10 1093@oxfordhb@9780190469733 013 12

Economic Voting
Oxford Handbooks Online

Economic Voting
Michael S. Lewis-Beck and Mary Stegmaier
The Oxford Handbook of Public Choice, Volume 1
Edited by Roger D. Congleton, Bernard Grofman, and Stefan Voigt
Print Publication Date: Feb 2019

Subject: Political Science, Political Economy, Political Behavior
Online Publication Date: Feb 2019 DOI: 10.1093/oxfordhb/9780190469733.013.12
Abstract and Keywords
We examine the economics and elections connection, often referred to as economic

voting, via a review of key studies by economists and political scientists, focusing on key
generalizations applicable across democracies. Early work (1930s–1960s) was
exploratory, seeking to establish whether economics mattered for elections, in the
examination of individual country studies. In two strands of later work, one (1970–1990)
developed “vote-popularity functions” over time; another (1980–2000) researched micro-
level economic voting in national election surveys. Leading, global generalizations began
to emerge in the contemporary period (2000s–2010s), such as the following: sociotropic
retrospective economic evaluations dominate the economic vote choice, the economic
vote itself can vary with clarity of policy responsibility, and the strong research results at
the national level mirror results at the individual voter level. Currently, questions of the
impact of economic crisis, and further dimensions of the economic vote, such as
positional or patrimonial voting, are under serious consideration.
Keywords: economic voting, economics and elections, VP functions, popularity functions, economics and politics
12.1 Introduction
IN considering the outcome of a national election, the usual first question, as far as
domestic politics goes, is “How’s the economy doing?” We know the economy plays a
major, often decisive, role. As a leading political economist, Edward Tufte (1978, 65) once
declared: “When you think elections, think economics.” Of course, one does not have to
be such a determinist to think that economics has a great deal to do with the vote; it
does, and this chapter aims to map this connection, showing how and why the state of the
economy can make or break candidates and parties. By our reckoning, there are easily
over six hundred books and articles on the subject. We do not propose to go through them
all. Instead, we select leading ones, ones that that have laid the foundation or pointed the
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Economic Voting
way to further discovery. In our discussion, we will tend to the scientific characteristics of
the evidence from key studies in economics and political science, at the same time
keeping our eyes on the central generalizations that bring coherence to this corpus. Our
intellectual journey will take us around the world, as the spread of the economic voting
literature follows the spread of democracy.
12.2 Early Work and Hypotheses

The idea that the economy and elections are somehow intertwined has an old pedigree.
Leading studies dating from the 1930s can be offered (Tibbitts 1931; Gosnell and Colman
1940; Wilkinson and Hart 1950). Even earlier supporting “fragments of research
evidence” on the topic show up as far back as 1878 (Rees et al. 1962, 458). The notion of
economic voting, in a general way, has formed part of the discourse on causes of electoral
outcomes for many years. But the question, in the shape of a scientific proposition,
appeared more recently, embedded (and all but forgotten) in a later chapter of an (p. 248)
otherwise seminal book, The American Voter (TAV), by Campbell et al. (1960, chap. 14). A
number of telling quotations could be presented from that work, but the two that follow
provide good illustrations. (For further consideration of this “forgotten” chapter, see
Lewis-Beck and Stegmaier 2009a.) The first quotation proposes a link between economic
performance and voting behavior:
(1) Is a person’s economic outlook associated with his partisan choice between
presidential candidates? (2) Is a person’s economic outlook associated with his
level of political participation? The answer to both of these important questions is
substantially affirmative. (Campbell et al. 1960, 397, 399)
The second quotation proposes the more specific link between economic prosperity and
the incumbent presidential party:
Does economic prosperity at election time give the incumbent an advantage at the
polls? The successful candidate, the incumbent Republican President, Mr.
Eisenhower, did apparently draw a disproportionately large part of his popular
vote margin from the economic optimists in 1956. (Campbell et al. 1960, 385, 400–
401)
Oddly, throughout the 1960s, just a single mention of TAV evidence joining the economy
and elections appears in the literature, not coincidentally, via a journal of economics
(Rees et al. 1962, 458). That research investigated the relationship, at the aggregate
level, between unemployment and votes for Congress, an intellectual precursor to the
1970s boom in economics and elections studies. A relevant pivotal study of that era came
from Kramer (1971), in his examination of macroeconomic change and voting patterns for
the US House of Representatives. Tufte (1978, chap. 5), writing another influential period
piece, shows with his referendum model of elections that voters appear to punish the
White House party in response to declines in disposable income. Generally speaking, the
1970s experienced a bounty of aggregate investigations tying macroeconomic
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fluctuations to variations in the incumbent vote or popularity, in what are sometimes

dubbed “vote and popularity functions” or “VP-functions.” Monroe (1984) and Nannestad
and Paldam (1994) provide insightful reviews of this early work.
12.3 Aggregate Findings: 1970–1990

