Changing Perceptions, Changing Party Preferences, and Vote Switching

Changing Perceptions, Changing Party Preferences, and Vote Switching How Changes in Economic Perceptions Affect Changes in Voting Behavior

Konstantin Glinitzer1 Department of Methods in the Social Sciences, University of Vienna Paper prepared for the 5th Annual General Conference of the European Political Science Association, Vienna, Austria, 25–27 June 2015 Work in progress – please do not cite or circulate without author’s permission

Abstract: Retrospective economic voting theory comprises in its essence a model of vote switching, in which citizens whose economic perceptions changed between two elections are expected to switch votes and thus behave differently than voters with stable perceptions. However, among the potential switchers not all are equally likely to switch votes, as other valence or policy factors – not directly related to economic perceptions – impact vote switching as well and might bias voters against moving to another party. If other parties are simply not regarded as attractive enough on other factors a voter deems relevant, changing economic perceptions might not suffice to induce vote switching. Overall, this paper proposes a model of economic voting centered on changes in behavior due to changes in perceptions moderated by voters’ party preference structure. The theoretical model is applied to Great Britain’s General Elections in 2005 and 2010, during which the international financial crisis caused (some) Britain’s voters to alter prior economic perceptions. Using data collected by the British Election Study Panel Survey, this paper shows that voters who changed their perceptions after the crisis became visible indeed behaved differently than voters with stable perceptions. However, among the segment of voters with changing perceptions not all voters actually switched votes: voters with tied preference are more likely to actually switch votes than voters whose preference structure is biased towards the incumbent Labour party. Acknowledgements: This work is supported by the Austrian National Election Study (AUTNES), a National Research Network (NFN) sponsored by the Austrian Science Fund (FWF) [S10902-G11].

1 [email protected]

Contents 1

Introduction

1

2

Theory: Perceptions, Preferences, and Choices

3

2.1

3

3

Economic Perceptions and Vote Switching

Research Design

9

3.1

Vote-Switching, Panel Data, and Causality Problems . . . . . . . . . . . . . . . . . . . .

9

3.2

The British Election Study Panel Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.3

Variable Coding and Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.2.1

4

. . . . . . . . . . . . . . . . . . . . . . . . . .

Time of Measurement

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.3.1

Dependent and Independent Variables . . . . . . . . . . . . . . . . . . . . . . . . 11

3.3.2

Control Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Empirical Results

17

4.1

Update 1: How the Economy has Changed . . . . . . . . . . . . . . . . . . . . . . . . . . 17

4.2

Update 2: How Electoral Utilities have Changed . . . . . . . . . . . . . . . . . . . . . . . 18

4.3

Update 3: How Voting has Changed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

5

Conclusion

26

6

Appendix

29

7

References

30

List of Figures 1

Voting-Decisions, Perception Updates, and Preference Reformation over Labour’s Term in Office (2005 to 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Economic Changes (2005 to 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

5

Voting-Decisions in a Three-Party System Depending on Underlying Preferences and 8

Changes in Assessment of How Labour Has Handling the Economy Over the Electoral Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

4

Predicted Probabilities for Changes in Economic Perceptions . . . . . . . . . . . . . . . . 19

5

Probability of Voting Again for Labour among Voters Who Became Negative . . . . . . . 25

List of Tables 1

Overview of Panel Waves and Variables Used in the Models . . . . . . . . . . . . . . . . . 12

2

Overview of Economic Perceptions in 2005 and 2008 . . . . . . . . . . . . . . . . . . . . . 14

3

Multinomial Regression Results: Hypothesis 1 . . . . . . . . . . . . . . . . . . . . . . . . 18

4

Linear Regression Results: Hypothesis 2a-2d . . . . . . . . . . . . . . . . . . . . . . . . . 21

5

Linear Regression Results: Hypothesis 2a-2d . . . . . . . . . . . . . . . . . . . . . . . . . 22

II

6

Bivariate Results: Hypothesis 3a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

7

Binomial Regression Results: Hypothesis 3a . . . . . . . . . . . . . . . . . . . . . . . . . 24

8

Binomial Regression Results: Hypothesis 3b . . . . . . . . . . . . . . . . . . . . . . . . . 29

III

1

Introduction

How does the economy affect election outcomes? Following the seminal contributions by Key (1966) and Kramer (1971), political scientists conceive economic voting as a simple retrospective decision-rule (see also Fiorina 1978, Ferejohn 1986): over the course of the incumbent’s recent tenure in office voters collect information about the state of the economy. A buoyant economy will be rewarded – by those voters who simply re-elect the governing party and by those citizens who now switch votes to the incumbent. A faltering economy, on the other hand, will be punished – by those voters who simply choose the opposition party again and by those voters who abandon the incumbent and move to the challenging party (for reviews see Lewis-Beck and Stegmaier 2000; 2007). In either case, having observed how the economy has fared under the incumbent, some voters will stay with their prior electoral choice and some citizens will switch votes. What separates these two groups – the electoral ’switchers’ and the ’stayers’ – is how their economic perceptions evolved over the incumbent’s term: the ’switchers’ comprise the segment of voters that actually changed their economic perceptions from being satisfied with the incumbent to being unsatisfied or they other way around. They might change their prior voting decision, because changes in their economic assessments create an incentive to rethink prior behavior for that set of voters. The ’stayers’, on the other hand, are those voters whose perceptions remained largely stable; for them the economy creates no substantial reason to rethink behavior compared to the last election. Retrospective economic voting can thus be conceived as a theory of vote switching, in which the economy generates stimuli to rethink and possibly adjust prior voting behavior. The amount of voters moved by economic circumstances depends on how many voters actually update their perceptions. However, even if this segment of voters is considerably large (for example if the largest economic and financial crisis since World War II broke out during the last term), not all potential switchers are equally likely to switch votes. This paper asserts that voting (and thus vote switching) is a function of underlying utilities, of which economic perceptions are only one factor (Kayser and Wlezien 2011, Hellwig 2010). Policy- and valence factors, which are not directly related to the incumbent handling the economy, enter voters’ utilities as well and structure their party preferences (Van der Brug, Van der Eijk and Franklin 2007). Based on these factors some parties are more attractive than others and some parties are not attractive at all to a specific voter. From a standpoint of vote switching these differences in party preferences matter: for example a voter, who became dissatisfied with the economic record of the party she voted for at the last election, will consider switching votes – but do so only if the opposition party is regarded as attractive enough on all other factors that influence a voter’s utility. If no party other than the office-holding party is seen as equally or almost equally attractive, replacing an unsuccessful incumbent becomes less likely (or rewarding an successful incumbent in the mirror picture). Thus, even if the set of potential switchers is large, economic vote switching depends on the supply of attractive alternatives. In that sense, the set of actual switchers consists of voters who not only updated their economic perceptions but changed their overall evaluation of 1

the incumbent and the challenger in a way to make vote switching possible as well. In short, this paper proposes a model of electoral accountability which consists of three intertwined updates (Bartels 2002, Gerber and Green 1999): The first update relates to voters’ economic perceptions. Based on economic beliefs at the last election and new information received until the present election, voters might form different economic assessments. Some voters remain negative and others remain positive in their economic views. Some voters, however, might actually change their prior beliefs. If that is the case, they have an incentive to reconsider their previous vote decision. The second update refers to a voter’s preference structure. If the economy is causally important, voters whose economic perceptions changed are expected to re-adjust how they think about the competing parties. According to economic voting theory voters who became dissatisfied with economic circumstances update support for the incumbent negatively. Voters who are now satisfied should increase their support. The third update relates to changes in voting behavior. Even as voters adjusted their party preferences in line with economic voting theory, bias in party preferences might still prevent voters from switching votes (Van der Brug, Van der Eijk and Franklin 2007). For some voters the impact of the economy on their party preference structure might suffice to induce vote switching. Other voters, however, might refrain from switching votes, because other factors cause them to consider other parties not as attractive alternatives (Eggers 2014). Economic voting is thus a function of prior and changed economic perceptions as well as voters’ prior and updated party preferences. Thus, the research question of this paper is: Research Question How do voters reward or punish incumbent parties for economic changes given that they have preferences for parties? The theoretical and empirical strategy of this paper is to firstly analyze whether voters who change their economic assessment behave differently than voters whose perceptions remain stable (Sekhon N.d., Lenz 2012) Secondly, it aims to analyze how this process is moderated by voters’ party preferences. Empirically, this paper focuses on Great Britain’s General Election in 2010. This election is of particular interest: the Labour party started their third term in office in 2005, only to be confronted with the outbreak of the international financial and economic crisis three years later. As the international crisis deeply affected Britain’s economy, most voters should have observed the same ’real-world’ events – but how did they respond? Did voters actually adjust their economic perceptions? Which voters did not? Did those who updated their perceptions also adapt their preferences for the governing Labour party? How did the preferences for the challenging Conservative and Liberal Democratic party change? Finally, how many voters actually transformed their changed perceptions and changed party preferences into a shift in vote choice? Methodologically, this paper makes use of the British Election Panel Study collected in nine waves during 2005 and 2010 (Clarke et al. 2010). This data-set contains measures of voters’ economic perceptions, preferences, and vote choices before and after the fi-

