Inequality and party support: positional economic voting or a new dimension of valence?

ABSTRACT

Economic growth helps governments get re-elected. But does growth, as a valence issue, exhaust the possibilities for the economic vote? This paper shows, via an examination of 318 elections in established democracies, across time and space, that growth and inequality both matter for incumbent government support. Somewhat surprisingly, it is found that both left- and right-wing incumbents are held accountable for changes in inequality, suggesting that inequality, even if a positional economic policy issue, can affect the vote in a valence way, at least at the macro-level. Further, these effects appear unaltered by structural factors such as federalism or the electoral system.

KEYWORDS:

• economic voting
• growth
• inequality
• valence
• positional economic voting

JEL:

• D72
• H53

ACKNOWLEDGEMENTS

Previous versions of this paper were presented at the Decentralization after the Great Recession conference in Santiago de Compostela, Spain, and at the MAPLE conference on The Politicisation of Europe: A Citizens’ Perspective in Lisbon, Portugal. The authors thank the participants at these conferences for their comments and are grateful to Ignacio Lago and Mariana Costa Lobo, respectively, for suggestions for improving this paper.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. See the contemporary literature reviews by Lewis-Beck and Stegmaier (2013) and Stegmaier, Lewis-Beck, and Park (2017).

2. See the recent special issues of Dassonneville and Lewis-Beck (2014a) and Lewis-Beck and Whitten (2013).

3. Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the UK. See Appendix A in the supplemental data online for the time coverage of each country.

4. As such, the data set includes both established and newer democracies – which are only included for the more recent period. To account for the possibility that these newer democracies drive the results, we have replicated the analyses for a more restrictive sample of established democracies only. As can be seen in Appendix G in the supplemental data online, the conclusions still hold when doing so.

5. We also verify, however, whether the results are robust to focusing on the party of the prime minister only. See the discussion in the robustness section.

6. As evident from the results in Appendix B in the supplemental data online, when relying on quarterly GDP data – retrieved from the Organisation for Economic Co-operation and Development (OECD) database – and evaluating the role of economic growth on an even shorter period before election day (two quarters before the election), the results are substantively the same.

7. Solt’s data set includes 100 separate imputations of the inequality data, which allows taking into account uncertainty in the estimates. For reasons of parsimony, and in order to estimate panel models, we rely here on the average estimate of these 100 imputed variables. We make use of Solt’s gini_disp variable, an estimate of Gini index of inequality in equivalized household market income (Solt, 2016). We use version 7.1. of the SWIID data set.

8. We also verified whether our conclusions hold when analysing the impact of change in the economic indicators (GDP growth and Gini) during the cabinet’s term in office, taking the difference between the indicator at time t – 1 and the indicator in the year the government enters office. The results of these additional analyses are reported in Appendix B in the supplemental data online.

9. In particular, we used expert evaluations of parties’ left–right position, as included in the ParlGov data set. For single-party governments, we simply use the expert placement of the government party. In case of multi-party governments, we calculated a weighted average, with weights based on parties’ seat shares in parliament.

10. Appendix D in the supplemental data online also reports the results for an alternative measure of the government’s ideological position – which is based on a dichotomous categorization of left-wing and non-left-wing parties.

11. There is indeed significant correlation between the errors of the model that we estimate (without an LDV) and a model in which both the dependent and the independent variables were lagged one election.

12. Estimates are based on Model 3 in Table 1; estimated effects are on observed values for all other variables.

13. We also verified whether economic growth conditions the effect of inequality, which proved not to be the case (see Appendix C in the supplemental data online).

14. We do not include country fixed effects in these models, as we explicitly model differences between countries by means of, for example,the majoritarian system variable.

15. To determine a party’s ideological position, we make use of respondents’ assessments of the ideological positions of parties, on a left–right scale. We take as the value of a party’s position the mean ideological position of a party, as perceived by all respondents in a particular election sample.