Paul Beard writes to ask what the economists and social scientists at Crooked Timber think of this interview with economist Ray C. Fair. His model that is predicting that Bush will get 57.5% of the 2-party votes.
Well, the economists and social scientists at Crooked Timber are in bed, so I’ll try. Here’s the model and relevant webpage. Fair is a Yale professor who has been tweaking his model, and successfully publishing papers on it, since 1978. I am a lowly uncredentialed blogger who has spent less than an hour looking at said papers. If I were a betting man, I’d have to bet that Fair is right and I’m wrong when I raise a criticism. If I’m lucky, maybe he’ll respond to my email and humiliate me in comments.
Having said that, a few comments:
1. The model is stunningly simple. There are only two inputs: inflation and two measures of real per capita GDP growth. And the output is not the expected vote percentage of the incumbent, but of the Republican candidate. (There’s also an incumbency variable implicit in the equation he’s posted for the 2004 election.)
2. If I wanted to put this model into words, it would sound something like: “Republican presidential candidates will get more of the vote when real GDP growth is strong and inflation is relatively low.” This has a few counterintuitive implications:
Good GDP growth and low inflation hurts Democratic candidates. (Even when they’re the incumbent? I’m not sure which effect is more powerful.)
Unemployment, polls, fundraising, immigration, wars, etc., don’t make much difference in how people vote for President.
If you share the reasonable belief that the President doesn’t have much control over GDP or inflation, the model implies that the candidates, even sitting Presidents, can’t do much about the percentage of the vote that they obtain.
Now, “counterintuitive” certainly doesn’t mean “wrong”, but I’d need some convincing.
3. The input GOODNEWS is rather delicately specified; it’s defined as “number of quarters in the first 15 quarters of the Bush administration in which the growth rate of real per capita GDP is greater than 3.2 percent at an annual rate”. I can’t imagine that there’s a theoretical justification for it, as it changes in different versions of the model. It seems that it’s simply a number that most accurately retroactively predicts the old elections.
Is it an overspecified model, good at describing past history but not at making predictions? It seems awfully unlikely that I’d be the one to discover this. We’ll know more in November.
Professor Fair updates his model after every election to better accomodate the new data point. I’d be interested in seeing how well each iteration predicted the elections since 1978 before they were retroactively tweaked. It did pretty well in 2000.
UPDATE: Evan Roberts at Coffee Grounds points out that I’ve missed something important. The party of the incumbent is a variable; benefits of a good economy don’t automatically benefit Republicans.