Aggregate investigations of the economy and elections, mostly single-country studies,
dominated the literature from the 1970s to the 1990s. A conference on VP-functions, held
in Denmark in 1998, served as a sequel to a 1991 Bellagio conference on political
economy models of the vote. (See, respectively, the collected papers in Lewis-Beck and
Paldam 2000 and Norpoth, Lewis-Beck, and LaFay 1991.) The papers at the Danish
conference, mostly macroanalyses, offered a considerable amount of comparative work
on (p. 249) North American and European democracies. The participants, economists, and
political scientists came together to explore what the organizers called
economic voting . . . a field that mixes economics and political science and does so
by means of econometrics. Political scientists analyze elections, and economists
routinely use macro welfare functions, with little empirical basis. For the political
scientist it is wonderful to have explanatory variables that are well known,
carefully collected and quantitative. For the economist, voting forms an important
limiting case where people decide while having only a small and “intangible”
interest in the outcome. (Lewis-Beck and Paldam 2000, 113)
The theoretical undergirding of the eighteen presentations in Denmark came from the
responsibility hypothesis: voters hold the government accountable for the state of the
economy. The chief scientific conclusions conveniently included the following: (1)
macroeconomic variables strongly predict government support; (2) voters, in choosing,
are likely to evaluate the economic performance of the recent past; (3) voters care more
about the nation as a whole than about their own pocketbooks; and (4) VP-functions show
instability, which may be more apparent than real (Lewis-Beck and Paldam 2000, table 1).
On the question of stability, the Chappell and Veiga (2000) article holds special interest
for economists. It tests, on thirteen Western European nations, the idea that changing
macroeconomic theory leads to changing vote functions, à la the Lucas critique. That is,
supposing voters have full information and rational expectations, does their behavior
change when economic theory changes? According to the empirical evidence offered by
Chappell and Veiga (2000), the answer appears to be no.
At about the time these articles from the Danish conference appeared in print (Electoral
Studies, 2000: vols. 2 and 3), a broad review of the vast economic voting literature,
entitled “The Economic Determinants of Electoral Outcomes,” was published in the
Annual Review of Political Science (Lewis-Beck and Stegmaier 2000). This widely read
and cited article gives special consideration to VP-function work, with its focus on
aggregate-level measures of the economy and the polity, and is organized around Key’s
(1966, 568) classic hypothesis of reward and punishment. As Lewis-Beck and Stegmaier
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(2000, 183) express it: “The citizen votes for the government if the economy is doing all
right; otherwise, the vote is against.”
The US case took pride of place, and its discussion began with the popularity function
literature, launched by Mueller (1973). That work looked at how macroeconomic
indicators accounted for fluctuations in presidential approval over time. With respect to
the vote function literature for the United States, initial foundations were laid by Kramer
(1971) at the congressional level, and Fair (1978) and Tufte (1978) at the presidential
level. Interestingly, economist Fair focused on model specifications that, substantively,
contained exclusively economic variables, while political scientist Tufte focused on model
specifications that included political variables as well. This distinction in vote function
modeling, with political scientists favoring political variables and economists favoring
economic variables, has continued.
VP-function studies flourished in a few other nations besides the United States,
(p. 250)
namely, France, Britain, and Denmark. In each of these leading, but different,
democracies, the economy was found to press hard on voters, in ways the reward-
punishment hypothesis would predict, despite a fair amount of disagreement over
variable measurement and model specification. These studies were comparative, in that
they looked at places beyond American shores, but they were not comparative in the
“large N” sense. However, truly comparative vote function studies were beginning to
appear, especially for high-income democracies. Two studies were central. The first came
from Paldam (1991), who examined seventeen high-income (mostly Western European)
nations in a pooled analysis of 197 elections. To his surprise, the effect on the economy on
the incumbent government vote showed itself weak to nonexistent. The second came from
Powell and Whitten (1993), analyzing a pool of about a hundred Western European
elections. In contrast to Paldam (1991), they found important economic effects, but the
effects were conditioned by clarity of responsibility, that is, how easy it is to identify who
is responsible for economic policy and outcomes.
12.4 Survey Findings: 1980–2000

Thus far, we have focused primarily on aggregate-level studies of the economic vote. Now
we turn to individual-level studies, launched in earnest in the 1980s, a consequence of
work on American National Election Studies (ANES) carried out by Fiorina (1978, 1981).
In his consideration of economic voting, he clearly acknowledges his intellectual debt to
Key: “The foregoing argument is not original. Anyone familiar with the works of V.O. Key,
Jr., will recognize it as the traditional reward-punishment theory of elections, a theory
based on the assumption that citizens vote retrospectively” (Fiorina 1981, 6). Despite his
emphasis on retrospective economic voting, Fiorina also paid attention to prospective
economic voting, making a theoretical nod to Downs (1957). Alongside the time
dimension (retrospective vs. prospective), other election survey research added the
target dimension (pocketbook [egotropic] vs. national [sociotropic] economic voting)
(Kinder and Kiewiet 1979, 1981). In his influential analysis of economic voting in the
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ANES, Kiewiet (1983) demonstrated that sociotropic effects dominated pocketbook

