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Are State Elections Affected by the National Economy? Evidence from Australia

Harvard Dataverse (Africa Rice Center, Bioversity International, CCAFS, CIAT, IFPRI, IRRI and WorldFish)

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Title Are State Elections Affected by the National Economy? Evidence from Australia
 
Identifier https://doi.org/10.7910/DVN/6VQUAF
 
Creator Leigh, Andrew
McLeish, Mark
 
Publisher Harvard Dataverse
 
Description Using data from 191 Australian state elections, we test how voters respond to economic conditions. We find that unemployment has a strong impact on election outcomes, with each additional percentage point of unemployment reducing the incumbent’s re-election probability by 3-5 percent. However, when we separate luck (unemployment in other states) from competence (unemployment in that state relative to the rest of Australia), we find that both luck and competence are equally important. This is consistent with a psychological theory of the ‘fundamental attribution error’, in which observers consistently underestimate the importance of situational constraints. We also find evidence that unemployment driven by a clearly exogenous source – the United States economy – has a non-trivial impact on the re-election probability of Australian state governments. Our results suggest that Australian voters either retain too many state governments in economic booms, vote out too many state governments in recessions, or perhaps both.
 
Subject rational voting; political business cycles; unemployment; elections
 
Date 2009