Counter-cyclical Voting in the United Kingdom

Date01 December 2017
Published date01 December 2017
DOI10.1177/0032321717702399
Subject MatterArticles
https://doi.org/10.1177/0032321717702399
Political Studies
2017, Vol. 65(4) 1040 –1058
© The Author(s) 2017
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DOI: 10.1177/0032321717702399
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Counter-cyclical Voting in the
United Kingdom
Abel Bojar
Abstract
By extending the time-tested reward–punishment hypothesis in economic voting, this article
argues that rational voters hold incumbents accountable for the macroeconomic policies they
pursue rather than purely for the economic climate that prevails under their tenure. Building on
this premise, I first put forward a theory where business cycle fluctuations realign relative fiscal
preferences among income groups. This theory’s implications predict that the aggregate electoral
response to fiscal decisions evolves in a counter-cyclical fashion. Using quarterly measures of vote
intention shares of incumbent parties in the United Kingdom, I provide time-series evidence from
a set of error correction models supporting this proposition: at times of low unemployment, the
electorate punishes profligate incumbents; in deteriorating labour market conditions, however,
they reward expansionary policies. The immediate electoral impact is non-significant across the
models, and most of the estimated effect is spread out across subsequent quarters.
Keywords
economic voting, median voter, fiscal policy, elections, vote intention
Accepted: 2 January 2017
The broad relationship between economic performance and government accountability is
one of the most studied research areas in political economy. The highly intuitive and
seemingly uncontroversial observation that support for incumbents and re-election pros-
pects depends on economic conditions has triggered a rich literature with different strands
from the 1970s onwards: partisan theory, political business cycle research and economic
voting. The point of departure of this article is the third strand or the ‘demand-side’ of
the economics–incumbency nexus: Is the electoral response adequately captured by the
reward–punishment hypothesis?1 Alternatively, do voters distinguish between macro-
economic outcomes and the policy choices leading up to these outcomes? In other words,
are voters fundamentally outcome-oriented or are they able to hold incumbents accountable
European Institute, London School of Economics and Political Science, London, UK
Corresponding author:
Abel Bojar, European University Institute, Via della Badia dei Roccettini 9, 50014 San Domenico, Fiesole,
Florence, Italy.
Email: abel.bojar@eui.eu
702399PSX0010.1177/0032321717702399Political StudiesBojar
research-article2017
Article
Bojar 1041
for the specific policies they pursue? Moreover, to the extent voters do assess economic
policy-making when casting their vote, is the electoral response uniform over time or is it
conditioned by underlying macroeconomic conditions? The central contention that this
article makes in response to these questions is that voters, on the aggregate, are more
sophisticated than much of the economic voting literature has hitherto suggested.
These considerations should be understood against the backdrop of more than 40 years
of research on the relationship between economic conditions and electoral behaviour,
generating 500+ articles and books in the field (Lewis-Beck and Stegmaier, 2007).
Economic voting, as it came to be known, postulated one of the most robust ‘iron laws’ in
political economy: incumbent governments tend to be punished by disappointing eco-
nomic performance and rewarded by economic prosperity.
However, when the pioneers of economic voting went beyond their turf (mostly the
US and the UK) and began to undertake cross-country comparisons, the consistency of
prior results seemed to buckle. As my literature review shows, not all electorates seemed
to hold incumbents accountable equally and in some cases the relationship simply broke
down. As a response to this conundrum, a new paradigm started to emerge: the simple
reward–punishment hypothesis gave way to the ‘clarity of responsibility’ thesis in which
the domestic institutional context (Powell and Whitten, 1993) and changes in the world
economy (Hellwig, 2001) fundamentally alter the extent to which the electorate is able
to credit/blame governments for their assumed impact on the macroeconomy. More con-
cisely, where clarity of responsibility is high, economic voting remains strong. In contexts
where the clarity of responsibility is weaker, economic voting dampens or disappears. As
one of the earliest extensive reviews captured the moral of the story in a nutshell, around
one-third of the change in vote share of governments can be explained by economics
when these issues are accounted for (Nannestad and Paldam, 1994).
Such a sophisticated electoral assessment of incumbent competence admits a great
degree of rationality to the economic voter. As this article will argue, however, this rational-
ity sits uneasily with economic outcomes rather than the policies which lead up to these
outcomes as the main object of responsibility attribution. Rational voters are thus presumed
to break the broad link between outcomes and electoral reward/punishment and bring
accountability closer to where actual decisions are made: fiscal choices. This article will
therefore push the responsibility paradigm to its substantive conclusion where the variable
of interest for voters is one of policy output rather than broad economic outcomes.
This article offers such an account of the British electorate in a rational-choice
framework with individuals’ cost–benefit calculations on fiscal policy changing with
macroeconomic conditions. In particular, the preference alignment for expansionary/
contractionary policies of different income groups depends on varying labour market
conditions along the business cycle. My findings offer evidence on counter-cyclical pref-
erence changes and vote intentions on incumbents among the British electorate. It is
therefore not the fiscal stance per se that determines incumbents’ re-election prospects but
the interaction between the underlying economic conditions and fiscal policy that exerts
a sizeable influence on incumbent popularity.
The structure of this article runs as follows. The next section offers a brief literature
review on economic voting starting from the classics to the recent state of the responsibil-
ity paradigm. The following section introduces my theory and the aggregate-level hypoth-
esis that flows from it. The section on the United Kingdom as the ‘Downsian laboratory’
introduces my case study and my empirical strategy. The last two sections present the
findings and the conclusions, respectively.

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