due to
the fact that empirical studies are often based on cross-sectional data, which only account
for specific points in time. We argue that results might improve both in clarity and sub-
stance by looking at the temporal dimension from a cross-national perspective. This is
because satisfaction fluctuates much over time due to contingencies and does not only
depend on cross-national differences. This is somewhat suggested by existing longitudinal
research (see Bellucci and Memoli 2012). However, the results are not stable and are
difficult to interpret, given differences in the time spans chosen. In this study, we try to
demonstrate our view by considering trends in satisfaction with democracy in four southern
European countries over three decades.

3 The Economy and Satisfaction with Democracy in the Southern


European Context

Southern European democracies have often been thought of as countries sharing some
important commonalities. Indeed, beyond their geographical location, these countries have
common traits both at the political and the economic levels. At the political level, all of
them have passed through deep structural transformations in recent decades. After having
experienced authoritarian regimes, they have completed successful, although difficult,
processes of consolidation, which have moved them from the periphery to the mainstream
of advanced post-industrial democracies in the European Union (Gunther et al. 1995;
Morlino 1998). On the other hand, an important aspect characterizing the recent history of
southern European countries is their difficulty in achieving broad and stable institutional-
ization of their party systems, which has been described as their having leapfrogging
processes of change (Diamandorous and Gunther 2001). In this respect, some phases of
party consolidation as the organizational particularities of traditional mass-type party
politics have been almost completely absent in the democracies of Greece, Portugal and
Spain. Moreover, the presence of both extreme left- and right-wing anti-system parties has
conditioned consolidation with differences from one country to another. This has largely
shaped the dynamics of political competition, and is the case of Italian democracy in
particular (Morlino 1998). Another feature is the persistent low quality of their

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Easy Come, Easy Go? Economic Performance and Satisfaction 663

bureaucracies, despite several attempts at reform, due to the penetration of parties into all
spheres of society with political patronage or spoil systems still nowadays being instru-
ments of recruitment (Sotiropoulos 2006; Di Mascio 2012). The unveiling of scandals and
episodes of corruption is also part of this picture across the four countries, and they still
plague these political systems, putting the relation between citizens and the state under
serious threat (Gunther et al. 1995; Morlino 1998).
If we consider our cases from the mid-1980s, namely when the consolidation process
was complete in all four countries, much variation is encountered at the economic level.
Spain and Portugal, for instance, underwent a notable improvement between 1985 and
1991. Compared to the five years prior to the transition to democracy, GDP per capita rose
by around 3.9 % in both countries, while unemployment fell from 21.1 to 18.4 % in Spain
and from 8.5 to 4.0 % in Portugal. Conversely, the negative performance of the Greek
economy of the previous period did not change and government policies proved incapable
of reverting the trend, as GDP only grew by 1 % per year and unemployment fluctuated at
around 7.9 % until 1990 (Roccas and Padoa-Schioppa 2001). In this discussion, Italy
merits specific consideration. The remarkable economic boom experienced during the post-
war period allowed Italy to enter among the most industrialized countries earlier, with a
considerable advantage over the other southern democracies. Indeed, by 1980 Italian GDP
per capita had already surpassed the average level of the twelve European Union member
states, with a growth of almost 3 % per year and unemployment at around 9 % between
1980 and 1990. However, after the oil crisis of the 1970s there was a gradual slowdown
in the economy reflecting fundamental problems in public finances, with debt rising from
60 % in 1970 to 105 % in 1992 (Toniolo 2013).
The following two decades saw opposing patterns of boom and bust, with Spain and
Greece being the two most significant cases. After the international downturn that occurred
in the first half of the 1990s, Spain showed high levels of unemployment, rising to over
23 % (Montero et al. 1997). However, in the following years the country was able to start a
strong economic recovery and became one of the most successful countries in the Euro-
zone. Between 1997 and 2007 Spanish GDP grew at an average level of around 3.5 %,
unemployment was reduced to 8 % and public debt to 40 % (Royo 2009). Nevertheless,
since the real-estate market bubble burst and the international financial crisis started in
2008, the country has faced its worst recession in half a century, showing the fragile
foundations of its economic growth with a fall of 3.8 % in GDP and unemployment back to
the levels of the early 1990s. To some extent, the Greek economy experienced a very
similar situation. Over the period between 1999 and 2008, Greece exhibited high growth
rates, among the highest in the area, with a parallel reduction in unemployment to 8 % in
2008. However, its fiscal vulnerability, its limited adherence to the structural reforms
recommended by the European Union, and the deficit generated by the 2004 Olympic
Games left the country unprepared in front of the crisis (Pagoulatos and Triantopoulos
2009). The consequences were tremendous, with a deep contraction in growth in 2011 and
2012 of around 6 and 7 % respectively and unemployment at 27 % in 2013 (OECD 2014;
European Commission 2014). The country is still finding its way out, after having initiated
a plan of austerity measures with deep social costs.
Portugal and Italy show two different patterns. The former did not experience the rapid
expansion of Spain and Greece. Indeed, the economic recovery that occurred between 1995
and 2000 was not sustained, resulting in a new period of economic stagnation. In the
following decade the economy slowed down, with a contraction in growth and rising
unemployment, in particular after 2008 (Torres 2009). The latter, instead, underwent low
growth in the period before 2008 (1.7 % GDP average annual growth rate between 1992