2

nancial crisis. Panel data not only allow for a theoretically more interesting specification, they also allow to overcome methodological problems which are typically related to survey-research: reversed causality. In cross-sectional research the decision to change vote choice after economic perceptions have been altered is observationally equivalent to the decision to first change voting behavior (for whatever reason) and then adjust economic perceptions accordingly (Anderson, Mendes and Tverdova 2004, Bisgaard 2015, Evans and Andersen 2006, Evans and Pickup 2010, Heath et al. 2015, Lewis-Beck, Nadeau and Elias 2008, Wlezien, Franklin and Twiggs 1997). In order to overcome problems of observational equivalence, this paper uses the following three-wave statistical model: it analyzes whether changes in economic perceptions between 2005 and 2008 (after the crisis started) are related to later changes in party preferences and vote choice between 2008 and 2010. If prior changes in economic perceptions are statistically related to later changes in preferences and in voting, confounding effects of reversed causality are minimized (Lenz 2012). This paper makes several contributions: firstly, it offers a new perspective on economic voting centered on changes in perceptions, preferences, and choices between two elections. Economic voting as a model of vote switching is more directly related to what political competition is about – the number of voters lost or won by a party between two elections. Secondly, party preferences play a significant role in moderating the impact of voters’ perception changes on changes in voting behavior. Thereby, we get a better understanding of electoral accountability. If a large segment of voters refrains from punishing incumbent parties, because other parties are not viewed as attractive alternatives, the theoretical notion of electoral accountability might have to be re-thought. Thirdly, studying economic voting between two elections not only offers a new theoretical perspective on a highly disputed empirical phenomenon, it also has methodological advantages. Observational equivalence and endogenous preferences, which plague most survey research, are less critical within a framework of lagged dependent and independent variables. Furthermore, the proposed model of electoral accountability might be extended to account for cross-national differences in economic voting as the supply of attractive alternatives and the structure of party preferences might vary between countries (Anderson 2000; 2007, de Vries and Giger 2014, Dorussen and Palmer 2002, Duch and Stevenson 2008). Finally, this paper shows how the international financial and economic crisis affected voting behavior of the British population in 2010 (Bisgaard 2015, Wagner 2014).

2 2.1

Theory: Perceptions, Preferences, and Choices Economic Perceptions and Vote Switching

Retrospective economic voting is in its essence a model of vote switching. Changes or stability in voters’ economic perceptions are used to explain incentives to change voting behavior or to stay put between two elections. Think for example about two voters, both were satisfied with economic conditions at the last election and voted for the party now in government accordingly. 3

At the present election the first voter is still satisfied with economic circumstances. Keeping economic perceptions stable, no incentive exists to rethink prior voting behavior (i.e. stayer). The second voter, however, became dissatisfied with economic conditions having observed the incumbent’s term in office. According to economic voting theory such a perceptual change creates the electoral incentive to reconsider prior voting behavior. The second voter might thus switch her vote. Voters who change economic perceptions are thus expected to behave differently than voters whose perceived economic circumstances remained stable. From a standpoint of electoral accountability the second voter represents the ’electoral costs’ paid by political parties for economic downturns. It is also this segment of voters that creates the moral incentives for office-holding parties to not shirk political responsibilities (Duch and Stevenson 2008, Ferejohn 1986, Key 1966). The ’switchers’ are thus more closely related to the theoretical notion of electoral accountability than the segment of ’stayers’. But which voters will behave differently and how does the economy cause them to behave differently? Figure 1 depicts the evolution of economic perceptions, underlying party preferences, and voting decisions over Labour’s third term in office between 2005 and 2010. The model starts with the election in 2005, in which voters had to choose between Labour (then already in government), the Conservative party, and the Liberal party. Over Labour’s third term in office voters collect new information on how the economy is doing and possibly update their assessments (first update). Due to prior beliefs, individually perceived new information, and idiosyncratic updating rules voters re-evaluations are likely to differ (Bartels 2002, Gerber and Green 1999): Some voters – even after the financial and economic crisis – might think that Labour is still performing well. Other voters might have already thought that Labour has been doing a bad job even before the crisis broke out. These stable voter segments are shown in the first and third column of figure 1. The stability of their prior assessments possibly results from strong prior party preferences,2 rendering economic perceptions endogenous at least for this set of voters (Anderson, Mendes and Tverdova 2004, Bisgaard 2015, Evans and Andersen 2006, Evans and Pickup 2010, Lewis-Beck, Nadeau and Elias 2008, Wlezien, Franklin and Twiggs 1997). By either blocking contradicting new evidence or failing to include new information into the updating process, these biased information processors maintain perceptions in line with their prior party preferences (the theoretical underpinning is provided by Leeper and Slothuus 2014, Lodge and Taber 2005, Taber and Lodge 2006, Zaller 1992). Although the motivated reasoning of the ’always positive’ voters in midst of an economic crisis might be stronger than for the ’always negative’ set of voters, the implications for vote switching remain the same: both voters have no incentive to update their party preferences in a way that might cause them to switch votes at the next election. At least not compared to a third set of voters which actually change their initial values. These voters are shown in the middle of figure 1.3 For these voters a clear incentive to rethink their prior 2 ’Strong’ party preferences describe voters with large utility-differentials (i.e. for whatever reason, they clearly prefer one party over all the other parties). ’Prior’ refers to a timepoint before the crisis broke out, for example at the last election in 2005. 3 Figure 1 only shows voters with negative updates. Theoretically, some voters might update their economic perceptions in a positive way. However, because the 2010 General election was preceded by a large international

4

Figure 1: Voting-Decisions, Perception Updates, and Preference Reformation over Labour’s Term in Office (2005 to 2010) Behavior

VL,C,D

2005

Perception Stayed negative

Became negative

Stayed positive

updates 2005 - 2010

∆UL ≤ 0

∆UL < 0

∆UL ≥ 0

Preference

∆(UL − UC,D ) ≤ 0

∆(UL − UC,D ) < 0

∆(UL − UC,D ) ≥ 0

reforma-

(UL − UC,D ) > 0

tion 2010

(UL − UC,D ) < 0 (UL − UC,D ) < 0

(UL − UC,D ) > 0

VC,D

VC,D

VL

VL

Negative Stayer

Punisher

Refrainer

Positive Stayer

Behavior 2010

Note: This diagram shows changes in voting behavior in 2005 and 2010 for either the incumbent Labour party, or the challenging Conservative and Liberal Democratic party (indicated by V ). Underyling preferences and changes in these preferences for each party are indicated by U and ∆U respectively. Different types of electoral behaviour (’negative stayer’, ’punisher’, ’refrainer’, ’positive stayer’) are a function of changes in economic perceptions and how these changes affected the underlying preference structure of each voter. It only shows changes in perceptions, preferences, and behavior as expected by economic voting theories. Theoretically aberrant behavior (for example a voter who stays positive and increases support for Labour but still switches to the Conservatives) are not shown, because they contradict economic voting theory.

party preferences and their ultimate vote choice exists. Possibly this set of voters consists of moderately biased voters or voters who waver between two or more parties and thus do not have to avoid the psychological pressure of incongruent perceptions. Thus, depending on prior party preferences some voters will actually perform these updates and form the segment of potential vote switchers. For some voters, however, perception changes might be soaked up by partisan predisposition.4 The composition of these voter segments will be tested in hypothesis 1. financial and economic crisis, this group is highly unlikely to exist. Therefore, they are not shown in figure 1. This exclusion is justified by the empirical distribution of economic perceptions (see section 3.3.1.) 4 This has obvious macro-level implications: firstly, economic voting might vary across countries depending on the distribution of partisan attachment among the electorate. Highly polarized political systems, in which voters have strongly biased prior party preferences, are less likely to produce strong economic voting effects. Secondly,

