Is Political Ideology Endogenous? Evidence from the Business Cycle

Abstract

We construct a time series of political party ideology, based on Poole and Rosenthal's (1997) NOMINATE scores, for the 1950-98 period. The results show that (1) party ideology has become increasingly more polarized over this period; and (2) that it is very sensitive to business cycle conditions. In particular, a worsening of economic conditions (e.g. higher inflation or unemployment) is associated with a decline of the relative difference in party ideology scores. Republicans tend to become less conservative relative to Democrats when either the unemployment or inflation rate increases. We obtain the same results using an equivalent time series based on ADA (Americans for Democratic Action) scores. That there is an important economic component in ADA and NOMINATE scores questions the ability to interpret these scores as proxies of legislator ideology. But the finding that political parties' platforms tend to converge during economic downturns is not inconsistent with the traditional Downsian-type approach of modeling party behavior.