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Economic Perceptions in an Unequal Era

- September 7, 2010

Like the economy itself, political science’s attention to economic voting is cyclical. In the late 1970s and the 1980s, the field had a vibrant set of debates about economic voting here in the U.S. One dominant argument held that economic voting was largely sociotropic–that is, responsive to economic conditions in the country as a whole. Voters were responding to their country, not their pocketbook. Before we apply the same thinking to today’s economy, though, we need to test whether its preconditions still hold. After all, sociotropic voting should only lead to clear shifts in candidate support to the extent that Americans agree about how the national economy is doing.

And there is good reason to think that we might not agree as much as we used to. In the decades since the major debates about sociotropic voting, the U.S. economy has seen important shifts, as an increasing share of income is concentrated among the wealthiest. In 1978, just prior to the peak of economic voting studies, Americans at the 95th income percentile made 6.7 times as much as their counterparts at the 20th percentile. By 2003, that ratio had grown by 27%, to 8.5. (Since much of the growth has been at the very top of the income distribution (gated, ungated), if anything, these figures understate the increase in inequality.) Given this rising inequality, it seems plausible that Americans’ perceptions of the national economy are diverging along with our actual economic fortunes. If so, the political impact of sociotropic voting might well change, since national economic performance would mean different things for different groups of voters.

risingineqjoint5.jpg

The left side of the graph shows average annual incomes for Americans at different income levels, and tells the familiar story of rising income inequality. The right-hand side is less familiar. It shows the perceptions of national economic performance from the Michigan Survey of Consumer Attitudes for three income groups: the top 5 percent (black line), the top 25 percent (blue line), and the bottom 25 percent (green line). Higher numbers indicate a stronger economy in the past year. Can’t distinguish between the three lines? That’s the point: the trends are virtually indistinguishable most of the time, although those with higher incomes were quicker to perceive the economic recovery of the mid-1980s. So while Americans’ economic fortunes have diverged since the late 1970s, we still agree to a striking extent about how the national economy is faring. Inequality exists in our actual economic fortunes, but not in our perceptions of the national economy. And as the corresponding paper of mine illustrates, this consensus does _not_ seem to be because Americans are disproportionately weighting the economic performance of those making the most money. Instead, when viewed in the aggregate, Americans’ perceptions of the national economy appear closely linked to the economic conditions of those in the middle of the income distribution. A key precondition for sociotropic voting based on actual economic conditions is alive and well.

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