5

Hypothesis 1 The stronger the prior party preferences, the less likely an update in economic perceptions. Economic perceptions are of course not the only factor that influences a party’s attractiveness to a voter and consequently her vote choice. Policy- and valence factors, not related to how the incumbent has handled economic affairs, affect voters’ party preferences (Van der Brug, Van der Eijk and Franklin 2007, Kayser and Wlezien 2011, Hellwig 2010). In line with most discrete choice models, I conceive voting and thus vote switching to be a two-stage process of underlying electoral utilities and observable behavior, whereby the latter is a function of the first (Downs 1957, Train 2009). These underlying utilities capture a voter’s preference regarding each party and combine all factors that affect the overall attractiveness of a party. Voting is then based on the behavioral rule that a voter chooses the party she prefers the most (e.g. VL > VC if UL > UC and VL > VD if UL > UD ). In order to have an effect on vote switching, economic changes have to affect the updating process of underlying preferences – at least regarding the incumbent party. This process of forming new preferences is shown in the third row of figure 1. Depending on how voters changed their economic perceptions, changes in utilities will differ: firstly, citizens whose perceptions stayed negative obviously have no reason to adjust their underlying feeling towards the incumbent Labour party in a positive light. Latent party evaluations should thus stay largely constant or deteriorate even further. The same reasoning applies to the ’always positive’ voters: if they are responsive to economic changes, only positive changes or no changes should be observed. Voters who actually re-valued their economic assessments are, however, expected to update their perceptions differently: if overall party attractiveness is substantially related to the economic performance of the incumbent, negative changes in these performance evaluations should alter the attractiveness of the incumbent. Furthermore, the underlying preferences regarding the two challenging parties should remain constant or even increase. In the case that all parties become less popular, which reflects a general movement against the political system, no vote switching between the three main British party should be expected. Hypothesis 2a Party preferences for the Labour party should remain constant or increase among those voters whose economic perceptions remained positive. Hypothesis 2b Party preferences for the Labour party should remain constant or decrease among those voters whose economic perceptions remained negative. Hypothesis 2c Party preferences for the Labour party should decrease among those voters whose economic perceptions became negative. Hypothesis 2d Party preferences for the Tories or LibDem should increase or remain constant among those voters whose economic perceptions became negative. the magnitude of economic shocks might be important as well: if the economy deteriorates so harshly, that even strong partisans rethink their prior assessments, more economic voting will be observed.

6

Even as the incumbent becomes less popular, the sanctioning feature of economic voting works only under one crucial assumption: that voters treat parties as substitutable goods. Parties are substitutes if no party-characteristic other than economic performance allows to discriminate between a set of parties. Consequently, most accounts of economic voting assume that voters entirely discount the policy-proposals or any other information of parties (Duch and Stevenson 2008, 11). ”Voters respond only to the performance of a candidate in office and do not pay attention whatsoever to the promises of the challenger or, for that matter, to the promises of the incumbent. All that counts for a voter here is how well he fares under a given administration” (Ferejohn 1986, 8). If voters discount all other information regarding parties, parties are indeed substitutes and substitutable parties are readily replaced if one party fails to deliver the desired economic outcome. Yet many voters do not view parties as substitutable goods. Many voters have varying party preferences and hence support some parties more than others. The structure of these party preferences become of crucial importance if economic voting is conceived as vote switching, because economic changes will translate into vote switching only if other parties are seen as at least equally attractive. That is, economic changes not only have to affect the utility drawn from each party, but reverse the utility-differential between Labour and each of the challenging parties to alter the relative ranking of the competing parties (i.e ∆(UL − UC ) and ∆(UL − UD ) given the behavioral rule that the highest ranked party is chosen). If vote switching is a function of prior and changed economic perceptions and party preferences, voters are more likely to change their utility-ranking if (1) the effect of the economy on utilities is large (δUL ) and (2) if prior preferences have already been almost tied between two voters, so even small changes in economic perceptions can have an impact on voting. These constraints are shown in the final panel of figure 1. To make this point clearer, figure 2 shows voters’ underlying preferences for the three main British parties. In order to locate voters’ preferences in a two-dimensional space the preferences for the Liberal Democratic party are normalized to zero (UD = 0). Voters are thus characterized in terms of their preferences for Labour (vertical axis) and the Tories (horizontal axis).5 Voters who rank Labour the highest (and are thus assumed to vote for Labour) are located within the light grey area, with different rankings of the second and third alternative. Voters in the dark grey area rank the Liberal Democrats highest. Again the preference ordering of Labour and the Tories vary depending on a voter’s location in that area. Finally, the white area locates voters who value the Conservatives the most. Vertical shifts represent negative or positive changes in supporting Labour. Voters who thereby cross one of the indifference lines are assumed to switch votes. Four different voters are depicted, depending on how their economic perceptions changed the underlying preferences for the Labour party.6 The ’positive stayer’ most clearly has 5 I am very thankful to an article by Andrew Eggers, Nick Vivyan, and Markus Wagner for providing a simple way to illustrate that complex relationship. 6 For ease of presentation I assume that the underlying preferences for the challenging parties remain constant, which results in a vertical shift of a voter’s location. If voters additionally update their preferences for one of the challenging parties, a voter’s location would move downwards and to the left. In that case the amount of voters that actually change votes would be higher.

7

Figure 2: Voting-Decisions in a Three-Party System Depending on Underlying Preferences and Economic Changes (2005 to 2010) UL Positive Stayer

UL > UC > UD

UL = UC

UL > UD > UC Punisher Refrainer UL = UD

UC > UL > UD UC

UD > UL > UC

UC > UD > UL

Negative Stayer

UD > UC > UL

UD = UC Note: UD normalized to zero to characterize voters’ locations in a UL −UC space. Voters in the dark grey area rank D highest, voters in the light grey area rank L the highest, and voters in the white area prefer C the most. Voters pick the highest ranked alternative. The dotted line indicates equal utility between L and C (indifference) and thus segments the space into six areas with different rankings of the second and third alternative. Four forms of electoral behavior are shown: the ’positive stayer’, the ’negative stayer’, the ’punisher’, and the ’refrainer’. The vertical shift indicates the in-/decrease in feeling for L due to the economic crisis (assuming UC and UD remain constant). Source: adapted from Eggers, Vivyan and Wagner (N.d.)

no incentive to switch votes. This voter type corresponds to a voter whose economic perceptions remained positive and who in turn increased her support for Labour. The same reasoning applies to the ’negative stayer’ who will vote against Labour in both elections. The most interesting group consists of voters whose economic perceptions decreased in a similar way. Despite that similarity the electoral consequences for these two voters are different depending on their prior and changed party preference structure. The ’punisher’ is a voter who initially supported two parties; one of which is the incumbent, the second party is one of the challenging parties. Here the Conservatives and the Labour party are (almost) equally attractive alternatives. In 2005 8

this voter picked Labour; the changes in economic perceptions and consequently the changes in support for Labour, however, cause to voter to rethink her choice in 2010. At this election this voter punishes the incumbent Labour party by switching to the challenging Conservatives.7 The ’refrainer’, on the other hand, might be equally dissatisfied with how Labour has been handling economic conditions, but the change in preferences for Labour did not suffice to overcome other factors that bias vote choice in favor of Labour. Because such a voter does not view other parties as attractive alternatives, the voter refrains from punishing the governing Labour party. The bias in her preferences structure in favor of Labour constraints the impact of economic changes on vote switching. Hypothesis 3a Voters are less likely to switch votes from Labour if economic perceptions remained stable (the ’positive stayers’) than voters whose perceptions became negative. Hypothesis 3b Voters are more likely to switch votes from Labour if economic perceptions became negative and the utility differential in 2010 is small (the ’punisher’) compared to voters whose utility-differential in 2010 is large (the ’refrainer’).

3

Research Design

3.1

Vote-Switching, Panel Data, and Causality Problems

The proposed model requires information regarding prior and current values of dependent (party preferences and vote choice) and independent variables (economic perceptions). To account for that more complex model setup, panel data are a necessary requirement. Furthermore, panel data have the additional advantage of overcoming two methodological problems which typically plague cross-sectional survey data: (1) ’Common cause’ confounding effects due to biased perceptions and (2) problems related to reverse causality (Gerring 2012, 295). As already discussed, citizens with strong partisan attachment might be biased information processors and arrive at economic perceptions in line with previous party preferences. However, within the framework of vote switching these voters are explicitly discerned from voters who actually change their perceptions. Because different expectations for both groups exists and these two groups are not used to explain the same outcome category (switch or stay), the bias in economic perceptions in the first group does not influence the estimate of the effect in the second group. The second methodological problem is related to observational equivalence: The statistical association established in cross-sectional research does not reveal whether economic conditions 7 This pairing was chosen arbitrarily; a voter who regards Labour and LibDem as attractive alternatives would be located somewhere along the negative range of the horizontal axis. Whether the incumbent party looses voters to only one of the opposition parties or both opposition parties, depends on the empirical distribution of voters in these segments around the indifference line. The pattern of economic vote switching thus resembles the overall pattern of party competition. Regarding the British party system movement from Labour to LibDem might be more realistic than to the Conservatives (Alvarez and Nagler 2000).