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and 2000 and 0.7 % between 2000 and 2007) and a severe recession afterwards (-2.2 %
GDP annual growth rate between 2007 and 2011) (Toniolo 2013).
Given that the economic conditions and the political contexts have changed, how have
people been satisfied with the way democracy works in southern Europe? Is satisfaction
with democracy dependent on economic conditions? As can be seen from Fig. 1, which
displays the proportions of satisfied citizens in the four countries and in Western Europe
between 1985 and 2013, there has been a fair amount of variation in peoples opinions.
First of all, it is important to note that satisfaction in the four countries is almost always
lower than the average level in Western Europe. Overall, the challenge of social and
political development may have affected peoples opinions about the functioning of their
system compared to other democracies. A second important point is that trends in satis-
faction seem to quite closely follow periods of economic expansion and contraction. For
example, it can clearly be seen from the first dashed vertical line in Fig. 1 that around the
end of the 1980s and the early 1990s satisfaction drops in all four countriesa period of a
deep economic distress. A clearer pattern can be singled out for the period after the 2008
global crisis, when the decrease in satisfaction is even more substantial. This is particularly
the case of Spain, in which the proportion of satisfied citizens dropped from an average of
about 0.60 in 1985 to 0.35 in 1994. Subsequently, satisfaction constantly increased until

Fig. 1 Trends in satisfaction with democracy (proportion of respondents who are fairly or very satisfied)
in Greece, Italy, Portugal, Spain and in Western European countries with 95 % confidence intervals,
19852013. Note the two vertical dashed lines represent the early-1990s and the late-2000s recessions. The
trend lines are smoothed using spline interpolation. The Western European countries are: Austria, Belgium,
Germany, Denmark, Finland, France, Great Britain, Ireland, Netherlands, and Sweden. Own elaboration
based on the Eurobarometer series

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Easy Come, Easy Go? Economic Performance and Satisfaction 665

the late 2000s, when the economy boomed, reaching 0.80, but after the beginning of the
recession in 2008 it dropped strikingly to about 0.20. This confirms what has previously
been found for the Spanish case. In fact, it has been argued that the trend of satisfaction
with democracy follows the ups and downs of the economy (Montero et al. 1997).
A similar situation may be found for Greece, where the levels of citizen satisfaction
rocketed up between 1995 and 2008, when the country saw its most positive economic
results, and satisfaction started falling dramatically afterwards. Portugal and Italy, again,
present more specific figures following conditions of economic stagnation interrupted by
short periods of low growth. The Italian case is characterized by the corruption scandals of
the early 1990s (Della Porta and Vannucci 2007), which may have contributed to the drop
in satisfaction in that period (Memoli 2009) together with the deep economic crisis at the
same time (Toniolo 2013). However, in the following period satisfaction increased stea-
dily, probably due to the economic recovery and the change in the party system, until the
2008 economic crisis. In Portugal we observe a steady decline from the 1990s. This has
been attributed to a combination of a post-honeymoon effect and the low performance of
democracy (Magalhaes 2005).
To conclude, according to this overview we expect to find an association between
economic conditions and trends in satisfaction in the four countries. In the next sections the
basis for a test of this relationship will be set out.

4 Research Strategy

4.1 Measuring Satisfaction with Democracy

Measures of satisfaction with democracy are widely debated in the literature (see Linde
and Ekman 2003). Nevertheless, an indicator of satisfaction that has been much used is a
four-point ordinal scale measuring the extent to which survey respondents are satisfied with
the way democracy works in their country. The four points are not at all, not very,
fairly, and very satisfied. This indicator is present in the Eurobarometer series from
1985 to 2013 for all the countries analysed.1
It has been argued that this indicator may capture different meanings (Canache et al.
2001), such as the performance of the government (Anderson and Guillory 1997), regime
performance or regime evaluation (Linde and Ekman 2003; Dalton 2004; Norris 2011).
This is true too in the context of southern European countries. Legacies of an authoritarian
past makes the citizens living in this area able to differentiate between particular issues
regarding democracy and regime performance. Studies have demonstrated that in southern
Europe satisfaction with democracy basically represents an evaluation of regime outputs
and of how the regime responds to citizens requests (Morlino and Montero 1995; Montero
et al. 1997; Morlino 1998; Memoli 2009; Martini and Quaranta 2015).

