The Consequences of Partisanship in Economic Perceptions

We investigate the role of economic perceptions in macropolitical analyses, with a particular focus on the role that partisanship might play in shaping consumer sentiment. Instead of taking consumer sentiment at the fully aggregated level, as is customary, we disaggregate by party in order to see the effects of partisanship on over-time evaluations of the economy. Analyzing four presidential administrations’ worth of public opinion data, we find that differences in Republicans’ and Democrats’ beliefs about the changing economy do not cancel in the aggregate. Furthermore, our macroanalysis shows that the endogeneity of consumer sentiment to partisanship leads to a clear overestimate of the role of consumer sentiment on approval of the president’s handling of the economy. It has long been thought that partisan attachments provide a perceptual filter for information about politics. In fact, the “minimal effects” school of campaigns begun by Columbia researchers in the 1940s started from the notion that the high-information nature of presidential campaigns would activate the partisan defenses of the masses, thereby rendering the events of the campaign ineffectual. Nowhere was this assertion more clear than in the influential “ funnel of causality” in The American Voter, which placed partisanship at the very focal Peter K. Enns is an Assistant Professor of Government at Cornell University, Ithaca, NY, USA. Paul M. Kellstedt is an Associate Professor of Political Science at Texas A&M University, College Station, TX, USA. Gregory E. McAvoy is an Associate Professor of Political Science at the University of North Carolina at Greensboro, Greensboro, NC, USA. A previous version of this article was presented at the Annual Meeting of the American Political Science Association, Boston, August 28–31, 2008. We thank John Bullock for providing helpful comments. Peter Enns also gratefully acknowledges support from Princeton University’s Center for the Study of Democratic Politics. * Address correspondence to Peter K. Enns, Cornell University, Department of Government, 214 White Hall, Ithaca, NY 14853-7901, USA; email: pe52@cornell.edu. by gest on July 8, 2012 http://poqrdjournals.org/ D ow nladed from Enns, Kellstedt, and McAvoy 288 point of an individual’s political world (Campbell et al. 1960). A variety of important but particularistic forces shaped an individual’s partisan identification, but, once formed, this psychological attachment to a party structured subsequent attitudes and behavior. The attachment to a political party became the lens through which other political decisions were seen. In particular, in the classical formulation, partisanship shaped policy attitudes, candidate evaluations, and the vote itself. To the extent that there is an unmoved first mover in the study of American political behavior, it is partisanship. Campbell et al. also recognized that partisanship structured what they called economic outlook, with similarly situated Republicans and Democrats espousing systematically different views on the economy. Reacting to the recession during the second Eisenhower Administration, for example, Campbell et al. wrote that “Partisanship drove . Democrats . to criticism and pushed . Republicans . into positions of support” (1960, p. 389). People see most things—even those where some objective reality exists, like the economy— through partisan lenses. The unmoved-first-mover status of partisanship unraveled rather abruptly. MacKuen, Erikson, and Stimson (1989), in shifting the level of analysis from the individual to the public as a whole, reversed the causal arrow. Whereas the traditionalist view held that partisanship was exogenous to economic outlook, MacKuen, Erikson, and Stimson showed precisely the opposite: Aggregate shifts in economic outlook—along with shifts in presidential popularity (which were themselves caused by economic outlook)—caused macropartisanship to ebb and flow. The macropolitics canon, so to speak, has evolved out of this key reversal of the causal flow. Economic outlook—or, as it is typically called nowadays, consumer sentiment is (to exaggerate only a bit) the new unmoved first mover. It finds itself, treated exogenously, on the right-hand side of countless models of macropolitical reality in the United States. In addition to partisanship, studies of the effects of consumer sentiment on policy mood (Durr 1993), election outcomes (Erikson, MacKuen, and Stimson 2002), and trust in government (Keele 2005, 2007; Hetherington and Rudolph 2008) have abounded in recent years. None of this work to date allows for the possibility that partisanship serves as a filter for aggregate economic attitudes. In this article, we examine this question of the exogeneity of economic perceptions in macropolitical analysis and the role partisanship might play in shaping these perceptions. We utilize four presidential administrations’ worth of public opinion data, showing