9

affected a respondent’s vote choice or whether a respondent actually decided to vote for a specific party on other grounds and then simply adjusted her economic conditions for consistency needs. In the latter case survey analysis reveals more about respondents’ consistency within a survey, than about the causal ordering expected in economic voting theories (Evans and Andersen 2006, Evans and Pickup 2010). In order to reduce possible influences of reverse causality, an additional panel wave is introduced. Specifically, the following statistical model tests whether changes in economic perceptions between the first and the second wave affect changes in the dependent variable between the second and third wave (Lenz 2012). Instead of using variables from the same wave, which possibly suffer from reverse causation, latter values of some variables are predicted based on earlier values of a different variable. Hypotheses 2a-d and 3a-b differ regarding the dependent variable; the underlying generic statistical model is, however, the same (further specifications will be discussed later):8 Yt = δx,t2−t1 (Xt−1 − Xt−2 ) + βx,t−2 Xt−2 + δy,t2−t1 (Yt−1 − Yt−2 ) + βy,t−2 Yt−2 + t

(1)

In both cases, the model contains only two variables (controls not shown), although measured at three points in time. Time-point t corresponds to the 2010 General election, t − 2 refers to the 2005 General election, and t − 1 is taken from the 2008 panel wave (see below). The dependent variable is measured at time t and is regressed on the prior values of the dependent variable (Yt−2 ) and the prior value of the independent variable (Xt−2 ). Thereby, a conditional change model is obtained and the estimated coefficients reveal the stability in voters’ behavior and assessments (Finkel 1995). To model the influence of the economy, the prior change of the independent variable (Xt−1 − Xt−2 ) is included in the model (i.e. the ’stayed positive’, ’stayed negative’, and ’became negative’ groups from figure 1). In order to assure that the changes in Y , which are attributed to changes in X between t − 2 and t − 1, did not actually happen before t − 1 (for whatever reason), the lagged change in the dependent variables (Yt−1 − Yt−2 ) are included. Thereby, the model becomes a model of change in the dependent variable between wave II and wave III depending on changes of the dependent and independent variables between wave I and wave II and their prior values at wave I. The coefficient of interest is δx,t2−t1 , because it reflects how economic changes affect vote switching and should thus be different from zero.

3.2 3.2.1

The British Election Study Panel Survey Time of Measurement

The model outlined above differentiates between three types of variables: (1) the prior level measured at wave I, (2) the prior change measured as the difference between wave II and wave I, (3) and the actual value of the dependent variable measured at wave III. All explaining variables are measured at wave I (prior values) and at wave II and I (prior changes). Regarding the explaining 8 Hypothesis

1 uses only two panel waves.

10

variables I distinguish between independent and control variables.9 Only the dependent variable is additionally measured at wave III. Table 1 gives an overview of the time of measurement of each variable. The BES-panel survey consists of nine panel waves: three of them collected before, during, and after the election campaign of the 2005 general election; three collected between the 2005 and 2010 general election (in 2006, 2008, and 2009); and three conducted before, during, and after the 2010 general election campaign. All prior levels-variables are taken from the ’Post 2005’-panel wave. They provide the baseline for assessing the impact of changing perceptions on vote choice (or party preferences). To avoid confusion: I use the third wave of the BES-panel survey as my first wave. Thus, whenever I refer to wave I the ’Post 2005’ wave of the BES-survey is meant, because I use this as my starting wave. Using the ’Post 2005’-panel wave as wave I (baseline) seems preferable because this wave reflects how citizens thought about Labour at the moment the Labour party started its government term. The prior change-variables measure the difference between the ’Post 2005’-wave and the ’2008’ panel wave. Thus, I use the fifth BESpanel wave as my second panel-wave. Prior changes are measured for the dependent variable, the independent variables, and the control variables. Specifying the correct lag-structure is a difficult task in panel-models, as one could alternatively use the ’2006’, ’2009’ , ’Pre 2010’ or the ’Cam 2010’-waves as wave II. The ’2008’-wave seems preferable for two reasons: Firstly, the model is interested in how the impact of the financial crisis changed voters’ economic performance assessment between wave I and wave II. Thus, the ’2006’-wave might be too early to detect the influence of economic changes which became visible during 2008. Secondly, the model is interested in how changes in economic assessments between wave I and II later affect changes in vote choice between wave II and III. If voters already adjusted their vote choice between wave I and wave II, because wave II is set too close to the election, no variation between wave II and wave III is left to explain. This might however be the case if we use the ’2009’, ’Pre 2010’ or ’Campaign 2010’-wave as wave II. Using the ’2008’ wave as wave II seems thus as the optimal choice, because voters might then already have had adjusted their economic perceptions but not their vote choice. Finally, I use the ’Post 2010’-panel wave to measure the dependent variable’s current level. Thus, the ninth BES-panel wave is my third panel wave.

3.3 3.3.1

Variable Coding and Description Dependent and Independent Variables

The proposed model of electoral behavior is interested at three different processes: (1) How do voters update their initial economic assessments (hypothesis 1), (2) how are economic changes affecting voters’ preferences for each party and related utility-differentials (hypotheses 2a-d), and (3) how are these changes finally linked to adaptions of voting behavior (hypotheses 3a-b). Every process step includes lagged dependent variables and some variables are re-used as independent variables at later stages of the model. Therefore, I discuss coding and distribution of these three 9 Control variables are not shown in Equation (1) but are also included in the model as prior value and prior change.

11

Table 1: Overview of Panel Waves and Variables Used in the Models Variable of interest Dependent variable Actual BES-Panel Wave

level

Independent

Control

variable

variable

b

Prior

Prior c

level

change

Prior

Prior

Prior

Prior

level

change

level

change

(1) Pre 2005

(X)

d

(2) Campaign 2005 (3) Post 2005 (wave I)a

X

X

X

(4) 2006 (5) 2008 (wave II) (6) 2009

X

X

X

(7) Pre 2010 (8) Campaign 2010 (9) Post 2010 (wave III)

X

a

For better readability I refer to the ’post 2005’-wave as wave I, ’2008’ as wave II and ’post 2010’ as wave III. b The following models use three different types of dependent variables: (1) vote choice, (2) feeling towards an individual party, (3) feeling for the Conservative (Liberal Democratic) party relative to the Labour party. All types of dependent variable are measured at wave ’post 2010’. c All prior change-variables measure the difference between the values of wave ’2008’ and wave ’Post 2005’. Thus, they are in italics. d Party-identification is the only variable measured at the ’pre 2005’ wave due to an survey experiment in the BES-panel study. All other variables are measured after the 2005 election.

variables together. Economic changes: Economic perceptions are measured using the following question from the BES Panel: ’How well do you think the present government has handled the economy in general?’ with five answer categories ranging from ’very well’ to ’very bad’. Unlike the ’standard’ wording of economic perception, this wording explicitly links economic outputs to the governing party. On theoretical grounds this seems preferable, since the concept of economic voting directly relates the government’s actions and efforts while in office with voters’ decision-making (Lewis-Beck 1988, 35-37). For example, some voters might think economic circumstances are deteriorating, but that Labour – given present circumstances – is handling it very well and without its efforts the economic downturn would be even worse. Thus, this question wording might reveal some effects of the economy, that are not observable using the ’standard question’. Table 2 shows the distribution of economic perceptions in wave I and wave II. As can be seen from the marginal frequencies, many British voters revalued their initial economic perceptions into a negative direction. In 2005 almost 60% of respondents chose one of the positive categories (’good’ or 12

