The influence of state-level economic conditions on presidential elections

Abstract

Evidence from recent presidential elections indicates that voters behave as if they hold presidents accountable for changes in state-level economic conditions. Given the apparent political payoffs, it is almost a certainty that macroeconomic pump-priming (which affects state-level conditions on average) and certain inter-state redistributive policies would engender support from pragmatic incumbent presidents. The finding that state-level economic conditions can affect voting behavior is particularly relevant to the president already caught in an over-heated macroeconomic environment; for example, because of the peculiarities of the electoral college, Carter might improve his chances for re-election in 1980 by cutting some federal programs in Arizona and Nebraska (strong Ford states) and switching them to Illinois or Texas (closely contested states in 1976). Abolishing the electoral college and permitting popular votes to determine presidential-election outcomes would greatly reduce, if not eliminate, the president's political gains from such state-level redistributive policies. This study's findings also suggest a potentially perverse side-effect from the Federal Election Campaign Act (FECA) as amended in 1974. By legislatively equalizing the major-parties' presidential campaign spending, FECA has removed the natural fund-raising advantage of the incumbent president — especially Republican incumbent presidents. Removing this advantage could well increase the relative importance of other vote-getting activities — for example, the manipulation of national and state-level economic conditions. The findings for the 1972 election suggest that state-level campaign spending influences state-level voting outcomes. Since FECA has lowered major-party presidential campaign spending — which presumably has had the effect of raising the marginal productivity of campaign spending — the allocation of spending across states may be more important than ever in deciding presidential-election outcomes. Finally, the finding that state-level economic conditions affect voting outcomes raises the possibility that earlier studies which have found voter responses to national-level conditions may actually only be measuring the influence of state-level conditions (on average). Determining to what extent voters respond to national-level economic conditions after controlling for state-level conditions must await further analysis.