that how Republicans and Democrats in the mass public process information about the economy depends critically on which party occupies the White House. Instead of taking consumer sentiment at the fully aggregated level, we examine the dynamics of consumer sentiment by party in order to see the effects of this powerful psychological attachment on the over-time evaluations of the economy. Thus, we restore the role party attachments play in shaping (rather than merely being shaped by) the public’s by gest on July 8, 2012 http://poqrdjournals.org/ D ow nladed from Partisanship and Economic Perceptions 289 views on the economy. Our analysis shows that the role of partisanship in economic perceptions is substantial and that it has important analytic implications in the study of macropolitical opinion. Specifically, an analysis of approval of the president’s handling of the economy shows that the endogeneity of consumer sentiment to partisanship (i.e., partisanship influences both the dependent and independent variables) leads to a significant overestimate of the impact of consumer sentiment on public opinion. The role of Partisanship in economic evaluations Are economic perceptions exogenous? To answer this question in the affirmative is to put economics above politics—that is, for economic perceptions to be exogenous in political judgments, they must be outside the political and social context in which they are formulated. Evans and Andersen (2006, p. 195) argue that in stable democracies, economic outcomes are “typically not distinctive enough to produce a shared, accurate assessment of how the economy is doing. ” As a result, when making judgments about the performance of the economy, individuals must rely on information that they have received about the economy and process that information in order to make a judgment. It is through this process of information reception and judgment that we expect non-economic factors to play a role in economic evaluations. As Duch, Palmer, and Anderson (2000) show, the outcome of these judgments is not an objective assessment of economic conditions, attenuated with random error to account for differences in information-processing abilities. Instead, economic perceptions are rooted in social and political factors like income, education, party, and group affiliations. Indeed, individual-level analyses suggest that individuals’ partisanship and their preference for the incumbent administration influence their economic evaluations (Anderson, Mendes, and Tverdova 2004; Conover, Feldman, and Knight 1987; Gerber and Huber 2010; Wlezien, Franklin, and Twiggs 1997; but see Lewis-Beck, Nadeau, and Elias 2008). This article extends the individual-level evidence that partisanship influences economic perceptions in two ways. First, we argue that the influence of partisanship on economic evaluations will often be asymmetric. If Democrats’ and Republicans’ economic perceptions are equally influenced by their partisanship, the effects may, in large part, be offsetting. In other words, the existing evidence of individual-level partisan economic evaluations may not carry aggregate-level implications. However, if partisans respond in different ways and different amounts, the effect of partisanship on economic evaluations will not cancel in the aggregate. This asymmetric partisan response implies that standard measures of consumer sentiment reflect political considerations; i.e., economic perceptions are endogenous to political considerations. Given its central role in political decision-making, partisanship is a likely cause of both public opinion and economic perceptions. Thus, macro-level studies will tend by gest on July 8, 2012 http://poqrdjournals.org/ D ow nladed from Enns, Kellstedt, and McAvoy 290 to overestimate the role that economic perceptions play in public opinion, since both opinion and perceptions are influenced by partisanship.1 We believe there are several reasons to expect that partisanship influences economic evaluations asymmetrically. If economic perceptions are endogenous to partisanship, as the individual-level studies indicate, partisans may pay more attention to the economic indicators that reinforce their preconceptions (Kunda 1990; Taber and Lodge 2006; Taber, Cann, and Kucsova 2009). Likewise, through selective exposure to the media (Iyengar and Hahn 2009), partisans may seek out information or be more exposed to news that reinforces their existing economic evaluation. In addition, Soroka (2006) shows that bad economic news carries more weight in the public’s perceptions of economic performance than does good economic news. Combining this insight with that of Iyengar and Hahn (2009) suggests that partisans will be exposed to and respond differently to economic news that they encounter. For example, in-party partisans—that is, partisans who identify with the party of the sitting president—may observe and respond more quickly to positive information, and out-party partisans may obs