’very good’), whereas less than 20% were dissatisfied with Labour’s economic handling (’bad’ or ’very bad’). This distribution changed drastically after the financial and economic crisis became visible in Great Britain. In 2008 more than 60% are located in one of the negative categories and only about 20% remain in the positive categories. The joint frequencies in table 2 are used to create a new variable which indicates whether a voter switched categories between 2005 and 2008 (shown at the bottom of table 2). 1. Remained negative: Voters in the categories ’very bad’, ’bad’, or ’neither’ in 2005 and 2008 are recoded into a new category ’remained negative’. In both elections no incentives exist to vote for Labour. As expected, almost no movement from a ’negative’ category in 2005 to a ’positive’ category in 2008 is observed. If possible, voters shifted their already negative assessments even more into the negative direction. Therefore, the mode of all ’negative’ sub-categories in 2005 is the ’very bad’ category in 2008. 2. Remained positive: Voters in categories ’good’ and ’very good’ in 2005 and 2008 create the new category ’remained positive’. This group possibly consists of highly supportive Labour voters who are unlikely to reconsider prior preferences and choices – although some voters decreased their evaluations a little bit downward. Additionally, the few voters that move from ’very bad’, ’bad’, or ’neither’ to ’good’ or ’very good’ are included into that group. This two groups are combined because the same incentive to vote for Labour exists. Given the small size of the second group (n=34) there are unlikely to increase heterogeneity within the group of ’remained positive’. 3. Became negative: Voters who move from ’good’ or ’very good’ in 2005 to ’very bad’, ’bad’, or ’neither’ in 2008 are considered as ’became negative’. This is a considerable large group, in which 75% changed their perceptions by at least two scale points. The statistical model referred to above is designed to reduce confounding effects of reversed causality (Lenz 2012). All explaining variables are measured two years before the General Election in 2010. Consequently, if economic perceptions further change between wave II and wave III, the effect of these perceptions is either under- or overestimated. As figure 3 shows this has not been the case: aggregate evaluations remained very stable between wave II and wave III (middle and right dashed lines). The main and drastic change occurred between wave I and wave II. After Lehman Brothers and Northern Rock Bank have collapsed in early 2008 and Britain’s economic performance plunged, the percentage of satisfied voters dropped from almost 60% to about 20%. Having however updated their perceptions between 2005 and 2008 most British voters did not further adapt their economic perceptions until 2010 – neither positively nor negatively. Party utilities and utility-differentials: Voters’ party preferences are measured using feeling scores regarding each of the three main British parties. Respondents were asked: ’On a scale that runs from 0 to 10, where 0 means strongly dislike and 10 means strongly like, how do you feel about the ... Party?’ Prior changes indicating a shift wave I and II are obtained by subtracting the feeling-scores from wave II and wave I. This variable ranges from -10 to 10, where 10 means a 13

Table 2: Overview of Economic Perceptions in 2005 and 2008 In 2005: Economic perceptionsa

In 2008: Economic perceptions very bad bad neither good very good Total

very bad

bad

neither

good

very good

Total

190

316

366

265

51

1,188

90.05

65.02

41.17

19.02

6.68

31.75

17

139

343

428

119

1,046

8.06

28.6

38.58

30.73

15.60

27.95

3

29

149

356

144

681

1.42

5.97

16.76

25.56

18.87

18.20

1

2

27

326

339

695

0.47 0

0.41 0

3.04 4

23.40 18

44.43 110

18.57 132

0.00

0.00

0.45

1.29

14.42

3.53

211

486

889

1,393

763

3,742

5.64

12.99

23.76

37.23

20.39

100

Changes between 2005 and 2008 Remained Positive:

827

22.10

Remained Negative:

1,552

41.48

Became Negative:

1,363

36.42

Source: BES-Survey Panel a

Vertical and horizontal lines indicate the separation rule.

respondent totally favors a party in wave II which she completely disliked in wave I. Generally, a positive value indicates that the feeling towards that party increased between wave II and wave I, a negative value points to a decrease in attractiveness. Capturing a voter’s preference structure is more difficult, because it has to include the structure of voters’ preferences (i.e. where Labour ranks relative to the other two parties) but also the intensity of that structure (i.e. how much more or less Labour is preferred relative to the Tories and LibDem). For all three waves the following measures is constructed: Based on the feelings scores of all parties it is first established where Labour ranks among the three alternatives (first, second, or third highest score). If Labour is ranked first, the difference to the second ranked party is calculated; if Labour is ranked second or third, the difference to the first ranked party is used. The advantage of this coding is that this variable simultaneously contains information regarding the ranking and the difference between the alternatives. By definition positive values are only possible if Labour is ranked first (i.e. UL > Usecond ) and negative values are only obtained if Labour is ranked second or third (i.e. UL < Uf irst ). If Labour is tied with another party at first place, the variable is by construction 0. Additionally, values between -10 (=fully biased against Labour) and -1 (=Labour is almost the

14

100

Figure 3: Changes in Assessment of How Labour Has Handling the Economy Over the Electoral Cycle

% of Respondents 40 60

80

very bad - bad

20

neither

0

very good - good

2005

2006

2007

2008

2009

2010

Year

Source: BES Panel Survey Note: Aggregate distribution of voters’ perception of ’how Labour is handling the economy?’. Answer categories ’very bad’ (very well) and ’bad’ (well) taken together. The area below each line indicates the percentage of voters in each category. The black dashed lines point to the three panel waves: after the 2005 election, during the two elections (2008) and after the 2010 election.

highest ranked party) and values between 10 (=fully biased in favor of Labour) and 1 (=voter is almost tied) refer to the strength of voters’ preference structures. 3.3.2

Control Variables

Changes in economic perceptions are not the only source of switching votes or changing preferences. Therefore, individual-level factors with the possibility to vary between two elections have to be controlled for. The inclusion of controls follows the same logic for overcoming reverse causality and thus prior levels and prior changes of each variable are included. Because the following models use different covariates, I just broadly discuss them here (details in the appendix). Four types of variables are included: 1. Spatial Components: Voters might shift their ideological position between two elections – especially in the aftermath of a large economic crisis. I thus control for the prior level and prior change of respondents tax-spending-position.10 Changes are again captured by subtracting wave II from wave I. Ranging from -10 to 10 a positive (negative) value relates to a shift to the right (left) on the tax-spending scale. Additionally, for each respondent the squared distance to each of the three parties’ position and the difference between wave 10 Scale

inversed: 0 means ’raise taxes and spend much more’ indicating a far left position.

15

II and wave I are calculated. For prior changes a value of zero means no change in the distance between two waves; a positive values indicates an increase in distance; a negative value indicates a voter who moved closer to this party (’the distance decreased’). 2. Affective Components: I control for prior party identification (0 = identifies with Labour party, 1 = identifies with Conservative party, 2 = identifies with LibDem, 3 = identifies with other or no party) and its change between wave I and wave II. Due to its categorical nature the change variable takes on five values: 0 = stayed with party from wave 111 , 1 = moved away from Labour party, 2 = moved away from Conservative party, 3 = moved away from LibDem, 4 = moved away from one of the other parties or from being a non-identifier. 3. Performance Components: Performance-related aspects other than the economy might influence vote-switching as well. Thus, I control for perceptions of how well Labour handled (1) the NHS and (2) the crime-situation in Britain (’How well do you think the present government has handled the ...’). Coding procedure was the same as for the economic perception variable. 4. Voter characteristics: Because adaption processes depend on available information, I control for political information (5-point scale) and political attention (4-point scale). Additionally, I control for satisfaction with democracy.

11 Used

as reference category in all regression models.

16

4

Empirical Results

4.1

Update 1: How the Economy has Changed

Electoral accountability unfolds as a three-step process: Firstly, voters adjust their prior perceptions of economic conditions. These adaptions give voters different incentives to further update their underlying preferences and ultimately their prior vote choice. To proceed further, I develop and test a multivariate model of the first updating process that generates voters’ stimuli to further adjust their preferences and behavior. Table 2 showed that a considerable amount of voters remained at their initial positive or negative evaluations. Their reluctance to update prior perceptions is possibly related to strong prior party preferences. Therefore, citizens in the ’remained positive’ category are likely to have strongly biased preferences in favor of Labour. Regarding citizens who ’remained negative’ the biased updating works differently: Given that they already have been in a negative category and the largest economic crisis since World War II broke out, no real reason to update their perceptions positively exist – regardless of preferences for Labour. Strong prior party preferences, however, might account for why they chose the negative category in 2005, when most voters had a rather positive image of Labour’s handling capacities. Finally, a large segment of voters actually ’became negative’. This voter segment is possibly composed of independent or mildly biased voters, whose preferences are less likely to bias updating processes. Table 3 shows a multinomial logit model in which category changes between 2005 and 2008 are conditional on party preferences, affective and spatial components, and voters’ available information and interest. Several other factors explain why some voters remain stable and other voters did change their perceptions. The variable of main interest is, however, the utility differential between Labour and the other two main parties of Great Britain’s political system (UL − UC,D ). Measured after the General Election in 2005, this variable is based on (1) Labour’s rank among all three parties and (2) depending on that rank the utility-differential to the second (if Labour is ranked first) or the first ranked party (if Labour is ranked second or third; see section 3.3.1).12 Due to the complex nature of that variable and functional form of the statistical model, interpretation is difficult. Figure 4 plots predicted probabilities of staying in the prior ’negative’ or ’positive’ category or updating prior assessments into a negative direction conditional on voters’ utility differential. By construction values greater than zero are only possible for voters who rank Labour first. Negative values are only possible if Labour is ranked second or third. A value of zero is obtained only if a voter has a tied preference structure between Labour and the Tories or LibDem. These preference orderings and differences have a substantial effect of who updates preferences and who selects which category in the first place: The probability of ’staying positive’ is very high among strong Labour supporters and decreases constantly as preferences for Labour became more negative. This results is mirrored by the probability of ’staying negative’, which is very likely among strong supporters of opposition parties. As hypothezied, the probability of ’becaming negative’ is most likely among citizens moderately biased in favor of Labour and 12 No

current values are used due to reverse causality concerns.