effects, a conclusion that has resisted many challenges. Parallel to this American work
was the comparative effort of Lewis-Beck (1988), who uncovered a strong impact from
these different economic voting dimensions, in his pioneering survey research project on
Britain, France, Germany, Italy, and Spain.
Since the 1990s, survey research on economic voting has been at least as important as
aggregate research, primarily because it solves the ecological fallacy problem (i.e., falsely
inferring individual behavior from the observation of aggregate relationships). Besides
offering more evidence supporting the reward-punishment hypothesis, the survey
literature has gone on to examine the individual heterogeneity of the economic vote (e.g.,
Welch and Hibbing 1992), the effect of economic issues compared to noneconomic issues
(p. 251) (e.g., Alvarez and Nagler 1995), the impact of institutions on the economic vote
(Norpoth 2001), the relevance of political sophistication (e.g., Godbout and Bélanger
2007), and the exogeneity of economic evaluations (Lewis-Beck, Nadeau, and Elias 2008).
The US investigations of economic voting have profited greatly from a mining of their
national election studies, a tradition adopted in other leading Western democracies. The
British Election Studies (BES) stand out as a serious fount of testing for key questions.
Clarke et al. (2004), for example, systematically explore the relative importance of
sociotropic versus egotropic (and retrospective vs. prospective) evaluations, confirming
the American finding that sociotropic evaluations prevail over egotropic ones. However,
unlike the American studies, they discovered that prospective evaluations, as well as
retrospective ones, have weight. Similar findings also emerged in investigations of
French National Election Surveys (FNES). The 1995 FNES, in particular, fielded a serious
battery of economic voting questions, so allowing a comparison of the different economic
evaluations in terms of their impact. Along that line, Lewis-Beck (1997) uncovered a
result paralleling the aforementioned British result, showing that sociotropic dominates
egotropic evaluations, but retrospective and prospective evaluations have equivalent
force. It is noteworthy that in the French case, not to mention the survey work done on
the Danish case, the dependent variable remains “incumbent vote”; however, that
incumbent may be a coalition of parties, rather than a single party, as with the US case.
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12.5 Leading Generalizations: 2000–2010s

Moving into the new century, a considerable amount of research was done on economic
voting, much sparked by the review article of Nannestad and Paldam (1994) on VP-
functions. The editors of Public Choice asked us for a subsequent review, a follow-up
twenty years later, with an eye to assessing the impact of this seminal piece. We carried
out the charge, extracting rather firm propositions about what has been learned over
these two decades (Lewis-Beck and Stegmaier 2013). In the manner of Nannestad and
Paldam, we offer the most important statements that we believe hold for economic voting,
based on our scouring of the scientific findings. First, we examine the individual level,
then the aggregate level, beginning with the former:
1. Sociotropic economic voting exercises more influence than egotropic economic

voting.
This proposition receives clear support in recent (post-2000) comparative
investigations: the pooled survey analysis of thirteen European nations by Anderson
(2000); the large study by Duch and Stevenson (2008), who examine 165 surveys
from nineteen countries; and the follow-up study by Nadeau, Lewis-Beck, and
Bélanger (2013), who conduct a pooled survey investigation (ten European nations
polled four times, 1988–2004). The last study calculates that when a voter’s
sociotropic (p. 252) perception changes from “worse” to “better,” the chance of a
favorable incumbent vote becomes 19 to 35 percent more likely (Nadeau et al. 2013).
These investigations confine themselves to Europe, but the basic finding holds for
democracies in other regions. With respect to sub-Saharan African democracies,
Bratton, Bhavnani, and Chen (2012) show that voters act in a classic manner,
rewarding or punishing the government according to how they perceive government
performance. Turning to Latin America, survey research on twelve democracies by
Lewis-Beck and Ratto (2013) estimates that a shift in sociotropic economic
perception from “worse” to “better” increased the likelihood of an incumbent vote by
21 percent.
2. The impact of the economic vote varies with the clarity of government
responsibility for the economy.
For the economic vote to be triggered, the voter must first attribute responsibility to
the government for managing the economy. Suppose, for example, that voters believe
that big business and corporations essentially run the economy. In that case, it might
make little sense to praise (or blame) the government for economic conditions.
However, even supposing voters hold the government responsible, they might not be
clear about which part of government to target, for example, the legislature, the
executive, the national bank, the treasury? According to the research literature, as
practiced, this responsibility attribution usually rests with the ruling party or party
coalition.
Let us focus, then, on how parties influence clarity of responsibility. Anderson (2000)
offers the first initial micro-level investigation of clarity of responsibility, looking at
Eurobarometer surveys from thirteen nations; he reports that the economic voting
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effects strengthen with fewer parties in the incumbent coalition, reaching the
extreme when one large party dominates. Others have verified such a result.
Studying surveys from eight European countries over a sixteen-year time span,
Nadeau, Niemi, and Yoshinaka (2002) find that as clarity of responsibility heightens,
so does the impact of the economic vote. In a major survey investigation of fifteen
European countries, Van der Brug, Van der Eijk, and Franklin (2007) discover a
similar result. Duch and Stevenson (2008) follow suit, reporting that in their nineteen
countries, economic voting strength changes as the concentration of responsibility
changes.
What leading propositions can be gleaned from recent aggregate-level studies? For
these studies to be truly relevant for the economic vote, they must be shown to avoid
the ecological fallacy. Fortunately, the individual-level studies just considered
suggest that economic voting, in fact, does manifest itself in the decision-making
process of actual voters. However, from recent work we can go further and assert
the following proposition:
3. The aggregate findings on economics and elections mirror the individual-level
processes of the economic vote.
Taking advantage of the high quality and quantity of the 1987–2011 Danish national
election studies, Lewis-Beck, Stubager, and Nadeau (2013) demonstrate at the micro-
level a strong, stable sociotropic economic vote. Then, they go on to reveal (p. 253)
that when “an average shift in these micro-economic evaluations is aggregated to the
national level, it shows substantial change in the national electoral outcome, change
that parallels the observed effects from an average shift in macro-economic
indicators such as GDP growth” (Lewis-Beck, Stubager, and Nadeau 2013). Such a
micro/macro resolution puts to rest the Kramer (1983) problem, that is, the claim
that surveys have so much error they are useless tools for investigation of the
economic vote. Further, it eliminates another, but neglected, fallacy—the
micrological fallacy of inferring from individual political economic relationships the
presence of aggregate political economic relationships (Dassonneville and Lewis-
Beck 2014). To say it another way, we can confidently assert that the observed
aggregate patterns of economic performance and electoral outcomes, and the
observed individual patterns of economic voting, are causally linked. Thus, the
assertion of these propositions at the aggregate level is not irrelevant. Next, we offer
an important one.
4. Unemployment and growth are the two most important macroeconomic indicators
of electoral outcomes.
In the kickoff popularity function for the British case, by economists Goodhart and
Bhansali (1970), the focus was on the political impact of unemployment change.
Since then, its rival variable, inflation, has sometimes been a contender. For
example, the investigation by economists Chappell and Veiga (2000, 196), who
analyze a pool of 136 Western European elections, conclude their “strongest finding
is that voters punish increases in inflation” (196). Still, that study stands as an
exception. Powell and Whitten (1993), in their comparative aggregate investigation
of government support, said the key macroeconomic variables were unemployment
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and growth. Recent studies, from Central and Eastern Europe, have emphasized the
role of the unemployment variable in explaining the economic vote (Fidrmuc 2000;
Roberts 2008; Tucker 2001). The growth variable, as well, has appeared as an
important predictor in economics and elections models from many parts of the world:
on Latin America, see Benton (2005); on Western and Eastern Europe, see
Dassonneville and Lewis-Beck (2014).
12.6 The Economy: Subjective and Objective