1
However, the indicator is not available in the Eurobarometer for 1996 and 2008. Although for Italy and
Greece the indicator is also present in the Eurobarometer surveys before 1985, we decide to study the trends
from 1985 in order to analyse the same number of years for each country, as for Portugal and Spain the
indicator is available starting from that year. We exclude Cyprus and Malta because the data are available
for fewer years. We use the Eurobarometer Trend Files: EB 58.1; EB 60.1; EB 61.0; EB 63.4; EB 65.2; EB
68.1; EB 71.3; 73.4; EB 76.3; EB 77.3; 79.3.

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4.2 The Independent Variables

The independent variables used in this study are measured at two different levels of
analysis. At the individual level, we use variables gauging the characteristics of the
respondents which are drawn from the Eurobarometer series. We include standard vari-
ables that are commonly used in the field (for a review, see Norris 1999; Dalton 2004). We
use the respondents gender (the reference category is man); age in years; age in years
squared divided by 100; age at completion of education in categories (less than 15the
reference category, 1519, over 19, and still studying); employment status (not
employed, retired, student, otherthe reference category, or employed); civil status
(single, divorced, separated or widowedthe reference category, married or
cohabitating).2
At the second level of analysis, which is the country-year level, we use variables
measuring yearly varying characteristics of each country. These variables are of two types.
The first type is one measuring the macro-economic situation of the four southern Euro-
pean countries. The literature review showed that many variables have been used to link
the economy to satisfaction. The variables commonly used to describe the status of the
economy are inflation, unemployment and economic growth, as they directly impact on
citizens lives (see Clarke et al. 1993). However, using single indicators may not be a
useful strategy as they measure specific aspects of the status of the economy. A solution
may be to use a composite index which taps the general economic performance of a
country. Therefore, in order to measure the status of the economy we follow Khramov and
Lee (2013), who propose application of the Economic Performance Index (henceforth
EPI). This index provides an intuitive and parsimonious measure which gauges well how
the economy runs and its deviation from the desired level. The index has the advantage of
summarizing information about the status of the economy while avoiding the risk of
multicollinearity among macro-economic indicators which are likely to influence each
other. Furthermore, the index accounts for economic factors that are known to have direct
effects on three important segments of society: firms, households and governments. The
index includes indicators of inflation (OECD 2014; International Monetary Fund 2014),
unemployment (European Commission 2014), deficit/surplus (European Commission
2014; OECD 2014; International Monetary Fund 2014) and growth (International Mone-
tary Fund 2014; OECD 2014). These measure the economys monetary status, production
status, fiscal status, and the aggregate status. The index is built using the following
equation:
EPI 100  WInf jInf  Inf  j  WUnem Unem  Unem
 WDef Def  Def  WGrow Grow  Grow

The term Wi represents a weight for each indicator that is computed by dividing the
average of the standard deviations of the four indicators by the standard deviation of each
indicator. The terms indicated with an asterisks are the desired levels of inflation,

2
As these variables are not central to our argument, we will not comment on them. Unfortunately, we
cannot control for further individual-level variables as many, such as the leftright scale, satisfaction with
life, and political discussion or interest, are not available for all the years investigated. Variables such as
evaluation of the economy and satisfaction with the financial situation are available for few years, In fact,
measures of individual evaluations of the economy or economic expectations are only included in the more
recent surveys of the Eurobarometer.

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Easy Come, Easy Go? Economic Performance and Satisfaction 667

unemployment, deficit and growth, which are respectively 0, 4.75, 0 and 4.75 %. There-
fore, a country meeting the desired levels of economic performance would have a score of
100.3
Figure 2 shows the levels of economic performance in southern Europe between 1985
and 2013. It can easily be noticed that the index describes the status of the economy well
over time in different contexts, as it is able to identify recessions and booms. Performance
drops significantly in all four countries at the beginning of the 1990s, which corresponds to
the recession of the early 1990s. Then, economic performance improves constantly for
more than 10 years, with the exception of Portugal. The figure shows that around 2008 the
economic performance of the four countries drastically worsened, in the case of Greece,
Portugal and Spain reaching the lowest score across the whole time period. Thus, the EPI
provides a simple yet informative indication of the status of the economy, summarizing
what was reported in the previous section.
As a control for economic performance, we include in the models the logarithm of GDP
per capita (International Monetary Fund 2013), which should measure the level of eco-
nomic development. In fact, it has been found that political support has a negative asso-
ciation with the level of GDP, as more wealth makes citizens have higher expectations of
their political system (McAllister 1999; see also Norris 1999).
The second type of variable measured at the macro level concerns characteristics of the
political systems, which are additional controls. Indeed, the economy is not the only factor
that needs to be taken into account, and constitutional arrangements and the political
performance of systems have often been used to explain supportive attitudes. The main
argument is that the type of democracy, summarized by its patterns of representation, is a
factor determining the cross-national levels of satisfaction with democracy (Lijphart 1999;
Powell 2000). Specifically, it is argued that proportional systems facilitate the inclusion of
relevant social and ethnic minorities within decision-making procedures. In this way,
power-sharing arrangements would allow broader representation, resulting in higher level
of satisfaction. On the one hand, several studies show that the degree of proportionality of
the electoral law and the number of parties are positively associated with satisfaction with
democracy (Anderson and Guillory 1997; Lijphart 1999). On the other hand, scholars find
contradictory results showing that majoritarian systems help to promote higher levels of
satisfaction (Norris 1999; Criado and Herreros 2007; Aarts and Thomassen 2008). Finally,
some studies conclude that there is no relation at all, or that the format of political
institutions only partially matters (Listhaug et al. 2009). Following these accounts, we
control for the potential role of the institutional context by including the effective number
of parties (Laakso and Taagepera 1979) and the Least Squares Index, which measures the
disproportionality of the electoral law (Gallagher 1991). The source of these two measures
is Gallagher (2014).
Another part of the literature emphasizes the performance of the system rather than its
structure. Therefore, it is also very important to consider the quality of institutions to
understand the dynamics of supportive attitudes. In this line of investigation, some studies
link the level of corruption to satisfaction (see Anderson and Tverdova 2003; Pellegata and
Memoli 2015). Thus, it is important to analyse whether this factor is associated with
satisfaction with democracy over time. We use a measure assessing the risk of corruption
present in a country. This variable measures how likely it is that several forms of cor-
ruption occur in a political system. It ranges from one to six, where one represents a high
risk of corruption and six represents a low one. The data come from the International

