Indian Politics & Policy Volume 3, Number 1, Spring 2020 | Page 17

Economic Evaluations and the Incumbent Vote in India’s Parliamentary Elections (2014, 2019)
propose to test in this study. I then present
the empirical strategy and the statistical
results. I conclude this analysis
with a discussion of the results.
Economic Voting: Theory
and Hypotheses
The concern in studies of economic
voting is whether economic
outcomes affect vote choices in
elections. Does a government’s economic
performance have a systematic effect
on electoral outcomes? Does a voter’s
evaluation of household or personal
economic conditions influence the decision
to vote for the incumbent? Duch,
Lewis-Beck, and Stegmaier; Duch and
Stevenson; and Silva and Whitten provide
excellent reviews of the theoretical
ideas behind economic voting in addition
to empirical evaluations. 2 I present
a very limited survey here.
The theoretical foundations for
the economic vote are provided by rational
choice models, which locate economic
concerns in a voter’s utility function
and derive conditions under which
a voter will choose an incumbent as the
preferred candidate. 3 In “sanctioning”
or “reward-punishment” models, voters
reward or punish incumbents based on
their economic performance. The likelihood
of an incumbent getting reelected
thus increases if a voter views the government’s
economic performance favorably.
Similarly, poor economic performance
by an incumbent is punished by
the voter, i.e., the incumbent has a lower
chance of getting reelected. 4 The “selection”
model draws heavily from rational
expectations theory and suggests that
voters identify and evaluate the economic
competence of political candidates
using past economic performance
as signals. 5 The chances of a vote in favor
of the incumbent increases if voters perceive
incumbents as competent.
While formal models of economic
voting provide a theoretical basis
for why the economy matters to a
voter, empirical evidence for economic
voting has come through the statistical
analysis of both aggregate and individual
level data. Some have sought
to identify the effects of aggregate indicators
of the “real” economy, such as
growth, inflation, and unemployment
on voting (typically measured as party
or candidate vote shares) in elections to
different political offices. 6 Others have
focused on individual-level data collected
through large-scale surveys such
as the American, British, and Canadian
National Election Studies, among others,
and seek to relate a voter’s subjective
perception of economic wellbeing to the
likelihood of voting for an incumbent. 7
Cross-national empirical research
suggests that the strength and
magnitude of economic voting varies
from country to country. For instance,
selection of political leaders in
France and the UK tend to be strongly
influenced by economic conditions.
However the observed relationship in
Denmark, Netherlands, Norway, and
Sweden is mixed, and very weak in Italy.
The magnitude of the effects of the
economy varies not only across nations,
but time as well, for example from 13
percent 8 to 38 percent. 9 Duch and Ste-
13