American political economics in one picture

Look at the figure below, and then look at it again, and again, and again.  It is the most telling picture about the U.S. political economy I have ever seen.

 

It comes from Princeton political scientist Larry Bartels' new book, soon to be released. What it shows is the difference that the President's party affiliation makes to the distribution of income during the four years of the president's term. (The distributional outcomes are shown with one year's lag.)  When a Republican president is in power, people at the top of the income distribution experience much larger real income gains than those at the bottom--a difference of 1.5 percent per year going from the bottom to the top quintile in the income distribution. The situation is reversed when a Democrat is in power: those who benefit the most are the lower income groups. If you are in the bottom quintile, the difference between having a Democratic or a Republican president in office is an income gain (or loss) of more than 2 percent per year! Strikingly, compared to Republicans, Democratic presidents generate higher income gains for all income groups (although the difference is statistically significant only for lower income groups).

Bartels shows in his book that this difference is not a statistical artifact or a fluke.  It is not the result of Democrats coming to power during better economic times, or of Republicans reining in the unsustainable excesses of Democratic administrations they replace. (It turns out that the same pattern prevails even when a Republican president is succeeded by another Republican.) These numbers are real and they are the outcome of partisan differences in policy. So if you are one of those who have bought the story that income distribution is the result of pure market forces and technological changes, with politics playing no role--think again.

Bartels' findings raise an important puzzle: if Democrats produce better income results for everyone, and particularly for the more numerous lower-income groups, why do they not always win?  Bartels offers a rather complicated, but well-supported answer to this question having to do with voter myopia and psychology.  (You will have to wait to read his book to get the full story). But Bartels does demolish two of the standard arguments regarding Republican advantages at the polls: the idea that poor Americans vote Republican for cultural reasons, or that Americans do not care about inequality.

Comments

[Chris]

Surely whoever holds congress has more to do with the true state of the economy than whoever holds the white house?

[James Ament]

Although I have libertarian tendencies, abhorring the nanny state proclivities of Democrats, I have always made more money when Democrats have been in power, even during the Carter years.

[James Ament]

Although I have libertarian tendencies, abhorring the nanny state proclivities of Democrats, I have always made more money when Democrats have been in power, even during the Carter years.

[James Ament]

Although I have libertarian tendencies, abhorring the nanny state proclivities of Democrats, I have always made more money when Democrats have been in power, even during the Carter years.

[robertdfeinman]

This and the prior entry about disagreement both are implicitly discussing psychology.

The key question is why are some people immune to facts? The most convincing description of this phenomena I've found is summarized in the work of psychologist Robert Altemeyer. His free, online book is at theAuthoritarians.com

He explains how people behave, not why. He does find a high degree of correlation between ideological blindness and political conservativism. Once again an observation, not an explanation.

For ideologues their worldview depends upon a set of axioms which they "know" are true. For them to admit doubt would mean re-evaluating everything. The self-protective mechanism becomes a combination of avoiding hearing counter arguments, dismissing those that one hears as false, or ignoring them altogether.

Over the past 50 years the number of left leaning ideologues in the US has dropped sharply, so these days they are almost always to be found on the right. There is no current faction similar to the Soviet apologists of the 1930's and 40's. This may be changing as the passions in the current Democratic primaries illustrate.

Leaving this group aside, "liberals" are, in general, more open to considering all sides of an issue and letting the best ideas win. Conservatives are not. They prefer to follow strong leaders who provide them with the axioms.

If we look at international development, we can see the same dynamic at work. "Free trade", democratic reform, privatization, and lowering subsidies are all offered as absolutes, despite all the evidence to the contrary.

The alternative to assuming that the IMF and WB are ideologically blind is to assume they are capitalist tools.

One cannot win an argument with the ideologically blind, facts are irrelevant. This is why I doubt that appeals to bipartisanship will work in practice. One side is willing to negotiate, the other isn't.

[jsalvati]

I share Chris' question. These results seem shockingly large given the amount of control over the economy that the president has. It also seems odd because I would imagine that quite a bit of what a president can influence would have relatively long lag times. Though, perhaps most presidents' economic influence is at the beginning of their terms.

[Bertil]

Do you think similar work could be done in other democracies?

[Patrick]

Discussing pyschology and asking whether people are "immune to facts" may not be the most effective way to address the question posed. The problem with political economy is that it's rarely as cut and dry as pure economics. It is often difficult to analyze political/group preferences from a purely self-interested (in the economic sense) point of view. In addition to economic policy preference, a Republican (or Democratic) presidency also signals a host of non-economic policy preferences (issues such as security/foreign policy spring to mind). Even if voters were presented with the conclusions drawn here, one would not expect to see a drastic shift from one party or the other. Caplan's thoughts on voter altruism may provide an additional useful way to think about voting preferences.

[Bertil]

Oh: there might be one tiny over-simplification in your presentation of the result.
Is the ratio calculted between the quintile on election year and the quintile four years afterwards (not necessarily the same people if there has been some redistribution), or is it the growth of the people from the initial quintile, no matter what quintile they end-up in?
It is certainly the same thing for a vast majority of each quintile, but being a hair-picking statisticien. . .

