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The Economy, Stupid

By Jack M. Balkin

Yale Economist Ray Fair's Presidential Prediction Model offers a very simple prediction method based on real per capita GDP and measures of inflation, along with dummy variables for party incumbency and presidential incumbency. His October 30th prediction, based on the latest economic data, predicts that Obama will will 51.91 of the vote and McCain will win 48.09 of the vote, for approximately a four point spread. Fair notes that his model may actually overpredict the Republican vote because "the economy since the end of the third quarter appears to have gotten much worse. People may perceive the economy to be worse than the economic values through the third quarter indicate."

Meanwhile, Larry Bartels notes in a recent paper that the electorate tends to focus on the economic news right around the time of the election; if things are going bad, they tend to punish the incumbent party. In addition, the electorate is somewhat myopic, focusing only in the most recent economic news, and discounting what happened in the first three years of a president's term. Neither Fair's model nor Bartel's account of voter response to economic news looks good for McCain.

What is perhaps more important is that if Fair's and Bartel's accounts are largely correct, then most of the issues in the campaign-- other than the economy itself-- have been largely peripheral to the outcome. Neither Sarah Palin, nor William Ayres, nor Obama's birth certificate, nor the number of houses McCain owns, or even Joe the Plumber has made much difference to the outcome of this election.

Full post as published by Balkinization on November 01, 2008 (boomark / email).