Mecro-Economic Voting: Local Information and Micro-Perceptions of the Macro-Economy∗

We develop an incomplete-information theory of economic voting, where voters’ information about macro-economic performance is determined by the economic conditions of people similar to themselves. Our theory shows that sociotropic voting is consistent with self-interested behavior. We test our theory using both cross-sectional and timeseries survey data. A novel survey instrument that asks respondents their numerical assessment of the unemployment rate confirms that individuals’ economic information responds to the economic conditions of people similar to themselves. Further, these assessments associate with individuals’ vote choices. We also show in time-series data that state unemployment robustly correlates with evaluations of national economic conditions and presidential support. ∗We thank Mike Alvarez, Laurent Bouton, John Bullock, Conor Dowling, Ray Duch, Jon Eguia, Jeff Frieden, Julia Gray, Rod Kiewiet, Lisa Martin, Nolan McCarty, Stephanie Rickard, Ken Scheve, Barry Weingast, and Chris Wlezien for encouragement and suggestions, and seminar audiences at Harvard, LSE, MIT, NYU, Temple, Yale, the 2009 Midwest Political Science Association and the 2010 American Political Science Association Conferences for useful feedback and comments. One of the most robust relationships in political science is economic voting: the positive correlation between an area’s economic performance and the performance of incumbent politicians and parties. However, no consensus exists about the micro foundations underlying this relationship. Survey data show that vote choice is more strongly associated with voter assessments of national economic conditions than with assessments of personal economic conditions. This pattern is called sociotropic voting (Kinder and Kiewiet, 1981; Kiewiet, 1983; Lewis-Beck, 1988), and is often interpreted as evidence that voters have other-regarding preferences (see, e.g. Lewin, 1991; Kiewiet and Lewis-Beck, 2011). This conclusion contrasts sharply with almost all political economy models, which assume that voters are purely self-interested, and care only about their own economic well-being (Meltzer and Richard, 1981; Persson and Tabellini, 2000). We show that focusing on voters’ imperfect information about the economy eases this tension between the political behavior and political economy literatures. A voter’s economic well-being is a noisy measure of the incumbent government’s policies. Thus, information about others’ economic fortunes improves voters’ assessments about which candidate or party is better for their own economic well-being (Kinder and Kiewiet, 1981). We therefore hypothesize that voters’ perceptions of the aggregate economy are shaped by the economic circumstances of people similar to themselves, and that these perceptions influence their votes. This hypothesis is then subjected to a number of tests. This hypothesis, which we call mecro-economic voting, is formalized starting with the assumption that voters gather information to understand their own economic risk, rather than to inform vote choice (Downs, 1957; Popkin, 1991). Each voter is a member of several groups, defined by location, industry, race, age, gender, etc. Following some economists, we refer to these groups as individuals’ mecro-economies, so called because they are somewhere between the macroand micro-economy. Members of these groups are similarly affected The literature on economic voting is truly massive. For recent reviews of the literature see Lewis-Beck and Paldam (2000) and Hibbs (2006). Kiewiet and Lewis-Beck (2011, p. 314) explain the term mecro-economy as, “[S]patially, phenomenologically, and linguistically located between the micro-economy of the individual and macro-economy of the