“For many Americans, there is no rational basis to suppose that one party is better than the other at managing the economy.” If that’s true, is our entire democratic process a farce?
We know that partisanship influences economic evaluations. In survey after survey, we have found that Republicans and Democrats rate the economy differently,1 yet we still don’t understand why.
More accurately, we don’t know which “why” is the real “why.” Folks who have published evidence of these perceptual biases have also offered lots of different reasons for them, and we have yet to see research that sorts those various reasons out.
In the current issue of AJPS, Gerber and Huber write an article that claims to do exactly that: Test the possible explanations of these perceptual biases against one another. At least, that’s what you would think their article does after reading the introduction. Once you get into it, you find that they really only test two of the possible theories against each other. The remaining theories that have been suggested go untested, meaning they may or may not be true.
Briefly, these are the six theories that have been given to explain why Republicans and Democrats rate the economy differently. I use boldface to indicate Gerber and Huber’s preferred label for each theory:
- Endogenous partisanship (i.e. reverse causation). Perhaps people shift their partisan leanings over time as they observe how each party manages the economy.2
- Divergent criteria. Perhaps voters evaluate Democratic-led governments on a different basis than they evaluate Republican-led governments (e.g. giving greater weight to unemployment relative to inflation).
- Partisan cheerleading. Maybe Democrats just like to cheer on Democratic-led governments by claiming that the economy is doing better when Democrats are in power.
- Selective exposure. Maybe Democrats and Republicans experience different economic realities (e.g. work in different sectors) or read different newspapers.
- Selected perception. Maybe Democrats and Republicans mentally screen out negative information about their party while uncritically accepting positive information.3
- Partisan perceptions (i.e. beliefs about confidence). Maybe voters believe that their party’s politicians are more competent at managing the economy, so they assume the economy will perform better when their party is in power. The logic here is very different from “endogenous partisanship”; see below. (This is Gerber and Huber’s preferred theory.)
Method and results
Gerber and Huber do not test all of these theories. Rather, they design a test that holds all of these possible mechanisms constant except two: Partisan cheerleading and partisan perceptions. They use CCES interviews from immediately before and immediately after the 2006 Congressional elections, which produce a surprise turnover of both the House and the Senate from the Republicans to the Democrats.
These pre- and post-election interviews were only a few weeks apart. During that time, not much changed in the real economy (as measured by stock prices, oil prices, inflation, unemployment, and so on) or in the reported economy (based on a comparison of NY Times and Wall Street Journal economic coverage). As such, Gerber and Huber argue (persuasively) that divergent criteria, selective exposure, and selective perception cannot explain any differences in the pre- and post-election interviews. To control for the “endogenous partisanship” theory, they use a panel of the same respondents for both interviews, enabling them to hold partisanship constant across the two waves.
These methods leave only two theories capable of explaining any shift in respondent evaluations of the national economy that occurred between the pre- and post-interviews: Cheerleading and partisan perceptions. Let’s be clear here: Of the 6 possible causal mechanisms that Gerber and Huber identify, they test only 2 of them.
They argue that they can differentiate between these last two theories by looking at two sets of dependent variables. Either theory would predict that respondents would adjust their perceptions of the national economy in a partisan manner following the election: Democrats would become more optimistic, Republicans would become less optimistic. But for reasons that aren’t entirely clear to me, Gerber and Huber argue that only the “partisan perceptions” theory would also predict that respondents would adjust their nonpolitical perceptions (e.g. general level of happiness, expected level of Christmas/vacation spending).
Sure enough, Gerber and Huber find that Democrats became much more optimistic about the national economy in the post-election survey; Republicans did the opposite. But they also found that Democrats became more optimistic about their personal lives. Because of that latter finding, they conclude that “partisan cheerleading” does not explain the results, but “partisan perceptions” does.
What it means
Here’s what they say it means:
… partisanship leads to a general attribution of desirable traits to those who share one’s partisanship (Conover and Feldman 1982). A similar phenomenon emerges in psychology research, in which individuals are prone to falsely attribute unobserved positive qualities to individuals whom share characteristics with them while falsely attributing unobserved negative qualities to individuals whom they do not feel warmly toward. While there is no doubt that some citizens have sophisticated and deeply held views about economic policy…, for many Americans, there is no rational basis to suppose that one party is better than the other at managing the economy. If such positive or negative traits are attributed to the parties nonetheless, it could generate the patterns of economic assessments and behaviors observed here.
Take that, Anthony Downs.
I have trouble with this claim: “For many Americans, there is no rational basis to suppose that one party is better than the other at managing the economy.” If that’s true, is our entire democratic process a farce? We can probably all agree that Democrats prefer more government services while Republicans are torn between wanting low taxes and wanting a ridiculously large defense budget. If nothing else, don’t those decisions about tax rates and government spending influence the economy in some way?
At the same time, I don’t question their broader point at all. It seems downright likely that a voter would tend to think more highly of a politician’s capabilities for the simple reason that the voter and politician are on the same “team.” (Case in point: The Robber’s Cave experiment.)
So I’m left wondering: Can’t we have both? Isn’t it possible that parties do manage the economy differently, and also that voters have biased beliefs about each party’s capabilities?
I’m also a bit disappointed by the bait and switch in this article. The authors had me expecting a test of all 6 theories listed above. Instead, they tested only two, confirming one and weakly rejecting the other. But although the scope of this article isn’t as broad as the authors pitch it as, the article is nevertheless excellent. The methods are precise and enable an accurate test of two theories. Let’s hope that future research can do just as good a job of testing the other possible theories.