Economic Voting and Economic Inequality: US Presidential Elections

Researchers and pundits alike view the state of the national economy as a key determinant of vote decisions and election outcomes: voters reward or punish the incumbent party as national economic conditions improve or decline. In an era of rising income inequality, however, national conditions provide relatively poor information to voters about how the incumbent is handling the economy in their interest. We develop a new theoretical perspective on economic voting in which voters look for economic indicators that provide them with information about growth and about how growth will be distributed. We argue that self-interested voters look to economic conditions of people like themselves as indicators of their future economic well being, especially as income inequality has grown. We examine vote share across voters in different income groups in presidential elections from 1952-2012 and in the recent period of rapidly increasing income inequality, 1976-2012. We compare the effect of national economic conditions and economic conditions specific to others situated in the same economic circumstances. We find that the commonly accepted economic voting model performs poorly for voters in the bottom 40% of the income distribution in this recent period. However, voters have not replaced national economic conditions with group specific conditions.