17

decreases among strong Labour supporters. Figure 4 thus shows strong support for hypothesis 1. Table 3: Multinomial Regression Results: Hypothesis 1 Reference: Stayed Positive Economic Perceptions

UL − UC,D in 2005

Stayed Negative

Became Negative

-0.349∗∗∗ (0.02)

-0.092∗∗∗ (0.02)

Party-Id in 2005: Labour

Reference: Labour ∗∗∗

Party-Id in 2005: Opposition

0.861

(0.17)

0.599∗∗∗ (0.14)

Party-Id in 2005: None

0.871∗∗∗ (0.19)

0.461∗∗ (0.17)

Ideology in 2005

0.316

(0.03)

0.147∗∗∗ (0.02)

Satisfaction with Democracy in 2005

-0.683∗∗∗ (0.08)

-0.210∗∗ (0.07)

Political Attention in 2005

-0.173∗∗∗ (0.05)

-0.029 (0.04)

∗∗

(0.12)

-0.335∗∗∗ (0.10)

∗∗∗

(0.28)

1.129

Political Interest in 2005

-0.375

Constant

1.060

N Adjusted R

3434 2

0.268

AIC

1.617

ePCP

50.06%

Log Likelihood t statistics in parentheses:∗ p < 0.05,

4.2

∗∗∗

-2746.076 ∗∗

p < 0.01,

∗∗∗

p < 0.001

Update 2: How Electoral Utilities have Changed

Prior preferences influence how voters’ economic perceptions change or not change – but how do economic perception changes influence voters’ preference updates? As hypothesized, voters whose economic perceptions remained positive have no real incentive to decrease their preferences for Labour. Given the severity of the international financial and economic crisis, some might even increase their prior preference for Labour and reward the government’s impact on fighting the crisis. Similarly, voters whose perceptions remained negative have no reason to improve how they think about Labour – more likely they will further decrease their prior preference for Labour. Within that group we might, however, observe an increase in support for one of the opposition parties, as economic circumstances might just confirm what they already thought about their most preferred party. Finally, if economic voting is to work as a mechanism of electoral accountability, the segment which became negative, should decrease the support for Labour. This updating thus produces the stimuli to finally adjust voting behavior in 2010. Table 4 shows results from a linear regression for changes in feeling for Labour (model 1 ), for 18

Figure 4: Predicted Probabilities for Changes in Economic Perceptions Staying Negative

-10

-8

-6

-4

-2

0

2

4

6

8

14 12 10 8 6 4

Percent of Respondents

.6 .4

Probability of Staying Negative

2

10

0

0

0

0

2

.2

8 6 4

Percent of Respondents

10

.6 .4 .2

Probability of Staying Positive

12

14

.8

.8

Staying Positive

-10

-8

-6

-4

-2

Utility Differential (2005)

0

2

4

6

8

10

Utility Differential (2005)

10 8 6 4

Percent of Respondents

.6 .4

0

0

2

.2

Probability of Becoming Negative

12

14

.8

Becoming Negative

-10

-8

-6

-4

-2

0

2

4

6

8

10

Utility Differential (2005)

Source: Own calculations based on table 3. Note: Predicted probabilities of staying in prior category or moving into negative category conditional on prior utilitydifferential between Labour and Tories. Covariates at observed values (Hanmer and Kalkan 2013)

Tories (model 2), and for LibDem (model 3) between 2008 and 2010 conditional on changes in economic perceptions between 2005 and 2008. The main advantage of this model-setup is that it cannot get the causal mechanism backwards, because prior changes predict future changes. This model is also a highly conservative test: all models include prior values and – more importantly – prior changes in the dependent variable (i.e. the feeling scores) as well. Because the model is interested in whether changes between wave I and wave II in the independent variable affect changes between wave II and wave III in the dependent variable, it has to block changes in the dependent variable that might have already happened between wave I and wave II. However, prior changes in the dependent and independent variables are formed and measured simultaneously at wave II. Unlike economic perceptions which remained largely stable (see figure 3), party preferences for Labour were at an all time low in 2008 (wave II) and then increased slowly but steadily until 2010. Overall, preferences for Labour in 2010 are still much lower than preferences have been in 2005 – they are, however, higher than they were in 2008. Because wave II – collected 19

in midst of the financial crisis – is used as baseline for later changes in the dependent variable and respondents decreased their preferences for Labour so forcefully between wave I and wave II, the model makes it more difficult for respondents to further decrease between wave II and wave III. The main drawback (or the conservative bias) of this model thus is that in order to block changes in the dependent variable that might have happened before the economic crisis broke out, it also blocks changes in the dependent variable that happened simultaneously with the economic crisis.13 Despite that conservative bias table 4 tells a consistent story: negative changes in economic perceptions reduce later changes in feeling for Labour (∆UL ) by about half a scaling point (on a 10 point scale) compared to voters who stayed in the positive category. Between voters who stayed in the positive category and voters who stayed in the negative category a weak negative effect can be found. Given that these two groups already start a different feeling values for Labour, the international financial crisis did not further separate that group between 2008 and 2010. Regarding the opposition parties only the Conservative party profits from changes in economic perceptions. Voters who became negative increase they support – although by only a small magnitude. Additionally, voters whose perceptions remained negative increase their support even further. No statistically reliable effect is found for the Liberal Democrats, whose support seems not related to economic perception changes. Table 5 additionally shows how the simple difference between Labour and Tories (model 1) and Labour and LibDem (model 2) is affected by economic circumstances. The coefficients of this model are mainly a function of the coefficients presented in table 4. However, it does reveal that voters do not decrease support for two parties in a similar direction. Voters who decrease support for Labour thus increase or at least keep constant support for the Conservatives or Liberal Democrats.

4.3

Update 3: How Voting has Changed

The final update refers to voting behavior a the General Election in 2010. Two group comparisons are of particular interest: Firstly, do voters whose perceptions turned negative behave differently (i.e. switch votes away from the incumbent) than voters whose prior economic perceptions were not altered by the financial and economic crisis. Secondly, how is this process of switching votes mediated by voters’ party preferences. Two voter segments were distinguished based on theoretical reasoning: (1) voters who actually punish the incumbent as a function of negative changes in economic perceptions and moderately biased preference structure and (2) voters who refrain from punishing despite their economic perceptions are now negative. This second group might behave different from the first group, because they regard no other party as attractive alternative – even at the expense of voting for a party with which they are unsatisfied. 13 A four-wave panel model would possibly overcome this problem by measuring (1) prior changes in the dependent variable between wave I and wave II (2006), (2) prior changes in the independent variable between wave I and wave III (2008), and (3) later changes in the dependent variable between wave III and wave IV (2010). The BES-Panel Study contains enough waves for such a model; however, the 2006 wave might have been collected too early to block all unrelated changes in the dependent variable. Additionally, it heavily limits the empirical scope

20

Table 4: Linear Regression Results: Hypothesis 2a-2d Changes between 2008 and 2010 in ∆UL

∆UC

UL in 2005

0.707∗∗∗ (0.02)

∆UL

0.487∗∗∗ (0.02)

UC 2005

0.852∗∗∗ (0.02)

∆UC

0.505∗∗∗ (0.02)

∆UD

UC 2005

0.673∗∗∗ (0.02)

∆UC

0.343∗∗∗ (0.02)

Economy in 2005 ∆ Economy: Stayed Positive

0.117 (0.07) 0.015 (0.07) 0.070 (0.08) Reference: Stayed Positive

∆ Economy: Stayed Negative

-0.248 (0.17) ∗∗∗

0.381∗ (0.19) ∗

0.004 (0.20)

