13 June 2017

It’s not just the economy, stupid

By Eugenio Proto

“It’s the economy, stupid”. Or is it? Bill Clinton’s strategist James Carville’s mantra has become something of an orthodoxy for politicians and political commentators, but is the economy really the key issue in voting behaviour?

Last October, Federica Liberini, Michela Redoano and I published research into the idea of retrospective voting using subjective well-being (SWB) measures. Using measures of voting intentions and subjective well-being from the British Household Panel Survey, our key finding was that an individual voter with a high level of subjective well-being will be more likely to support the incumbent party. If you are satisfied with your life, you are 1.6 percentage points more likely to support the incumbent.

As a comparison, individuals who feel that their financial situation has improved with respect to last year are 1.2 points more likely to support the incumbent. A 10 per cent increase in family income makes an individual around 0.2 points more likely to support the incumbent party. In other words, happiness matters more for a person’s voting decision than money.

If individual disagreement with the government’s policy decisions were a source of life dissatisfaction, one might worry that respondents who have allegiances with the incumbent party, and so greater agreement with the policy choices, would report greater life satisfaction therefore skewing the results. But that is not the case. Looking only at politically unaffiliated respondents, the results continue to hold. In fact, for non-partisan voters, the importance of well-being is even greater: for such voters, the well-being effect increases from 1.6pp to 2.4pp.

We also examined whether the effects are caused by the variation in life satisfaction, even if such variation is not the result of government policies.

To capture a drop in well-being that is unrelated to policy, the researchers considered the voting intentions of people who had suffered the death of a spouse. The results suggest that becoming a widow or widower makes individuals less likely to support the party of the incumbent government. This effect is larger for women; in the two years after becoming a widow, a woman is around 11 per cent less likely to be pro-incumbent.

Our research did not predict voting behaviour in any particular election. But in the context of last week’s election result, it is interesting to look at the current assessments of life satisfaction in the UK.

From the latest ONS data, we can see that average levels of life satisfaction, happiness and worthwhileness (all SWB indices) have steadily increased since 2012. And the vote share for the incumbent Conservatives has also risen since then. On the surface, then, the recent experience of the UK, with strong and rising support for an incumbent party at a time when living standards are flat or falling, would appear to support the idea that SWB indices are more important for voting decisions than financial circumstances.

But Jeremy Corbyn’s surprisingly strong showing last week perhaps suggest otherwise, with voter’s economic insecurity driving them towards an alternative.

A similar analysis can be applied to support for leaving the EU. The Brexit vote can reasonably be considered as a rejection of the status quo thus comparable to a vote against an incumbent. Hence we should expect that less “happy” regions would have supported Brexit more.

And indeed, we note that Northern Ireland and Scotland are the happiest geographical regions, with a support for Brexit below national average. Even considering the English regions only, we note that West Midlands, Northeast and Yorkshire and the Humber, all below the UK average in terms of subjective well-being, had higher level of Brexit support. There are exceptions. London, for example, features low levels of subjective well-being and low Brexit support. Clearly on this issue, London is, as in so many other regards, different from the rest of the UK.

But what is clear from the Brexit vote is that, even in the face of forecasts of economic disaster, unhappiness can drive people away from the political status quo.

Eugenio Proto is Associate Professor of Economics at the University of Warwick