3
See Khramov and Lee (2013) for further details on the Economic Performance Index and its validation.

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668 M. Quaranta, S. Martini

Fig. 2 The Economic Performance Index in Southern Europe, 19852013. Note the two vertical dashed
lines represent the early-1990s and the late-2000s recessions. The trend lines are smoothed using spline
interpolation. See the text for the sources

Country Risk Guide.4 Unlike other available measures of levels of corruption, this one
provides information over quite a long time span up to 1985. Indeed, some of the countries
included in the analyses, for instance Italy and Spain, also experienced various political
scandals in the past or cases of corruption which may have affected public opinion.

4.3 Model

Our research design consists of repeated cross-section surveys held in the four countries.
Therefore, our unit of analysis is the survey respondent, which represents level 1, which is
nested in country-years, which is level 2, which is cross-nested in both countries and years,
which are the non-hierarchical level 3.5 Using this design, we can analyse the association
between changes in macro-economic conditions and institutional variables with changes in
satisfaction at the individual level in southern Europe from 1985 to 2013. By including the
temporal dimension, we are able to provide findings that can be generalized to a wide time
range and not only to specific periods of economic recession and boom.
As we deal with three non-hierarchical levels of analysis and the dependent variable is
ordinal, we apply ordinal logistic cross-nested multilevel models (Gelman and Hill 2006;
4
A detailed description of the country-year variables and the descriptive statistics is available in the Online
Appendix.
5
This strategy allows time shocks that operate simultaneously on all cross-sectional units (Shor et al.
2007, p. 172) to be taken into account.

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Easy Come, Easy Go? Economic Performance and Satisfaction 669

Agresti 2010). At level 1 we include the individual-level predictors; at level 2 we include


the time-varying predictors measuring economic performance and institutional character-
istics; while at the country and the year levels we do not include any predictor, as they
serve as a control for country and year heterogeneity. The model takes the following form:

Pyi  j F sj  li ; for J 1; . . .; J  1

Pyi J 1  F sj  li
li xi b gk

gk  N zk c dc ht ; rg
dc  N 0; rd
ht  N 0; rh

The dependent variable is indicated by yi , which has J 4 categories, where i indexes


the respondents. The term sj represents the thresholds, of which are j  1. The term li is a
linear predictor including the vector of individual-level variables xi , the vector of coeffi-
cients b, and the level-2 random effects, gk , where k indexes the country-years. The level-2
random effects follow a normal distribution which has as mean a linear combination of zk ,
which is the vector of level-2 predictors, c, which is the vector of level-2 coefficients, the
country-specific random effects, dc , where c indexes the countries, and the year-specific
random effects ht , where t indexes the year and has standard deviation rg . The last terms,
dc and ht , follow a normal distribution with mean 0 and standard deviations rd and rh .
Finally, F is the inverse of the logit function.
To explore whether economic performance is associated with satisfaction in the four
southern European countries we also let the coefficient for the EPI vary across the four
countries. If economic performance is similarly associated with the dependent variable in
the four countries, the standard deviation of the random slopes should be small.
We estimate four models. The first is an empty model used as a reference. In the
following model, we enter the first predictor at level 2, the EPI. Then, we include all the
level-2 predictors. In the last model, we let the EPI coefficient vary across the countries. As
the estimates of an ordinal logistic model are not straightforward to interpret we compute
the average marginal effects of the level-2 independent variables for each category of the
dependent variable.6 Furthermore, we compute the predicted change in probability for each
category of the dependent variable across the range of the independent variables measured
at level 2.