[Barkley Rosser]

I am sure that myopia and psychology can be invoked to partially explain poor people voting Republican. But I seriously doubt that Bartels "demolishes" the argument that many of them are doing so for cultural reasons. Poor whites who attend fundamentalist churches and listen to Christian Right preachers are not voting for Republicans for cultural reasons? Give us a break, please.

[DrewDruncan]

This exactly matches the data in my Social Security lifetime earnings statement. My earnings increased under a Democratic president and fell under a Republican presisdent, every time, from 1971 to 2007. Guess how I vote>

[corvad]

I'm with Barkley. For a fascinating documentary analysis on the politicization of the religious right in the 1970s, as a calculated play to gain foot soldiers for the Republican revolution, check the BBC documentary widely available on line "The Power of Nightmares." draws some interesting parallels between the neocons and the rise of political Islam ...

but still the question, well, how does it work? what material conditions were present that made moral conservatism so attractive as a political message? How , in other words, does cultural difference resonate as a plausible source of insecurity -- ie a threat to the fabric of (whoever's) society that must be warred against? Surely times of economic crisis have something to do with why people embrace the politics of fear, or at least loook for a different paradigm for understanding theirs, and others, relationship to their imagined communities.

[sparks]

"Nanny State." The first time I heard the term was when I got here to Australia. Australians are complaining their governments take care of them. COMPLAINING?!? How absurd.

[Willie]

But how does Bartels calculate all the vote fraud? Did W really get the most votes in 2000 and 2004? The US is crooked from top to bottom, and, unfortunately, it's not exactly a new phenomenon.

[Willie]

But how does Bartels calculate all the vote fraud? Did W really get the most votes in 2000 and 2004? The US is crooked from top to bottom, and, unfortunately, it's not exactly a new phenomenon.

[dale]

Read Dean Baker and David Cay Johnston for their exposes of the Conservative Nanny State. It just depends on whether you want our democracy to help wealthy or ordinary people. When we look at this graph- are we pleased at the growth of lower income folk's incomes under Dems or do we yearn for more years of Republican based growing inequalities of wealth and power? It's a Rorschach test of moral-political sensibilites.

[greatzamfir]

Are these data for income before taxation or after?

Also, I really don't see how this puts an end to the idea that 'poor Americans vote Republican for cultural reasons'. This graph at least would be evidence in favor of that idea, wouldn't it? Perhaps the book uses other info?

[Manuel Moreira]

The cause could be found in a sociological illusion. According with a survey during the first Bush mandate 39% of Americans consider themselves as being in the top 1% of the richest (19%) or that they will be part of this select group in their time life (20%).

[Divorced one like Bush]

If you would like to read more about this, Crooked Timber posted on the original symposium in Political Science and Politics showing the above chart by Bartel
http://crookedtimber.org/2006/03/16/inequality-and-american-democracy/

Note the date, 3/16/06. It is unfortunate that it takes so long for such info to come to light.

[James]

If this weren't pretax income it would be a telling chart indeed. Since it is pretax income it tells almost nothing without a corresponding graph of partisan change in tax rates as a percentage of income.

[Batocchio]

Wild. I agree with other commenters that there are other factors worth exploring (poor whites voting conservative because of social issues), but that's very interesting.

[M. Hodak]

Where does Bartels get this data from? It assumes a huge amount of with regards to data, beginning with pre- vs. post-tax, but almost innumerable other assumptions besides.

I ask because having looked at numerous studies on income distribution, I have yet to see one that actually proves (rather than suggests) any meaningful difference in outcomes based on governmental policies, so this would be groundbreaking...if it's true.

By the way, this picture is immediately suspect based on the lack of any good studies showing a difference in economic growth under one party or the other. Anecdotally, stagflation resulted from a joint effort between Republicrats.

[Robert Stacy McCain]

Why is control of the presidency isolated and singled out as a factor? Congress and the judiciary have influence in economic affairs, too. And why aren't different presidencies shown separately? The policies of Ike and Nixon were different from the policies of Reagan, and the policies of the two Bushes were different. Furthermore, each president enacts policies that continue to have economic effects after he leaves office. Given such glaring flaws, this chart is clearly not economics, it's political propaganda.

[luci]

I've seen this claim many times before, and I still think there won't be enough data points to generate a significant result. How many presidents have we had in the modern era? Sure, we could use monthly data or something to pad out the # of observations, but how many times has the presidency changed party?

Business cycles are relatively long-lived creatures too. How many tech-booms did we experience?

I know Mr. Rodrik said, "Bartels shows in his book that this difference is not a statistical artifact [...] and it is not the result of Democrats coming to power during better economic times", but I just don't see how.

Not enough time, not enough presidents, not enough business cycles. Not to mention the President/Congress assumption, or the slim marginal difference between Democratic and Republican economic policies.

But maybe it's explained fully in the book. I actually believe such an effect could exist, but it would be small, the causal mechanism subtle, and take a lot of data to tease it out.

[Wilson]

In what way is the Eisenhower administration substanitively similar to the Bush administration, or the Kennedy Administration similar to the Clinton administration?

Just one of the 10,000 questions raised by this completely absurd claim. You'll have to read the book to find out!