Personal Economic Expectations Research Articles

Racial and Ethnic Differences in Consumers’ Economic Expectations

Consumers’ expectations about the future of their own finances and the macroeconomy are used to forecast consumption, but forecasts do not typically account for differences by race and ethnicity. In this report, the author asks (1) whether there is consistent racial and ethnic variation in consumers’ economic expectations, (2) if differences can be explained by economic experiences, and (3) how the scope of expectations matters. The author uses the Survey of Consumer Finances to examine variation in the likelihood of positive national and personal economic expectations among individuals who identify as black, white, or Hispanic. The author finds that national expectations have substantial racial and ethnic variation net of economic experiences. For personal expectations, initial racial and ethnic variation in the likelihood of positive expectations disappears once economic experiences are accounted for. These findings have important implications for consumption forecasts, especially as the racial and ethnic composition of the United States changes.

Economic News and Personal Economic Expectations

Personal economic evaluations are a component of consumer confidence and predict political behavior. However, very few studies have examined the link between mediated information and personal economic evaluations. This research examines the conditions under which exposure to media content influences personal economic expectations as well as which sources of information impact personal economic expectations. Results are based on an integration of a four-wave national panel survey and media content data. Findings show that exposure to unemployment news in tabloid outlets was a significant predictor of personal economic expectations. The implications of these results are further discussed.

Voting under uncertainty: the effect of information in the Scottish independence referendum

ABSTRACTDespite extensive research on campaign effects, the issue of whether information can actually influence vote choice in a campaign remains debatable. This study provides novel evidence of how issue-based arguments influenced voting preferences in the campaign for the 2014 Scottish independence referendum. The findings, based on a lab experiment and a follow-up survey with the experimental subjects, show that provision of information lead to a one-sided persuasion effect, by increasing the support for independence mainly through reduction of indecision. This effect occurred regardless of the possibility to select the arguments and found further confirmation in the actual increase of Yes votes in the referendum. Additional analyses reveal that personal economic expectations significantly moderated the effect of information, since the support for independence increased only among those who did not expect future economic gains. In line with prospect theory, these results suggest that risk-based calculations and economic perceptions prove important determinants of voting decisions, especially in a context of asymmetrical vote choice between an uncertain “Yes for a change” and a safe “No for the status quo”.

How Citizens’ Education, Occupation, Personal Economic Expectations and National Identity Interact with One Another to Sway Public Opinion on the EU

Abstract: This article examines the pattern of interactions between education, occupation, personal economic expectations and feelings of national identity and how these interactions affect public support for the EU. Using Eurobarometer data from 1993 to 2006, the results in this paper demonstrate that occupation mediates the relationship between EU support and education. It is also found that the sway of citizens’ personal financial expectations on EU support is not conditioned by education and occupation. Finally citizens’ personal economic expectations are not found to condition the relationship between EU support and feelings of national identity. In the light of these findings the paper draws implications.

Covering the crisis: Media coverage of the economic crisis and citizens’ economic expectations

The 2008-2009 worldwide economic crisis serves as a backdrop to this study of the dynamics of citizens' economic expectations. Economic expectations are identified as crucial for a range of political attitudes. This study is the first to consider how information affects evaluations in times of a severe crisis, as prior research of information effects on economic evaluations took place in more stable economic times. It links citizens' news exposure and the content of economic news coverage with changes in prospective economic assessments. Drawing on a three-wave panel study and on a media content analysis between the panel waves, we thus provide a dynamic assessment of media influences on changes in economic evaluations. The results demonstrate that media exposure strongly affected expectations regarding the future development of the national economic situation, while being largely unrelated to personal economic expectations. We furthermore show that media dependency increases the magnitude of the media effect. We discuss the disconnect between personal and national economic evaluations with regard to mass-mediated economic information. Acta Politica (2011) 46, 353-379. doi:10.1057/ap.2011.18; published online 8 July 2011

The political economy of UK party support, 1997–2004: Forecasts for the 2005 general election

Aggregate‐level models of party support patterns increasingly seek to evaluate both “economic” and “political” explanations of election outcomes. This paper explores the evolution of support for Labour, the Conservatives and the Liberal Democrats between 1997 and 2004. A number of politico‐economic models are developed and tested against monthly timeseries data for the 1997–2004 period. A variety of different assumptions are then made about likely movements in the key independent variables in these models in the run‐up to the next general election. Finally, these assumptions are used to inform a series of forecasting models in order to produce forecasts of likely party support levels in the early summer of 2005, the presumed time of the next general election. The analysis suggests, on balance, that the best performing statistical model is one that takes account of Blair’s leadership ratings, voters’ personal economic expectations, the “costs of ruling” and the continuing effects of the Iraq war. The central forecast from this model, for an assumed election in June 2005, produces vote shares of 39% for Labour, 31% for the Conservatives and 22% for the Liberal Democrats. Although a wide range of forecast election outcomes can legitimately be derived from the existing data, most of the forecasts reported suggest that a Labour victory is the most likely outcome of the next UK general election.

New Models for New Labour: The Political Economy of Labour Party Support, January 1992–April 1997

This article uses newly available British time-series data to analyze dynamic interrelationships among Labour vote intentions, perceptions that the Labour leader would make the best prime minister, and Labour party identification. Error-correction models reveal that best prime minister perceptions and party identification have important short- and long-run influences on vote intentions. Tests of rival models indicate that personal economic expectations outperform other economic evaluations in the vote intention and party identification analyses. National retrospective judgments perform well in analyses of best prime minister perceptions, and emotional reactions to economic conditions significantly influence these perceptions as well as party identification.

Who supports marketization and democratization in post-communist Romania?