5 Findings

Before moving to the multilevel models, it can be useful to analyse the relationship
between satisfaction with democracy and economic performance using bivariate associa-
tions. If we compare Figs. 1 and 2, we notice that the trend lines of satisfaction with
democracy and the EPI change contingently. In the case of Greece, the proportion of
satisfied citizens decreases until 1995 and later starts growing again, exactly when the EPI
increases. Around 2008 the EPI falls quickly, as does the proportion of satisfied citizens. In
Spain in the late 1980s, the proportion of satisfied citizens is around 0.60, and after 1990 it
declines to 0.40. In the same period, the EPI drops to its minimum since 1985. As the EPI

6
See Long (1997) for a discussion of marginal effects.

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670 M. Quaranta, S. Martini

improves around 1994, the proportion of satisfied citizens constantly increases and reaches
its maximum around 2007. When the 2008 recession starts, as is notably described by the
declining levels of the EPI, the proportion of satisfied citizens narrows impressively.
Figure 3 also confirms this relationship. Here, by means of bivariate regressions we
show how the predicted values of the proportion of satisfied citizens change as the EPI
increases in each country between 1985 and 2013. The association between satisfaction
and economic regression is clear at first sight. In Greece, an increase of one point in the
EPI corresponds to an increase in the proportion of satisfied citizens of 0.009. In fact, the
panel shows that satisfaction is lowest in the years of the recent economic crisis (201113)
and in the years of the 1990s crisis (19901993). In Italy, this association in even stronger,
as the increase is about 0.013. In the case of Portugal, the association is similar to that seen
in Greece, despite the p value being slightly higher (0.055). In this case too, satisfaction is
quite low in the years of the recent crisis, especially in 201213. Finally, the association is
also positive for Spain. In this case, we notice that the proportion of satisfied citizens very
precisely follows the values of the EPI. In fact, as the EPI increases the proportion
increases by 0.010 and this association is statistically significant. Satisfaction is quite high
during the years of the economic boom (20042007), but quite low during the years of the
recent crisis (201113). Figures 1, 2 and 3 provide us with initial evidence of the rela-
tionship between satisfaction and economic performance. However, this evidence does not
account for potential confounding factors and is only based on aggregate data.
For this reason, we estimate the multilevel models. Table 1 reports the coefficients.
Model 1 does not include any predictor and we use it as a benchmark. Model 2 includes the
first predictor at level 2, the Economic Performance Index. As expected, the index is
associated with satisfaction. An increase of one unit in economic performance corresponds
to an increase in the probability of being fairly satisfied of 0.008 and in the probability of
being very satisfied of 0.003. This means that when the economy performs badly the
probability of being fairly satisfied is about 0.20, while when it is at its best the prob-
ability becomes about 0.50. Instead, the probability of being very satisfied in a moment of
bad economic performance is almost nil, 0.02, while it becomes about 0.12 when the
economy runs well. So far, Model 2 provides an indication that economic performance is
associated with citizens evaluations of democracy. In fact, although the link between
macro-economic conditions and changes in satisfaction has often been postulated,
empirical analyses have not always confirmed the relationship. The importance of the
economy is suggested by the fact that the variability across country-years drops substan-
tially after economic performance is included.
Model 3 adds all the variables at level 2.7 We can see that economic performance is still
significantly associated with satisfaction, despite the inclusion of the control variables.8
Figure 4 shows the differences in the probabilities of being not at all, not very, fairly

7
All the models are checked for variance inflation factors. In none is multicollinearity present. As a
robustness check, we include in the models the Economic Performance Index at t  1 in order to capture a
potential lag between changes in the countries economic performance and citizens responses to the
satisfaction with democracy indicator. We also include in the models dummy variables accounting for some
stages of European integration and for the recent economic crisis. The results are robust to these controls.
See the Online Appendix.
8
We also run some additional models including the macro-economic indicators making up the Economic
Performance Index separately: deficit/surplus, growth, unemployment, and inflation. The results indicate
that three of the four components of the Economic Performance Index are associated with the levels of
satisfaction with democracy, providing support for the use of a composite indicator. The models are reported
in the Online Appendix.

123
Easy Come, Easy Go? Economic Performance and Satisfaction 671

Fig. 3 The association between the proportion of respondents who are fairly or very satisfied with
democracy and the Economic Performance Index for southern Europe, 19852013, with 90 % confidence
intervals. Note as the dependent variable is a proportion we use logit transformation. The confidence
intervals are simulated. In the top left-hand corners the average marginal effects and the p values (in
brackets) are reported

and very satisfied between the minimum and the maximum values of the independent
variables included at level 2, with 95 % confidence intervals.9 The difference in the
probability of being fairly satisfied at low and high scores of economic performance is
0.26, while the difference in the probability of being very satisfied is 0.09. This means
that economic performance is associated with satisfaction. As expected, the logarithm of
GDP per capita shows a significant and negative association with the dependent variable.
In fact, the differences in the probabilities of being fairly and very satisfied at low and
high GDP per capita are about 0.16 and 0.06 respectively. This indicates that as the
southern European countries become wealthier citizens also become more critical of their
democratic regimes (see McAllister 1999).
As the number of parties increases by one unit the probability of being fairly satisfied
decreases by 0.035, while the probability of being very satisfied decreases by 0.005. In
fact, the differences in the probability of being fairly and very satisfied at low and high
numbers of parties are 0.20 and 0.05 respectively. As many have argued (see Norris 1999),
the negative association means that the presence of a high number of political parties in the
political system decreases satisfaction because many actors in the political scene produce

9
The confidence intervals are computed using a simulation method based on Bayesian inference (see
Gelman and Hill 2006).