∆ Economy: Became Negative

-0.403

(0.11)

0.267 (0.12)

0.086 (0.13)

Ideology 2005

-0.101∗∗∗ (0.02)

0.032 (0.02)

-0.012 (0.02)

∆ Ideology

-0.061∗∗ (0.02)

0.039 (0.02)

-0.008 (0.03)

Party-Id 2005: Labour

Reference: Labour

Party-Id 2005: Tory

-0.851

∗∗∗

(0.14)

0.662∗∗∗ (0.17)

0.225 (0.15)

Party-Id 2005: Dem

-0.314∗ (0.15)

0.466∗∗ (0.17)

1.003∗∗∗ (0.19)

Party-Id 2005: None

-0.423∗∗∗ (0.13)

0.169 (0.14)

0.241 (0.15)

∆ Party-Id: Stayed

Reference: Stayed with Party ∗∗

∆ Party-Id: Labour

-0.474

(0.15)

0.451∗ (0.18)

-0.051 (0.19)

∆ Party-Id: Tory

-0.238 (0.21)

-0.848∗∗∗ (0.24)

-0.318 (0.26)

∆ Party-Id: Dem

-0.006 (0.20)

0.083 (0.23)

-0.587∗ (0.25)

∆ Party-Id: None

0.089 (0.18)

0.354 (0.21)

0.223 (0.23)

NHS in 2005

0.096 (0.06)

-0.096 (0.06)

0.063 (0.07)

∆ NHS : Stayed Positive

Reference: Stayed Positive

∆ NHS : Stayed Negative ∆ NHS : Became Negative

-0.118 (0.13)

-0.096 (0.15)

-0.059 (0.16)

∗

0.067 (0.14)

-0.119 (0.15)

-0.314 (0.12) ∗∗∗

Satisfaction 2005

0.195

(0.06)

0.065 (0.06)

0.098 (0.07)

∆ Satisfaction

0.169∗∗∗ (0.05)

-0.068 (0.06)

0.026 (0.06)

Attention 2005

0.032 (0.02)

-0.020 (0.02)

0.010 (0.02)

∆ Attention Constant

0.014 (0.02)

0.032 (0.03)

0.042 (0.03)

1.900∗∗∗ (0.27)

0.083 (0.26)

1.630∗∗∗ (0.31)

2154

1810

1776

0.748

0.737

0.452

N R

2

Standard errors in parentheses:

∗

p < 0.05,

∗∗

p < 0.01,

All changes (∆) in covariates between 2005 and 2008.

21

∗∗∗

p < 0.001

Table 5: Linear Regression Results: Hypothesis 2a-2d Changes between 2008 and 2010 in UL − UC

UL − UD

UL − UC 2005

0.897∗∗∗ (0.02)

∆UL − UC

0.593∗∗∗ (0.02)

UL − UD 2005

0.678∗∗∗ (0.02)

∆UL − UD

0.433∗∗∗ (0.02)

Economy in 2005

-0.002 (0.11)

∆ Economy: Stayed Positive

0.018 (0.10)

Reference: Stayed Positive

∆ Economy: Stayed Negative

0.518 (0.29)

0.559∗ (0.25)

∆ Economy: Became Negative

0.387∗ (0.18)

0.538∗∗∗ (0.16)

Ideology 2005

0.109∗∗ (0.04)

0.112∗∗∗ (0.03)

0.045 (0.04)

0.065 (0.03)

∆ Ideology Party-Id 2005: Labour

Reference: Labour ∗∗∗

Party-Id 2005: Tory

1.108

(0.29)

0.624∗ (0.27)

Party-Id 2005: Dem

1.560∗∗∗ (0.26)

∗

Party-Id 2005: None

1.000∗∗∗ (0.19)

0.485 (0.22)

∆ Party-Id: Stayed

1.435∗∗∗ (0.20)

Reference: Stayed with Party

∆ Party-Id: Labour

0.831∗∗ (0.28)

0.586∗ (0.24)

∆ Party-Id: Tory

-1.011∗∗ (0.37)

-0.660∗ (0.32)

∆ Party-Id: Dem

0.153 (0.36)

-0.226 (0.31)

∆ Party-Id: None

0.147 (0.33)

0.061 (0.29)

∗∗∗

-1.245∗∗∗ (0.23)

Constant

-1.577

N

1834

2

R

Standard errors in parentheses:

(0.30)

1793

0.800 ∗

p < 0.05,

∗∗

p < 0.01,

All changes (∆) in covariates between 2005 and 2008.

22

0.600 ∗∗∗

p < 0.001

Table 6: Bivariate Results: Hypothesis 3a Voted For Labour in 2005

Vote for Labour in 2010 Vote for Opposition in 2010 Total

Stayed Positive

Became Negative

Total

236

128

378

76.38

51.41

63.11

73

121

221

23.62

48.49

36.89

309

249

599

Note: Voting Decisions in 2010 conditional on changes in economic perceptions between 2005 and 2008 among those voters who voted for Labour in 2005. Those voters who choose an opposition party in 2010 are thus vote switchers. ’Stayed negative’ is not shown because it consists of only 41 voters.

Table 6 shows differences between voters whose perceptions remained positive and citizens whose perceptions turned negative. To make vote switching visible, the sample has been restricted to those respondents that voted for Labour in 2005. Clearly these groups behaved differently: 76% of voters whose perception remained positive re-elect Labour (i.e. they do not switch). The remaining 24% of positive voters moved away from Labour – despite their positive assessment. This aberrant behavior might result from factors not related to how Labour handled the economy. On the other hand, only 51% of voters whose perceptions decreased into a negative category re-elect Labour. This percentage point difference of 25% thus shows that the economy influences voters’ decision to stay or switch with their prior choice. Table 7 shows results from a binomial logit regression in which voting for Labour at the current election is predicted with changes in economic perceptions. Although the bivariate analysis shows a clear difference between these two group, no significant effect separating these two subgroups is visible. This non-finding results from the heterogeneity within the group of voters who ’became negative’. As hypothesized their decision to abandon Labour will be moderated by their party preferences. Thus, this group contains the ’punishers’ as well as the ’refrainers’, of which some will stay with Labour and some will now choose one of the opposition parties. Because this two subgroups have different behavioral incentives, the overall effect is not separated from the behavior of citizens with positive assessments. However, the ’remained positive’-voters and the ’became negative’-voters clearly behave different, as can be seen in table 6. In order to make the mediating influence of party preferences visible a binary logistic regression model is estimated using only those voters that voted for Labour in 2005 and whose economic perceptions remained negative (Table 8 in the Appendix). The variable of main interest is again the utility differential constructed based on Labour’s rank in the preference structure and the of this statistical model as only a few panel data sets contain four waves.

23

Table 7: Binomial Regression Results: Hypothesis 3a Reelect Labour in 2010 1.070∗∗∗ (0.26)

Voting Intention Labour: 2008 Economy 2005

-0.155 (0.23)

∆ Economy: Stayed Positive

Reference: Stayed Positive

∆ Economy: Stayed Negative ∆ Economy: Became Negative

-0.539 (0.65) -0.335 (0.26) -0.237∗∗∗ (0.07)

Ideology 2005 ∆ Ideology

-0.085 (0.07)

Party-Id 2005: Labour

Reference: Labour

Party-Id 2005: Tory

-0.251 (0.87)

Party-Id 2005: Dem

-1.759 (0.98)

Party-Id 2005: None

-1.281∗∗ (0.41)

∆ Party-Id: Stayed

Reference: Stayed with Party

∆ Party-Id: Labour

-0.882∗∗ (0.34)

∆ Party-Id: Tory

0.000 (.)

∆ Party-Id: Dem

-0.613 (1.29)

∆ Party-Id: None

0.101 (0.80)

NHS 2005

0.112 (0.18)

∆ NHS : Stayed Positive

Reference: Stayed Positive

∆ NHS : Stayed Negative

-0.322 (0.41)

∆ NHS : Became Negative

-0.235 (0.27)

Satisfaction 2005

-0.068 (0.19)

∆ Satisfaction

0.020 (0.16)

Attention 2005

0.022 (0.06)

∆ Attention

-0.022 (0.07)

Constant

1.683∗ (0.80)

N

530

ePCP

66.02%

Area above LROC

79.16%

AIC

1.127

Log Likelihood Standard errors in parentheses:

-273.778 ∗

p < 0.05,

∗∗

p < 0.01,

∗∗∗

p < 0.001

All changes (∆) in covariates between 2005 and 2008. Only voters that voted for Labour in 2005 included.