The post-1989 change in former Communist societies in East and Central Europe is generally viewed as a double transition involving both marketization (removal of state hegemony over the economy)anddemocratization (move to a Western-style liberal democracy). Data from a nationwide survey of Romania in 1993 demonstrates that Romanians in fact distinguish two reform dimensions—marketization and democratization—as opposed to a single “pro-Westernization” dimension. Though Romanians distinguish marketization and democratization conceptually, support for reform in both instances is strongest among the same segments of the population: the young, the better educated, men, and those living in cities. Further analysis reveals that the effects of age, gender, and urban residence (but not education) largely wash out once the effects of risk aversion, individualistic ideology, and personal economic expectations are controlled for. Risk aversion is an especially important mediating variable. Men, the young, and those in cities are more likely to support marketization and democratization in large part because they tend to be less averse to risk.

Forecasting political preferences and election outcomes in the UK: Experiences, problems and prospects for the next general election

Recent attempts to forecast movements in UK party popularity are reviewed and the major problems of political forecasting in the UK are discussed. A forecasting model for the current UK Parliamentary term is developed which focuses on the importance of aggregate personal economic expectations. A series of simulations are performed which make different assumptions about gdp growth and changed in real interest rates in the period through to mid 1997. It is concluded that the Conservative government cannot reasonably expect to win the 1996/1997 UK general election by using the general macroeconomic strategy of progressive interest rate reductions that was successfully followed in 1982–1983, 1986–1987 and 1991–1992. An alternative strategy, based perhaps on tax reductions in 1995 and 1996, offers the most obvious prospect of electoral (if not economic) success.

Economic Evaluations, Prime Ministerial Approval and Governing Party Support: Rival Models Reconsidered

The argument that personal economic expectations drive support for British governing parties has received wide attention. This article employs aggregate data for the 1979–92 period to assess the effects of personal expectations, other subjective economic variables and evaluations of prime ministerial performance in rival party-support models. Analyses of competing models, including error correction specifications that take into account nonstationarity in the time series of interest, indicate that the personal expectations variants generally do very well, although they do not outperform one or more alternatives incorporating other types of economic evaluations. The error correction models show that the prime minister's approval ratings have significant short-term and long-term effects on governing party popularity.

Peasants or Bankers? The American Electorate and the U.S. Economy

The usual model of electoral reaction to economic conditions assumes the “retrospective” economic voter who bases expectations solely on recent economic performance or personal economic experience (voter as “peasant”). A second model assumes a “sophisticated” economic voter who incorporates new information about the future into personal economic expectations (voter as “banker”). Using the components, both retrospective and prospective, of the Index of Consumer Sentiment (ICS) as intervening variables between economic conditions and approval, we find that the prospective component fully accounts for the presidential approval time series. With aggregate consumer expectations about long-term business conditions in the approval equation, neither the usual economic indicators not the other ICS components matter. Moreover, short-term changes in consumer expectations respond more to current forecasts than to the current economy. The qualitative result is a rational expectations outcome: the electorate anticipates the economic future and rewards or punishes the president for economic events before they happen.

Recapturing the Falklands: Models of Conservative Popularity, 1979–83

Recently, Sanders et al. have made the intriguing and counter-intuitive argument that the impact of the Falklands war on Conservative popularity was inconsequential. Their analyses raise important theoretical and methodological issues concerning the time-series analysis of party support. This present article contends that the stepwise regression procedures employed by Sanders et al. are misleading, particularly when predictor variables are highly intercorrelated. Box-Jenkins analyses demonstrate that the Falklands strongly influenced Conservative support, net of the effects of macroeconomic conditions and personal economic expectations. The significance of the latter variable in the models confirms Sanders et al.'s argument about the role of subjective economic variables in party popularity functions. Non-economic variables are also relevant, however, and popularity functions that model them correctly will enhance our understanding of both the economics and the politics of party support.

Government Popularity and the Falklands War: A Reassessment

Mrs Thatcher's decisive and determined stand during the Falklands crisis in 1982 has been widely credited with restoring the electoral fortunes of the Conservative party in the run-up to the 1983 general election. This article argues that the Falklands war produced a boost to Conservative popularity of at most three percentage points for a period of only three months. Government popularity was already accelerating as a result of macroeconomic factors before the outbreak of the Falklands crisis, in particular ‘personal economic expectations’ proved to be of critical theoretical and empirical significance, and can be modelled satisfactorily on the basis purely of objective macroeconomic indices. Thus macroeconomic factors were at the root of the revival of Mrs Thatcher's political fortunes, and most of the boost to government popularity which occurred in the spring of 1982 derived from intelligent (or cynical) macroeconomic management. The Falklands crisis merely coincided with a jump in government popularity which would have occurred anyway in the wake of Geoffrey Howe's 1982 Budget.

Perceived Economic Competency and the Ford/Carter Election

IN A recent symposium on 1972 presidential election it was forcefully argued that analysts from Center for Political Studies paid insufficient attention to economic variables. Asking how voters evaluate economic performance of political actors, critics (Popkin et al., 1976:804-05) concluded that the entire economic area has, as our treatment suggests, been heavily underplayed, and future voting research would be well advised to study popular perceptions and evaluations of various different kinds of economic conditions. How well critics illustrated effect of economic variables is questionable (Miller and Miller, 1976:848), but even CPS response agrees that questions of perceived candidate competence are important, especially if direct attention to new concepts or if they produce new generalizations. Research which analyzes political impact of economic factors on individuals is limited. Several authors have studied association between one's personal economic expectations and presidential vote (Campbell et al., 1960:381-401; Fiorina, 1978; Wides, 1976; Klorman, 1978; Tufte, 1978) and have shown that optimists are more likely to support incumbent administration than pessimists. The findings hold independent of partisanship, but in no case are they particularly