BY: JUSTIN WOLFERS
Stanford GSB
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=305740
Other Electronic Document Delivery:
http://gobi.stanford.edu/ResearchPapers/Library/RP1730
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Paper ID: Stanford GSB Research Working Paper No. 1730
Date: March 2002
Contact: JUSTIN WOLFERS
Email: Mailto:jwolfers at stanford.edu
Postal: Stanford GSB
518 Memorial Way
Stanford, CA 94305-5015 UNITED STATES
Phone: 650-725-7510
Fax: 650-725-7979
ABSTRACT:
Standard agency theory suggests that rational voters will vote
to re-elect politicians who deliver favorable outcomes. A second
implication is that rational voters will not support a
politician because of good outcomes unrelated to the
politician's actions. Specifically, rational voters should try
to filter signal from noise, both in order to avoid electing
incompetent, but lucky politicians, and to maximize the link
between their votes and optimal incentives. This paper provides
insight into the information processing capacities of voters, by
measuring the extent to which they irrationally reward state
governors for economic fluctuations that are plausibly unrelated
to gubernatorial actions. Simple tests of relative performance
evaluation reveal that voters evaluate their state's economic
performance relative to the national economy. However, these
tests only provide evidence of rule-of-thumb performance
filtering. More sophisticated tests reveal that voters in
oil-producing states tend to re-elect incumbent governors during
oil price rises, and vote them out of office when the oil price
drops. Similarly, voters in pro-cyclical states are consistently
fooled into re-electing incumbents during national booms, only
to dump them during national recessions. Consistent with an
emerging behavioral literature, this suggests that voters make
systematic attribution errors and are best characterized as
quasi-rational.
Keywords: Voting, rationality, elections, voter rationality,
state elections, economics and politics, voting models,
governors, behavioral economics, political economy