Economic evaluations move voters. But they may move voters differently, depending on
how objectively they see the economy. Scientific surveys have posed various questions to
voters, in an attempt to measure their economic perception. The following items, or
others similar to them, have regularly been asked in election studies around the
democratic world.
“We are interested in how people are getting along financially these days. Would you
say that you are better off or worse off than you were a year ago?”
“Now looking ahead, do you think that a year from now, you will be better off
(p. 254)
financially, worse off, or just about the same?”

“Now thinking about the economy in the country as a whole, would you say that over
the past year the national’s economy has gotten better, stayed about the same, or
gotten worse?”
“What about the next 12 months? Do you expect the economy, in the country as a
whole, to get better, stay about the same, or get worse?”
These items ask for an evaluation of the economics of the individual (i.e., pocketbook) or
the nation (i.e., sociotropic), across two different time periods, the past (i.e.,
retrospective) or the future (i.e., prospective). Pocketbook evaluations, in the popular
mind, are held to be important for the vote choice, but in fact are generally much weaker
than sociotropic evaluations. This occurs not because of the altruism in sociotropic
thinking. As Kiewiet and Lewis-Beck (2011) have argued, voters may simply reward the
government with their votes out of selfishness, believing they personally profit when the
whole country does well. Further, the sociotropic assessment does not boil down to a
mere “attitude.” Instead, it refers to the real economy, as largely judged retrospectively,
by examining past performance.
How clearly do voters see the objective economic world? Quite clearly, if we are to believe
Campbell et al. (1960, 394–395):
Economic outlook does, through individual perceptions of the economic situation,

reflect the “real” world. . . . [T]here are significant changes in the national
economy, particularly the consumer sector of the economy, which these attitudes
foreshadow and reflect. Economic events have an impact on both personal and
national components of economic outlook.
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Is this assertion by the authors of The American Voter generally supported? Are the
subjective perceptions of voters highly related to objective economic indicators? With
respect to macroeconomic indicators, Americans seem to do best at estimating
unemployment (Holbrook and Garand 1996; Lewis-Beck and Nadeau 2009). Further,
aggregated retrospective sociotropic evaluations are strongly related to key
macroeconomic indicators (Nadeau and Lewis-Beck 2001). Indeed, undertaking a
comprehensive investigation of forty years of ANES surveys, Lewis-Beck, Martini, and
Kiewiet (2013) report that sociotropic retrospective economic evaluations are shaped by
gross domestic product (GDP) growth, the stock market, and inflation. Turning to a
pivotal comparative study, Duch and Stevenson (2010, 122) find that
individual perceptions about the volatility of the macroeconomy are reasonably

