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If every voter were an economist (ghastly thought), elections would be easy to forecast. The performance of the economy would reliably predict consumer sentiment, which in turn would predict approval ratings for the incumbent president, which in turn would predict the outcome of the election in the Electoral College.
It doesn’t work that way. Few know that as well as Robert Gordon, an 84-year-old economist at Northwestern University. He has studied presidential elections going back to 1956, when he was 16 years old and Dwight Eisenhower, the incumbent Republican president, and his running mate, Richard Nixon, were squaring off against the Democrats Adlai Stevenson and Estes Kefauver.
The economy is a big factor in elections, but it’s not as influential as it once was, according to a working paper released by Gordon just in time for this year’s election. The economy’s performance only loosely affects the presidential approval rating, which is a predictor of election outcomes. The turning point was around 2000, when polarization increased and people became more likely to vote based on party affiliation, all other criteria (including economics) aside.
Oddly, Gordon found that even in the period before 2000, consumer sentiment did not predict winners, even though it would seem to be the logical go-between linking economic performance and feelings about the candidates.
The equation that best predicted election outcomes included two economic factors: economic growth adjusted for population and “excess” inflation, defined as average inflation over the president’s first three and a half years in office compared with the same period under the previous president. The equation also included the approval rating of the incumbent president.
“Prior to the 2000 election the equation does a remarkably good job in matching the sharp ups and downs of the incumbent party’s electoral vote outcome,” Gordon found.
From then on, not so great. While the equation correctly predicts 15 of the 17 elections since 1956, its two mistakes were in 2000 and 2016, when Al Gore and Hillary Clinton got fewer Electoral College votes than the equation predicted. The equation underpredicted how many electors Trump would win in 2020, but did get the result right.
Gordon came up with his “excess inflation” measure to get at the classic political question: Are you better off now than you were four years ago? He agrees with other analysts that one reason for President Biden’s low approval rating is that inflation has been higher on his watch than on Trump’s.
Gordon is the personification of a rational economist, but even he says he gets sticker shock sometimes. “I can’t believe that things that used to be $3.98 are now $5.49,” he told me.
But Gordon said Biden is doing even worse than can be accounted for by that inflation factor. He’s not sure why. (I’ve written that Biden is getting a bad rap, but that’s another story.)
Gordon said the two economic components of his equation explain President Ronald Reagan’s landslide re-election in 1984 despite high unemployment and inflation. Growth in gross domestic product per capita was strong, and although inflation was high, it was down from President Jimmy Carter’s time in office.
According to Gordon’s formula, a generic Republican candidate running this year would win easily. The race is likely to be closer than the equation suggests because Trump is uniquely unpopular, Gordon told me. There are two versions of his equation, which predict Vice President Kamala Harris securing only 145 or 183 electoral votes. She is “doubtless” going to do better than that, Gordon said, and might even pull out a win.
It’s possible, of course, that the equation fits past data well but won’t predict what happens next. That’s the risk of what statisticians call “overfitting.”
Gordon acknowledged that it would have been easier to predict the popular vote than the Electoral College vote using inputs such as economic data. But, he said, the popular vote isn’t what decides elections.
Gordon is an expert on inflation and long-term productivity and the author of a 2016 book, “The Rise and Fall of American Growth.” Election analysis is a departure for him. “My main reaction is how fascinating it is to trace the ups and downs of presidential approval over the last 70 years, and how much it doesn’t depend on economics,” he told me.
The Readers Write
You wrote about six mistakes people make about inflation. As a physician and technical consultant, the one word that I informed my staff never to use is “misunderstand.” To tell someone that they misunderstand is to suggest that their cognitive processes are in error, and no one likes being told that. I spent time working with my staff to use the phrase “not aware of,” which simply states that the consultant’s experience is different or perhaps more detailed in the nuance of an issue.
Dr. Alton BrantleyDavidsonville, Md.
Saying that a cost-of-living adjustment to Social Security is an equalizer is not correct since the COLA happened at the same time as the increase in Medicare premiums, so it becomes a wash for a lot of those on Medicare. In addition, retired nurses and teachers rarely receive cost-of-living adjustments on their pensions that reflect the cost of living.
Karen DelGuercioCherry Hill, N.J.
To me, one example of “U-Haul economics” is the placement of electric vehicle battery plants in rural Kentucky and Tennessee, where there’s no existing housing or public infrastructure to accommodate the work forces. There are many places with excess housing and underemployed labor where these plants could have been built, thereby achieving revitalization of people and places in need through industry and not subsidy.
Patrick CorpGlen Allen, Va.
Quote of the Day
“The Chicago White Sox lost three-fourths of their games this year, the worst record in modern baseball history, but they did win 41 games — including a 12-2 thrashing of the mighty New York Yankees. The importance of luck in baseball is why the outcomes of three-game, five-game, or even seven-game postseason series seem more like coin flips than true tests of ability.”
— Gary Smith, “The World Series of Coin Flips,” Mind Matters blog (Oct. 22)
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