123
Table 1 Estimates from ordinal multilevel models predicting satisfaction with democracy in southern Europe, 19852013
672

Model 1 Model 2 Model 3 Model 4


est. (SE) sig. est. (SE) sig. est. (SE) sig. est. (SE) sig.

123
Fixed-effects
Thresholds
s1 -1.641 (0.202)** -1.443 (0.218)** -1.457 (0.147)** -1.440 (0.131)**
s2 0.237 (0.202) 0.437 (0.218)* 0.423 (0.147)** 0.441 (0.131)**
s3 2.713 (0.202)** 2.916 (0.218)** 2.902 (0.147)** 2.921 (0.131)**
Level 1 predictors
Gender (Woman) -0.006 (0.010) -0.006 (0.010) -0.004 (0.010)
Age 0.002 (0.000)** 0.002 (0.000)** 0.002 (0.000)**
Age squared/100 0.022 (0.002)** 0.022 (0.002)** 0.023 (0.002)**
Education (ref. up to 15)
1619 0.014 (0.013) 0.014 (0.013) 0.016 (0.013)
More than 19 0.044 (0.015)** 0.045 (0.015)** 0.050 (0.015)**
Still studying 0.125 (0.025)** 0.125 (0.025)** 0.129 (0.025)**
Employment status (Employed) 0.069 (0.012)** 0.069 (0.012)** 0.071 (0.012)**
Civil status (Married or cohabitating) 0.110 (0.012)** 0.109 (0.012)** 0.109 (0.012)**
Level-2 predictors
Economic Performance Index 0.044 (0.006)** 0.039 (0.005)** 0.038 (0.007)**
[-0.006/-0.004/0.008/0.003] [-0.005/-0.004/0.007/0.002] [-0.005/-0.004/0.007/0.002]
log(GDP per capita) -0.374 (0.112)** -0.326 (0.112)**
[0.052/0.036/-0.064/-0.023] [0.045/0.031/-0.056/-0.020]
Effective number of parties -0.204 (0.049)** -0.219 (0.055)**
[0.028/0.020/-0.035/-0.013] [0.030/0.021/-0.038/-0.013]
Disproportionality 0.021 (0.018) 0.024 (0.020)
[-0.003/-0.002/0.004/0.001] [-0.003/-0.002/0.004/0.001]
Corruption -0.102 (0.061) -0.096 (0.059)
[0.014/0.010/-0.017/-0.006] [0.013/0.009/-0.017/-0.006]
M. Quaranta, S. Martini
Table 1 continued

Model 1 Model 2 Model 3 Model 4


est. (SE) sig. est. (SE) sig. est. (SE) sig. est. (SE) sig.

Random components
rg 0.468 0.358 0.332 0.318
rd 0.374 0.417 0.271 0.234
rh 0.319 0.266 0.211 0.215
rEPI 0.007
BIC 356,322 356,031 356,015 356,020
AIC 356,382 356,179 356,204 356,228
N 151,052/108/4/27 151,052/108/4/27 151,052/108/4/27 151,052/108/4/27
est. = log-odds, SE = standard errors; sig. = ** p B 0.01; * p B 0.05; rg = standard deviation of the country-years random-effects; rd = standard deviation of the country
random-effects; rh = standard deviation of the years random-effects; rEPI = standard deviation of the Economic Performance Index random slopes. Average Marginal
Effects are reported in square brackets. BIC = Bayesian Information Criterion; AIC = Akaike Information Criterion; N is the number of respondents, country-years, countries
and years respectively. Continuous variables are centred on their means
Easy Come, Easy Go? Economic Performance and Satisfaction
673

123
674 M. Quaranta, S. Martini

Fig. 4 Difference in probability of being not at all, not very, fairly and very satisfied with
democracy, over the range of the Economic Performance Index, the logarithm of GDP per capita, Number of
Parties, Disproportionality, and Corruption, with 95 % confidence intervals. Note the differences in
probability are computed holding the independent variables at their means. Own elaboration based on Model
3