well informed; voters appear to understand the extent to which their economies
are subject to shocks from the international economy; and voters who perceive
that the variation in the national economy differs from variation in the global
economy seem more inclined to exercise an economic vote.
(p. 255) Overall, then, voters achieve a good understanding of their economic world.
Of course, as accurate as economic perceptions are, they are not flawless. While citizens
can see the economy, they do not see it perfectly. In other words, when they look at it,
they will sometimes make a faulty evaluation. These errors of judgment occur in at least
two ways. First, voters vary in the amount of information they have. Duch, Palmer, and
Anderson (2000), examining heterogeneity, found different economic voting patterns
among respondents with different information levels. Godbout and Bélanger (2007) find
that voters who know more do not weigh pocketbook and sociotropic evaluations the
same way. Still, granting some heterogeneity exists, its general power to distort the
economic vote remains small.
In that light, some would argue that the major source of distortion comes from politics
itself. That is, a voter’s partisanship imposes a conceptual blinder, rendering economic
judgments (good vs. bad) a mere reflection of how the voter sees the ruling party (good or
bad). For instance, in Britain, a Conservative party supporter judging the economy under
the Conservative government led by Prime Minister Theresa May would rate the economy
more favorably than a Labourite. Thus, some scholars argue that economic perceptions
reduce to little more than partisan bias (Anderson 2007; Evans and Pickup 2010). This
endogeneity claim, as it has come to be called, has generated serious challenges, in part
because of apparent methodological flaws (see the critique in Lewis-Beck 2006).
Two leading comparative studies seek to exogenize sociotropic economic perceptions, in

an attempt to address these methodological issues. (See, respectively, Duch and
Stevenson 2008 and Lewis-Beck et al. 2008.) These studies carry out various econometric
tests, such as two-stage instrumental variable analysis of multiple-country panel data,
and are able to uncover a persistent economic vote. A still more recent, and more
extensive, investigation was executed by Nadeau et al. (2013), in an analysis of repeated
election surveys from ten European nations. They conclude that “economic perceptions
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appear strongly shaped by the objective economy,” with such perceptions decisively
impacting incumbent vote intention (Nadeau et al. 2013, 565). Taking a departure from
these rather complicated analyses, Lewis-Beck, Martini, and Kiewiet (2013) conduct a
straightforward regression of sociotropic economic evaluations on party identification in
the United States. Looking at a large pool of ANES surveys, they discover a statistically
significant but substantively insignificant effect of partisan bias on economic evaluation.
Taken together, these major studies indicate that voters have a reasonably precise picture
of their national economy and vote punitively on that basis.
12.7 Institutions: The Political Context

While the economic voter appears as a general phenomenon in democratic systems, the
particular institutional features of that system can shape the economic vote. In (p. 256)
parliamentary systems, the economic commander-in-chief tends to be the prime minister,
in contrast to the president in presidential systems. When the incumbent consists of
multiple parties in a coalition, the path of the economic vote can change. To take the
German case, the Chancellor’s Party, more than the other coalition party, gathers and
votes for a good economic performance (Debus, Stegmaier, and Tosun, 2014). Even under
a grand coalition—a coalition of the two major parties—it is the Chancellor’s Party the
public holds responsible (Williams, Stegmaier, and Debus 2017). Consider the
institutional feature of divided government, where one party controls the executive and
another controls the legislature. For the US case, this sort of division does not seem to
diminish the presidential focus of the economic vote (Norpoth 2001). However, for
France, it makes a difference, with the situation of cohabitation (the president and the
prime minister of opposing camps) weakening the economic vote (Lewis-Beck and
Nadeau 2004). Additionally, political power can operate at different levels of government.
For instance, voting can occur for national parliaments, or for supranational bodies, such
as the European Union (Magalhães 2014).
Investigating twenty-seven EU countries, Hobolt and Tilley (2014) study assignment of

economic responsibility to the national government, as compared to the European Union.
They show that respondents assign more economic responsibility to the national
government than to the European Union, although the difference is not great, with
respective scores of 7.2 versus 5.7 on a 10-point scale (Hobolt and Tilley 2014, 803).
Direct evidence that perceptions of EU responsibility influence the magnitude of the
economic vote come from investigations in Southern European countries. Costa Lobo and
Lewis-Beck (2012), navigating surveys from Spain, Portugal, Italy, and Greece,
demonstrate that for those who perceive that the European Union has more responsibility
for economic conditions, the magnitude of the national economic vote declines.
The foregoing Southern European findings, on the weakening of the economic vote in the
context of international political penetration, are especially noteworthy because of the
relatively fragile nature of these democracies compared to the democracies of Northern
Europe. Likewise, the systems of Central and Eastern Europe can also be characterized
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as more fragile, because of their unique postcommunist history. We might expect this
political context to shape the economic vote in this region, and it does. (See Lewis-Beck
and Stegmaier 2008 for an earlier review.) The abandonment of communism created high
levels of economic insecurity, with an attendant focus on the unemployment rate. In this
situation, certain scholars argued and then showed that voters concerned with the
unemployment problem would vote against what they saw as the failed policies of the
proreform parties (Fidrmuc 2000; Pacek 1994). However, over time, these transitional
voters began to see unemployment not as a policy issue linked to a particular party, but
instead as a governance issue that any incumbent party must deal with. In Hungary, for
example, voting for the left-wing Hungary Socialist Party (MSZP) increased across the
1990s, but by the 2000s the MSZP in government lost votes as unemployment increased
(Stegmaier and Lewis-Beck 2009). That is to say, “over time Hungarian economic voters
have moved from a policy-oriented, to an (p. 257) incumbency-oriented stance. In other
words, they have learned” (Stegmaier and Lewis-Beck 2009, 776).
In a subsequent study on the Czech Republic (1995–2008), Coffey (2013) finds that,
regardless, the prime minister’s party will be punished by voters, once the unemployment
rate passes a certain threshold. These patterns of “learning the economic vote” have also
been identified in a large study by Lippényi, Maas, and Jansen (2013), who hypothesize
that as time unfolds, Central Europeans will hold the government more and more
accountable. In an investigation of forty-one surveys from the region (1998–2008), they
find that the economic vote works in a classic manner, and with increasing strength over
time. In a related multinational study of incumbent vote, Roberts (2008, 541) also shows
that unemployment matters, and its electoral effect is a “considerably stronger and
significant effect after 1998.” In sum, the political context of the initial transition years
made economic voting more policy oriented than incumbency oriented. However, as
voters practiced democratic choice, in election after election, they began to conform to
the expectations of classic reward-punishment economic voting theory.
12.8 Institutions: The Economic Context

