Correspondence between the Objective and Subjective Economies: The Role of Personal Economic Circumstances
| Author | Sergi Pardos-Prado,Marta Fraile |
| DOI | 10.1111/1467-9248.12055 |
| Date | 01 December 2014 |
| Published date | 01 December 2014 |
| Subject Matter | Article |
Correspondence between the Objective and
Subjective Economies: The Role of Personal
Economic Circumstances
Marta Fraile
Institute of Public Goods and Policies (IPP-CSIC)
Sergi Pardos-Prado
University of Oxford
The impact of sociotropic economic satisfaction on the vote has been thoroughly analysed.However,knowledge about
how citizens acquire information about the economy and the degree of correspondence between objective macro-
economic changes and citizens’ subjective economic perceptions is much more limited.While the effect of partisan
rationalisation has recently received some attention,the role of objective personal economic conditions in assessing
national economic conditions is still unclear.Wesuggest that macroeconomic changes have some impact on subjective
economic satisfaction, especially among higher-income and socio-professional strata with higher risk aversion rates to
negative macroeconomic shocks. The results are obtained via three-level hierarchical linear models using the
cumulative file of the European Social Survey (2002–9) and confirm the relevance of citizens’ personal economic
circumstances as a filter to perceive the state of the economy.
Keywords: economic perceptions; sociotropic perceptions; macroeconomic changes;
personal economic conditions
A considerable amount of research has analysed the impact of individual economic per-
ceptions of the national economy on vote choice.The causal connection between eco-
nomic perceptions and vote choice is based on two main nexuses (Lewis-Beck and Paldam,
2000).The first goes from objective macroeconomic results to voters’ perceptions,and the
second from voters’ perceptions to their voting decisions. While the latter nexus has
received a lot of attention, the former has been much less studied. Apart from some
contested evidence about the correspondence between the objective and the subjective
economy, the different mechanisms through which citizens acquire information about the
economy still remain unclear (Anderson, 2007; Duch and Stevenson, 2010a; 2010b; Evans
and Pickup, 2010).Studying the connection between objective macroeconomic conditions
and subjective perceptions is pivotal, given the critical importance of this link for the
accountability of democratic representation (Evans and Pickup, 2010; Nadeau et al., 2013).
If the electorate incorrectly interprets the economic situation in a given country,punishing
or rewarding governments for their management of the economy will be far from the ideal
of a fair and functioning mechanism of representation.
In this article, and in line with the few previous contributions on the topic, we suggest
that macroeconomic changes have an impact on individual satisfaction with the state of the
economy. However, we argue that this connection is conditioned by objective personal
economic situations. Relying on axioms derived from an asset theory of social policy
preferences (Iversen and Soskice, 2001), we hypothesise that citizens with higher income
and higher socio-professional status will be more sensitive to objective macroeconomic
changes. According to this theory, it can be expected that people in the higher strata are
bs_bs_banner
doi: 10.1111/1467-9248.12055
POLITICAL STUDIES: 2014 VOL 62, 895–912
© 2013The Authors. Political Studies © 2013 Political StudiesAssociation
more risk averse because of the greater potential marginal cost they may experience if the
economy performs poorly.This is so because people in the higher strata have more to lose,
because they have presumably assumed more investment costs and because these factors
make them more receptive to the objective macroeconomic situation.This expectation
implies that citizens in the higher-income and status strata will be comparatively more
satisfied than citizens in the lower strata when the economy improves,and more dissatisfied
when the economy worsens. In contrast, since people in the lower strata were already in a
difficult situation before a given macroeconomic shock,their level of economic satisfaction
should be less dependent on the objective economy.These expectations are tested with
cross-national and cross-time data drawn from the European Social Survey cumulative file.
The results are in line with expectations, thereby suggesting that the degree of correspon-
dence between the economic reality and citizens’ economic perceptions is greater the
higher their level of income and status.
The contribution of this article to the discussion of the sources of citizens’ economic
perceptions is twofold. First, we attempt to deepen the understanding of the link between
the objective economy and subjective economic perceptions (Anderson, 2007; Lewis-Beck
and Stegmaier, 2000).Some researchers have considered objective economic indicators (Van
der Eijk et al., 2007) and subjective ones (Duch and Stevenson, 2008; Nadeau et al., 2013) in
either/or terms, without dealing with their potential interrelation (Evans and Pickup, 2010,
p.1237). If such an interrelation exists, then assuming an independent and additive effect of
subjective and objective dimensions of the economy can lead to biased results. Second, we
focus on an as yet unexplored source of individual-level heterogeneity, namely objective
personal economic conditions.While the recent debate on economic perceptions seems to
focus predominantly on the effect of partisan biases (Duch and Stevenson, 2010b;Evans and
Andersen, 2006; Evans and Pickup, 2010; Fraile and Lewis-Beck, 2013; Lewis-Beck et al.,
2008; Nadeau et al., 2013) and cognitive engagement (Duch et al., 2000), the conditional
effect of objective personal economic situations has received less attention.
Citizens’ Perceptions about the Economy: Personal Economic
Circumstances as a Filter
The systematic analysis of the whole range of factors that can mediate the connection
between objective macroeconomic performance and individual subjective perceptions is
still underdeveloped (Anderson, 2007;Duch and Stevenson, 2008; Lewis-Beck and Paldam,
2000; Van der Eijk et al., 2007).In one of the few works that directly tackle the individual
heterogeneity of economic perceptions, Raymond Duch et al. (2000, pp. 637–9) highlight
four factors mediating the link between the objective and the subjective economy: infor-
mation and media exposure, political attitudes, personal financial experience and group
self-interest.
First, information and media exposure refers to the effect that education, political
sophistication and media exposure can exert on perceptions of the economy.The main
hypothesis states that the degree of accurateness of citizens’ economic perceptions might
increase with their access and incentive to obtain information about the economy (Duch
and Stevenson, 2008; 2010b; Popkin, 1991). Second, political attitudes refer to the effect
that ideology and partisanship have on economic evaluations. This is consistent with the
896 MARTA FRAILE AND SERGI PARDOS-PRADO
© 2013The Authors. Political Studies © 2013 Political StudiesAssociation
POLITICAL STUDIES: 2014, 62(4)
To continue reading
Request your trial