centrifugal forces impeding the effective promotion and formulation of policies. Instead,
the differences in the probability of being fairly and very satisfied at low and high
disproportionality are about 0.05 and 0.02 respectively. However, the association between
disproportionality and satisfaction is not significant. Thus, in countries and years in which
the number of parties is limited, citizens tend to be more satisfied (see Aarts and Tho-
massen 2008). In Model 4, corruption is not significantly associated with satisfaction. This
result may seem puzzling, as previous research has found corruption to be associated with
measures of political support, and more generally with trust in government and institutional
confidence (see Anderson and Tverdova 2003; Pellegata and Memoli 2015). Instead, the
risk of corruption does not seem to affect public opinion about the functioning of demo-
cratic systems, at least in the four countries and the period studied here. In other words,
when explaining changes in evaluations of democracy over time in southern Europe, what
matters are the output of the system in terms of overall economic performance and the
simplified format of the political system in terms of a low number of parties, rather than
how the system delivers policies, i.e. whether these are delivered through corrupt practices.
These results add contrasting evidence about the political costs of corruption, challenging
common theoretical expectations of a negative effect. In this respect, they come close to
existing research on corruption and electoral support/accountability that has found that
corruption does not necessarily prevent the re-election of the officials involved. In par-
ticular, evidence for the Italian (Chang et al. 2010) and the Spanish cases (Costas-Perez
et al. 2012) suggests that the presence of limited punishment and high chances of re-
election among incumbents involved in events of corruption points to possible mechanisms

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Easy Come, Easy Go? Economic Performance and Satisfaction 675

of exchange between voters and politicians, in particular when media exposure is weak or
political information about these events is low (Golden 2006). The persistence of moderate
and high levels of corruption in advanced and developed democracies still poses several
questions which need to be further addressed, for instance by distinguishing the effects on
various types of supportive attitudes and behaviours, and at different levels of
government.10
Including all the predictors at level 2 helps account for a larger part of the variability
among the country-years. However, the reduction in the standard deviation of the random
effects at level 2 is not much smaller than that in Model 2, meaning that economic
performance by itself explains a considerable part of the variability in satisfaction among
the country-years.
The relevance of economic performance has already been underlined for the Spanish
case, as it has been noted that the trends in satisfaction in this country exactly follow the
trends in economic growth, inflation and unemployment (Montero et al. 1997; Torcal and
Magalhaes 2010). The role of a positive economic performance has also been stressed for
Greece. From 2000 up to 2008 there are almost always more satisfied than dissatisfied
respondents, and this has been attributed to the positive effect on the economy of the
Olympic Games, even though it is argued that they also worsened public finances
(Pagoulatos and Triantopoulos 2009). Indeed, our findings indicate that in these countries
satisfaction follows the trends in economic performance.
However, either previous findings do not stress the relevance of the economy or its role
is not clear as far as the other two cases are concerned. It is argued that Portugal witnessed
a constant decline in satisfaction, which halted in the late 1990s thanks to the economic
recovery that occurred in that period (Magalhaes 2005). This positive moment for satis-
faction vanished with the rise of the international crisis and the worsening of the economy.
Nevertheless, others have imputed the low levels of Portuguese citizens dissatisfaction to
the countrys cultural heritage (Wiarda and MacLeish Mott 2001). Conversely, some
scholars have held that Italy has always had low levels of satisfaction with democracy and
that they were dependent on the low performance of its institutions, widespread corruption
and its political culture (Morlino 1998; Della Porta and Vannucci 2007; Memoli 2009). In
this respect, some maintain that the re-orientation of political competition towards a bi-
polar model and the complete restructuring of the party system could explain the increase
in satisfaction starting from the mid-1990s (Morlino and Tarchi 1996). However, a recent
study underlines that dissatisfaction in Italy may have decreased not only due to the
institutional change but also to better economic performance (Martini and Quaranta 2015).
Thus, it seems that economic performance matters for satisfaction in the context of
southern Europe. However, the four countries are different in one respect that we have not
yet taken into account. In fact, one may rightly raise the question of whether the levels of
satisfaction are dependent on democratic tradition. Indeed, this element has been argued to
be relevant for the perception people have of the functioning of the political system (Norris
1999). Among the four cases, Italy has the longest experience of democracy, while Spain,
Greece and Portugal democratized during the same period: between the end of the 1970s

10
To further assess the role of corruption, we run a model using the Corruption Perceptions Index (CPI)
(Transparency International 2015) so as to use a different and widely-applied measure. It should be stressed
that Transparency International changed the index methodology after 2011. Thus, the scores of the index for
the periods 19952011 and 20122103 are not comparable. The model, reported in the Online Appendix,
shows that corruption perceptions, at least in the four cases for the chosen time range (19952011), do not
matter for satisfaction with democracy, while the EPI remains significantly and positively associated with
the dependent variable.