The idea that the national executive holds the economic reins faces increasing scrutiny,
because of changing realities of the world polity, and because of changes in the world
economy. Globalization puts itself center stage here. The more national economies come
to depend on foreign trade, the more policy tools lie beyond the grasp of elected leaders.
Citizens perceive this situation of foreign interdependency and lessen the economic
responsibility they assign to their incumbent (Fernández-Albertos 2006). To further
explore this issue, Hellwig and Samuels (2007) examine data covering 560 elections
(seventy-five countries, 1975–2002), finding that increased trade and capital flows as a
share of GDP reduce the positive effect of GDP on the incumbent’s vote share.
Interestingly, Hayes, Imai, and Shelton (2015, 270) discover that nations with a more
secure democratic tradition have voters who are better able to attribute economic change
to domestic versus international sources.
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In the field of economic voting, we in fact know much more about these processes in
nations with a more secure democratic tradition, such as those in Western Europe or
North America. The research by Hayes et al. (2015) reminds us that economic voting
might well be different in less advanced democracies. To help fill in this knowledge gap,
Lewis-Beck and Stegmaier (2008) reviewed all the published scientific papers (in English)
on economics and elections in low-income countries, mostly in Latin America or Eastern
Europe. Almost all of these investigations were based on cross-sectional surveys and
consistently showed significant sociotropic economic effects behind the incumbent vote.
Besides these single-country studies, a handful of (p. 258) comparative investigations have
appeared, mostly from Latin America. Remmer (1991) examines the link between
macroeconomic conditions and presidential elections in twenty-one Latin American
nations. She finds the standard result that studies from higher-income countries have
shown: economic downturn reduces government support. In a subsequent study, on
thirty-nine presidential elections from thirteen Latin American countries, Benton (2005)
uncovers an equivalent result. Lewis-Beck and Ratto (2013), working at the micro-level
with surveys from twelve Latin American countries, find that the perception of national
economic improvement leads to more voting for the incumbent. Singer and Carlin (2013,
733–740), in an extended inquiry into the Latinobarometer polls from eighteen Latin
American nations (1995–2009), discover that, while sociotropic economic voting always
exceeds pocketbook voting, the latter effect heightens in the poorest countries of the
region, suggesting that some form of vote buying may be operating.
Latin Americans, then, do appear to be economic voters. What about other parts of the
developing world? In a cross-national study of African countries, Bratton et al. (2012, 47)
find a strong economic motivation behind the vote, even exceeding that from ethnic
considerations. Undertaking a global investigation, Gelineau (2013) assesses government
support via surveys from fifty-one countries of Latin America, sub-Saharan Africa, South
and East Asia, and the Arab world. He finds that voters in these poorer parts of the
democratic world respond to the economy much like voters in the wealthier parts: “one-
unit decline in economic assessments produces a drop of 5 percentage points in vote
intentions” (Gelineau 2013, 422). These varied comparative studies, from a diverse set of
democracies, suggest that the economic vote works pretty much the same way, regardless
of the nation’s level of economic development.
12.9 Economic Crisis: Its Impact

As a consequence of the Great Recession of 2008, much ink has been spilled on the
electoral effects of this “economic crisis,” at home and abroad. Concerning the United
States, the serious rise in unemployment certainly impacted voting in the 2008
presidential election (Margalit 2011). Lewis-Beck and Stegmaier (2009b), in an
experimental presidential elections model driven entirely by key macroeconomic
variables, argue that a Democratic victory in that competition was virtually assured. In a
forthright assertion, Campbell (2010) claims the Great Recession nailed Obama’s 2008
triumph. Looking beyond our shores, a wide-ranging compendium (of twenty-six papers)
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Economic Voting
addresses the economic crisis and election outcomes the world over (Lewis-Beck and
Whitten 2013). These investigations, which follow a variety of research designs, virtually
all support the traditional reward-punishment economic voting theory.
One bone of contention relates to whether the economic vote has weakened or
(p. 259)
grown stronger in the face of the crisis. Evidence from Southern Europe (Greece, Italy,
Portugal, and Spain) suggests the answer is “grown stronger” (Lewis-Beck and Nadeau
2012). But others have found that the crisis has blunted the economic vote. (For Germany,
see Anderson and Hecht 2012; for Ireland, see Marsh and Mikhaylov 2012; for the United
States, see Holbrook 2012.) The question has become quite contentious in Spain where,
despite agreement on a major economic bust, its electoral effects appear illusive.
Fortunately or not, this “false negative” amounts to a methodological artifact, produced
by the “restricted variance problem.” Put simply, in the cross-sectional surveys examined,
no economic voting can be found, because there exists no variance in the independent
variable. Virtually everyone says the economy has gotten worse. In this situation, the
economic assessment measure becomes a constant, and it cannot explain vote choice in
the election under study.
A solution becomes possible through introduction of the time dimension. As an example,