24

utility difference to the second ranked party if Labour is ranked first or the first ranked party if Labour is ranked second. This variable allows the model to discriminate between the ’punishers’ and the ’refrainers’. Figure 5 shows predicted probabilities of voting for Labour depending on the current party preference structure. Because the sample is again restricted to Labour voters in 2005, it shows the effect of party preference among those voters whose perceptions became negative. Figure 5 clearly establishes that existing party preferences moderate vote switching among the potential group of switchers. Voters with a strong bias for Labour (say a utility differential of 6 or higher) have a very high probability of re-electing Labour even if they think that the incumbent Labour party has handled economic affairs in a not satisfying way.

10 8 6 0

0

2

4

Percent of Respondents

Probability of Re-Electing Labour

12

14

Figure 5: Probability of Voting Again for Labour among Voters Who Became Negative

-10

-8

-6

-4

-2

0

2

4

6

8

10

Utility Differential (2010)

Source: Own calculations based on table 5. Note: Predicted probabilities of voting for Labour conditional on utility differential between Labour and second ranked party among those voters that (1) voted for Labour in 2005 and (2) became negative between 2005 and 2008. Covariates at observed values.

On the other hand, voters who are tied (i.e. Labour and another party is ranked at first place) or moderately biased in favor of Labour (say between 1 and 5) have a probability of voting for Labour below .50. These segment of voters thus constitute the group of ’punishers’ – voters who are not satisfied with Labour’s performance in office and consequently move to one of the opposition parties. However, they are only able to do so because of an important prerequisite: other parties are seen as attractive alternatives.

25

5

Conclusion

This paper conceives retrospective economic voting theory as a model of vote switching. The first theoretical and empirical input of this paper is the analyze whether citizens whose economic perceptions changed between two elections behave differently than voters with stable perceptions. While the first set of voters is expected to switch their prior voting choice, the second group should stay with the choice at the last election. Changes in economic perceptions are thus regarded as stimuli for voters to actually rethink prior behavior. The second theoretical input of this paper is its focus on voters’ party preference structure. Party preferences enter the model at two stages: firstly, the structure of voters’ overall party preferences, conceived as a function of all factors that influence the overall attractiveness of a party to a voter, helps explain why some voters update their prior perceptions and why other voters remain stable. In line with models of motivated reasoning, this paper asserts that party preferences influence whether a voter will select into the stimuli or not. Party preferences, however, not only separate voters with changing perceptions from voters with stable perceptions. The theoretical focus on vote-switching in this paper shows secondly the importance of party preference within the subset of potential switchers. Even as voters change their economic perceptions and thus have an incentive to re-think prior behavior, not all of them will actually switch votes. For a voter’s party preference structure might bias her against switching votes, if other parties are not regarded as attractive enough on factors, not directly related to how the economy changed. Within the segment of voters, whose perceptions changed, party preferences thus lead to a second separation: voters who regard several parties as almost equally attractive and voters whose party preferences are biased in favor of the party chosen at the last election. In consequence, they might refrain from switching votes even as economic perception changes incite them to do. The focus on vote switching thus highlights that if parties are not regarded as substitutable goods, punishing (or rewarding) incumbent parties is harder than often conceived by economic voting models. Empirically, this paper focuses on Great Britain’s General Elections in 2005 and 2010, during which Great Britain’s economy became deeply affected by the outbreak of the international financial crisis. Confronted with worsening economic conditions, which became visible in early 2008, citizens reacted differently: voters with strong prior party preferences for Labour (i.e. only Labour is regarded as attractive) remained at their initial positive perceptions – even after the economic crisis. Similarly, voters with strong party preferences for one of the challenging parties remained stable in their initial negative positive perceptions, which they had even before the financial crisis broke out. However, a third set of voters, most of them regarded two or more parties as equally attractive, actually updated their perceptions from positive to negative assessments. They thus constitute the segment of potential switchers. In order to assess the electoral consequences of these changes, this paper uses a three-wave panel model in order to reduce confounding influences of reverse causality. Therefore, changes in economic perceptions between 2005 and 2008 are used to explain later changes in party preferences and voting behavior between 2008 and 2010. The inherent need for panel data due to this paper’s focus on vote 26

switching thus has additional methodological advantages which allow to disentangle the reciprocal relationship between economic percceptions and vote choices. Based on this methodological strategy, this paper shows voters with changed perceptions indeed behave differently than voters whose perceptions remained stable. Economic perception changes thus lead to changes in voting behavior, whereas stability in perceptions leads to stability in behavior. Secondly, this methodological strategy enables us to show that within the segment of voters with changed perceptions party preferences play an important role in determining which voters will actually change votes. This paper has three implications that follow from the prominent role of party preferences in the model: firstly, changes in economic perceptions are not fully soaked up by partisan predisposition. Although a large segment of voters – due to their strong prior party preferences – remain at their prior perceptions, citizens with less intense preferences actually changed their assessments. As expected by theories of motivated reasoning and its application to research on economic voting, this paper shows that voters’ perception updates are to considerable degree endogenous. However, this paper also shows that some voters are able to perform perceptions updates in line with retrospective economic voting theory and that their behavior consequently differs from those whose perception changes are soaked up by partisan predisposition. Secondly, changes in economic perceptions are not automatically related to changes in prior voting behavior. Economic voting models often treat parties as substitutable goods that are easily replaced of the incumbent party fails the deliver. However, many voters do not regard parties as substitutes due to factors not directly related to how the incumbent has handled economic issues. From a standpoint of vote switching these factors matter as some voters might refrain from punishing incumbents if no challenging party is regarded as attractive alternative. This paper thus shows that democratic accountability is a task only a specific subset of voters will be able to perform. Thirdly, the proposed model of electoral accountability has important crossnational implications. Prior party preferences affect economic vote switching at various stages of the model: firstly, the structure of voters preferences account for which voters actually change their economic perception over the electoral cycle. Strong partisans (identified by a clear-cut and strongly biased preference structure) have a much lower probability of selecting into the ’switcher’-group than moderate partisans or independent voters. Secondly, utility differentials affect whether a voter who is dissatisfied with the incumbent actually moves away from that party. Especially moderately biased voters (such as the ’refrainer’), might keep faith with the government even as they became dissatisfied with them. Given that important role of party preferences, economic vote switching might depend on the polarization (understood as biased structure of party preferences) of a political system. Highly polarized political systems (such as the United States) might allow for less economic voting, because fewer voters select into the set of potential switchers and among them fewer might regard the other party as attractive alternative. A further source of cross-national differences is related to the number of available alternatives: The more opposition parties are available, the higher the probability that one of them will be considered as a attractive alternative. A third source of cross-national differences is

27

most obviously to the economy itself. Changes in the ’real-world’ economy (upon which voters build their economic perceptions) affect economic vote switching in two ways: firstly, substantial and harsh breakdowns of economic conditions should increase the number of voters who actually change their perceptions. Even strong partisans might then rethink their economic assessment. Secondly, if the economy distracts heavily, the incumbent will loose more support and hence the utility differential of more voters will become negative.

28

6

Appendix Table 8: Binomial Regression Results: Hypothesis 3b Reelect Labour in 2010 Economy 2005 UL − Ux 2010 Voting Intention Labour: 2008 Ideology 2005 ∆ Ideology Party-Id 2005: Labour Party-Id 2005: Tory Party-Id 2005: Dem Party-Id 2005: None ∆ Party-Id: Stayed ∆ Party-Id: Labour ∆ Party-Id: Tory ∆ Party-Id: Dem ∆ Party-Id: None NHS 2005 ∆ NHS : Stayed Positive ∆ NHS : Stayed Negative ∆ NHS : Became Negative Satisfaction 2005 ∆ Satisfaction Attention 2005 ∆ Attention Constant

0.121 (0.48) 0.630∗∗∗ (0.10) 0.880 (0.51) -0.275 (0.15) -0.010 (0.12) Reference: Labour 3.583∗ (1.43) 0.899 (1.37) -0.792 (0.79) Reference: Stayed with Party -1.963∗∗ (0.66) empty -2.268 (2.09) empty 0.108 (0.38) Reference: Stayed Positive -0.632 (0.79) 0.097 (0.55) -0.457 (0.39) -0.293 (0.33) -0.037 (0.13) 0.117 (0.16) 1.597 (1.58)

N ePCP >LROC AIC Log Likelihood Standard errors in parentheses:

204 77.64% 91.86% 0.950 -73.915 ∗

p < 0.05,

29

∗∗

p < 0.01,

∗∗∗

p < 0.001

7

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