123
676 M. Quaranta, S. Martini

and the beginning of the 1980s. Therefore, to control for this issue, we run an additional
model including a dummy for Italy. The results show that the effect of economic per-
formance remains strong and significant while the dummy for Italy is not, suggesting that
the longer Italian experience with democracy may not be relevant.11
Model 4 allows whether the association between economic performance and satisfaction
holds in each country to be tested, as we let the coefficient for economic performance vary
across the four countries, while the previous model demonstrates that the association holds
without differentiating among the countries. Model 4 shows that the coefficient for eco-
nomic performance does not change compared to Model 3 and it keeps its statistical
significance, while the coefficients for GDP per capita and for the number of parties remain
roughly analogous. It is important to underline, however, that the standard deviation of the
EPI random slopes is modest, 0.007, which may suggest that there is limited variation in
the coefficients for economic performance in Greece, Italy, Portugal and Spain. This, of
course, may indicate that the association between economic performance and satisfaction is
similar in the four European countries and may suggest that the economy is an important
factor to be taken into account to understand the dynamics of citizens evaluation of
democracy. Therefore, our findings partially confirm previous studies (see Morlino 1998)
which argue that in Greece and Spain the economy matters for satisfaction. They also add
new insights about Italy and Portugal, showing that in these countries too citizens may be
reactive to changes in economic conditions, and not only to variation in the institutional
setting.

6 Conclusion

In the last few years there has been a renewal of interest in the implications of economic
performance in contemporary democracies, both for the citizens quality of life (see
Guardiola et al. 2015) and for the political sphere (see Bermeo and Bartels 2014). In this
respect, some authors have argued that the recent recession has not particularly influenced
citizens policy preferences about welfare programmes or their ideological views in many
advanced democracies. Moreover, while the effect on elections has been much more
drastic, the crisis has not produced a high level of popular mobilization (Kenworthy and
Owens 2011) even though it has produced diffuse dissatisfaction (see Mertens and Beblo
2015).
Some relevant exceptions to this pattern are southern European countries, where the
pace and the strength of the recent economic downturn have been much more visible,
partly because of the structural particularities affecting those markets and the political
measures adopted to tackle the problem (see Armingeon and Baccaro 2012).
This article has aimed to shed new light on the relationship between economic per-
formance and political satisfaction. Indeed, this relationship is far from being clear in the
literature (see McAllister 1999; Bellucci and Memoli 2012). Using opinion data spanning
almost 30 years, we first of all have tried to provide a comprehensive explanation of this
phenomenon across southern European countries.
We have shown that changes in economic performance are associated with how citizens
evaluate democracy in the four countries analysed. However, this is not the only factor
accounting for citizens support for democracy, as other factors also seem to play an
important role, although with some distinctions. We have found that economic
11
The model is reported in the Online Appendix.

123
Easy Come, Easy Go? Economic Performance and Satisfaction 677

development is associated with lower levels of satisfaction, and that the number of parties
seems to play a part in decreasing peoples satisfaction. Thus, it appears that citizens are
more satisfied when the party system is simplified, probably because they can more easily
identify political alternatives and the system works more efficiently. Disproportionality,
instead, turns out to be unrelated to satisfaction with democracy. Lastly and most sur-
prisingly, the other factor under investigation, corruption, appears to be irrelevant to
predicting satisfaction in southern Europe, which does not confirm the importance given to
this factor by other studies (see Morlino 1998). Future research may concentrate on this in
order to further investigate the relationship between corruption and satisfaction with
democracy.
Using a dataset made of repeated cross-sectional surveys and a straightforward measure of
economic performance has allowed us to achieve a more parsimonious model. These choices
have increased the statistical power of the estimates and allowed us to provide findings that
are not time-dependent, and neither are they based on a single country but are valid for the four
countries under investigation. Lastly, the results from this study may also add to the wider
debate on how economic conditions help democratic quality (see Morlino 2011). Different
scholars have attributed the fall of governments, electoral punishment of incumbents, and the
emergence of populist, extremist or xenophobic parties to the worsening of economic con-
ditions. This study suggests that there might be a missing link between economic crises and
political change, represented by dramatic drops in citizens evaluations of the functioning of
their democracies, which might be located in the middle of this chain. In this context, inability
to provide solutions during periods of economic distress may fuel a vicious circle made of
rising dissatisfaction and increasing demand for system reform.
This article has shown that satisfaction with democracy seems to be connected to
economic performance, and that the consequences of economic recessions on peoples
attitudes, although harsh at the moment, may be temporary. For instance, Fig. 1 showed
that after the recession in the early 1990s the proportion of satisfied citizens returned to
previous levels in about 57 years when the economic performance improved. Although it
is difficult to apply analogies across historical periods, it might be possible that a recovery
of satisfaction could be contingent on an improvement in the economic situation. Thus,
speeding up the search for solutions to the recession may therefore overturn dissatisfaction
and show citizens that democracy is actually responding to their demands. On the other
hand, a prolonged stagnation would further compromise peoples critical positions towards
their systems with unexpected results for other dimensions of political support. As already
noted by others (Mair 2009), the search for viable solutions in the countries studied here
involves external constraints at the European level which complicate the picture and widen
the gap between citizens and their national political systems.
Overall, this study has shown that satisfaction with democracy in southern Europe has
easily come and has also easily gone. Finding a way to overcome economic crises may
have a reverse effect on citizens satisfaction, with a positive spillover effect at the
supranational level too.

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