see Fraile and Lewis-Beck (2014), who carry out analyses of pooled cross-sections with
panel data, uncovering strong economic voting effects in 2008, even stronger in 2011.
Overall, it appears that countries such as Spain, where the crisis has been severe, have
experienced a substantive economic vote, perhaps an economic vote even stronger than
the precrisis period. This argument applies, in particular, to the nations on the European
periphery, which have been hit especially hard, namely, the Southern European countries
of Greece, Portugal, and Italy, and the Northern European countries of Iceland and
Ireland. It is difficult (but not impossible) to tease out the economic voting effects in the
critical postcrisis elections in those countries. (For a demonstration, see Lewis-Beck and
Costa Lobo 2017.) Another, more straightforward demonstration comes from looking at
the aggregate level, which we do next.
Dassonneville and Lewis-Beck (2014, 376) have recently examined how GDP growth
affects incumbent support, in a major sample of European national elections (359
elections in thirty-one countries, 1952–2013). Under rigorous testing conditions, they first
demonstrate that GDP growth increases incumbent support: “a 1 percentage increase in
GDP growth yields about a 0.7 percentage point increase in incumbent
support” (Dassonneville and Lewis-Beck 2014, 382). Important in itself, this macro-
pattern accords with micro-patterns, helping lay to rest concerns over the ecological and
micrological fallacies. Second, they demonstrate that with “economic crisis, GDP growth
relates more strongly to incumbent vote support” (Dassonneville and Lewis-Beck 2014,
377). More specifically, they show that economic crisis, with its negative GDP growth
“coefficient[,] approaches twice the magnitude of the positive” (Dassonneville and Lewis-
Beck 2014, 385). In other words, in hard economic times, incumbents are punished more
than when compared to good economic times. (Paradoxically, this greater impact at the
aggregate level can occur, even if, at the micro-level, the economic voting coefficient
Page 13 of 21

Economic Voting
remains unchanged. For more on this “micro/macro paradox,” see Lewis-Beck and Costa
Lobo 2017.)
(p. 260) 12.10 Conclusion

Much research has been devoted to economic voting in democracies around the globe. A
great deal has been learned. On the one hand, government loses votes when the economy
stumbles. On the other hand, government gains votes when the economy prospers. These
effects tend to be persistent, pervasive, and strong—strong enough to regularly bring
down governments. Of course, this does not mean that the economic voting coefficient
remains the same always and everywhere. Its magnitude can be perturbed, thrown off its
course, by changing institutional features. Such conditionalities undeniably exist. But
these dependencies, expressed statistically as interactions, detract very little from the
main effect the economy regularly delivers as it shapes the electoral outcome. Classic
economic voting, expressed by the electorate in rewarding or punishing incumbents,
continues to hold the preeminent place in the literature of economics and elections.
However, while incumbency-oriented economic voting remains the dominant paradigm,

serving well to organize this vast body of literature, it is not the only approach that can
be followed. The incumbency orientation emphasizes the economy as a valence issue, that
is, a consensus issue with all voters agreeing on the value of economic prosperity. But, as
Stokes (1963) long ago suggested, economic issues may be positional. That is, voters may
disagree on which economic policies to pursue; for example, some favor less
unemployment and more progressive taxation, while others do not. In the circumstance of
positional economic voting, the voter targets the policy of the party rather than the
incumbency status of the party. For example, examining a recent British general election,
Lewis-Beck, Nadeau, and Foucault (2013) found that progressive taxation (a positional
issue) had about the same impact on the vote as sociotropic economic retrospective
evaluation (a valence issue). To take another example from Germany, when the impact of
positional and valence economic evaluations were compared, both were found to be
strong (Clarke and Whitten 2013). Clearly, including consideration of positional economic
voting issues, as well as the traditional valence ones, offers a boon to further research.
Besides the question of issues and economic voting, there remains the question of status
and economic voting. By status, we do not mean social class, a phenomenon that has long
been examined by sociologists. Instead, we refer to voters’ economic patrimony, that is,
the assets or wealth they own, and how that influences their party choice. In different
Western European democracies, recent studies have shown that the more assets (e.g.,
stocks and property) a voter owns, the more he or she favors a political party on the right.
(On Britain, see Lewis-Beck, Nadeau, and Foucault 2013; on France, see Nadeau,
Foucault, and Lewis-Beck 2010; on Spain, see Fraile and Lewis-Beck 2013; on Denmark,
see Stubager, Lewis-Beck, and Nadeau 2013.) Moreover, these patrimonial effects on the
vote exist even after controlling on standard measures of social class. Indeed, patrimony
appears to form the third leg of the economic voting “stool,” after the first and (p. 261)
Page 14 of 21

Economic Voting
second legs of valence and positional economic voting (Lewis-Beck and Nadeau 2011).
Patrimonial economic voting and positional economic voting are embryonic research
areas. Moreover, the outlying fields of valence economic voting remain to be plowed.
Considerable research on the relationship between the economy and elections lies before
us.
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Michael S. Lewis-Beck
Michael S. Lewis-Beck is F. Wendell Miller Distinguished Professor of Political

Science at the University of Iowa.
Mary Stegmaier
Mary Stegmaier is Assistant Professor in the Truman School of Public Affairs at the
University of Missouri.
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Economic Voting

Oxford Handbooks Online

Print Publication Date: Feb 2019

Abstract and Keywords

We examine the economics and elections connection, often referred to as economic

Subscriber: Lund University Libraries; date: 25 February 2019

12.2 Early Work and Hypotheses

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fluctuations to variations in the incumbent vote or popularity, in what are sometimes

12.3 Aggregate Findings: 1970–1990

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12.4 Survey Findings: 1980–2000

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ANES, Kiewiet (1983) demonstrated that sociotropic effects dominated pocketbook

Subscriber: Lund University Libraries; date: 25 February 2019

12.5 Leading Generalizations: 2000–2010s

1. Sociotropic economic voting exercises more influence than egotropic economic

Subscriber: Lund University Libraries; date: 25 February 2019

Subscriber: Lund University Libraries; date: 25 February 2019

12.6 The Economy: Subjective and Objective

financially, worse off, or just about the same?”

Economic outlook does, through individual perceptions of the economic situation,

Subscriber: Lund University Libraries; date: 25 February 2019

individual perceptions about the volatility of the macroeconomy are reasonably

Two leading comparative studies seek to exogenize sociotropic economic perceptions, in

Subscriber: Lund University Libraries; date: 25 February 2019

12.7 Institutions: The Political Context

Investigating twenty-seven EU countries, Hobolt and Tilley (2014) study assignment of

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12.8 Institutions: The Economic Context

Subscriber: Lund University Libraries; date: 25 February 2019

12.9 Economic Crisis: Its Impact

Subscriber: Lund University Libraries; date: 25 February 2019

A solution becomes possible through introduction of the time dimension. As an example,

Subscriber: Lund University Libraries; date: 25 February 2019

(p. 260) 12.10 Conclusion

However, while incumbency-oriented economic voting remains the dominant paradigm,

Subscriber: Lund University Libraries; date: 25 February 2019

Anderson, Christopher J. 2000. “Economic Voting and Political Context: A Comparative

Benton, Allyson Lucinda. 2005. “Dissatisfied Democrats or Retrospective Voters?

Campbell, J. E. 2010. “The Exceptional Election of 2008: Performance, Values, and

Subscriber: Lund University Libraries; date: 25 February 2019

Dassonneville, Ruth, and Michael S. Lewis-Beck. 2014. “Macroeconomics, Economic

Downs, A. 1957. An Economic Theory of Democracy. New York: Harper Collins.

Duch, R. M., H. D. Palmer, and C. J. Anderson. 2000. “Heterogeneity in Perceptions of

Fernández-Albertos, J. 2006. “Does Internationalization Blur Responsibility? Economic

Fidrmuc, Jan. 2000. “Economics of Voting in Post-Communist Countries.” Electoral

Fiorina, M. P. 1978. “Economic Retrospective Voting in American National Elections: A

Fraile, Marta, and Michael S. Lewis-Beck. 2013. “Multi-Dimensional Economic Voting in

Fraile, M., and M. S. Lewis‐Beck. 2014. “Economic Vote Instability: Endogeneity or

Subscriber: Lund University Libraries; date: 25 February 2019

Gelineau, Francois. 2013. “Electoral Accountability in the Developing World.” Electoral

Gosnell, H. F., and W. G. Colman. 1940. “Political Trends in Industrial America:

Holbrook, T. M. 2012. “Incumbency, National Conditions, and the 2012 Presidential

Kiewiet, D. R. 1983. Macroeconomics and Micropolitics: The Electoral Effects of

British Journal of Political Science 11(2): 129–161.

Kramer, G. H. 1971. “Short-Term Fluctuations in U.S. Voting Behavior, 1896–1964.”

Subscriber: Lund University Libraries; date: 25 February 2019

Lewis-Beck, M. S., N. F. Martini, and D. R. Kiewiet. 2013. “The Nature of Economic

Subscriber: Lund University Libraries; date: 25 February 2019

Margalit, Y. 2011. “Costly Jobs: Trade-Related Layoffs, Government Compensation, and

Nadeau, Richard, Martial Foucault, and Michael S. Lewis-Beck. 2010. “Patrimonial

Nadeau, Richard, Richard G. Niemi, and Antoine Yoshinaka. 2002. “A Cross-National