Electoral Surprise and the Midterm Loss in US Congressional Elections

Alberto Alesina and Howard Rosenthal argue that surprise about the outcomes of US presidential elections accounts for two important features of the American political economy: the regular loss of votes experienced by the president's party in midterm congressional elections, and the systematic relationship between the party of the incoming president and macroeconomic performance. Scholars recently have begun conducting rigorous tests of the relationship between surprise and economic performance, but no similar empirical work exists on how surprise affects midterm elections. In this article, we offer the first direct test of the proposition that electoral surprise drives the midterm loss. Our analysis shows that the more surprised moderate voters are about the outcome of a presidential election, the lower the probability that they will support the president's party in the following midterm contest. elections accounts for two important features of the American political economy: the regular loss of votes experienced by the president's party in midterm congressional elections, and the systematic relationship between the party of the incoming president and macroeconomic performance. Scholars recently have begun conducting rigorous tests of the relationship between surprise and economic performance, but no similar empirical work exists on how surprise affects midterm elections. In this article, we offer the first direct test of the proposition that electoral surprise drives the midterm loss. Our analysis shows that the more surprised moderate voters are about the outcome of a presidential election, the lower the probability that they will support the president's party in the following midterm contest. Alberto Alesina and Howard Rosenthal argue that surprise about the outcomes of US presidential elections accounts for two important features of the American political economy: the systematic relationship between the party of the incoming president and macroeconomic performance, and the regular loss of votes experienced by the president's party in midterm congressional elections.1 To establish a link between electoral surprise and the macroeconomy, the authors develop a model in which individuals respond rationally to government policy, given available information. In their model, economic actors know that the Democratic party is more inflation-prone than its Republican counterpart, so they design wage contracts based on their beliefs about each party's chances of winning the White House in the upcoming presidential election. Unless some party is expected to win with a probability of 1, actors hedge by basing their contracts on a rate of inflation somewhere between the ideal levels of the two parties. When a new administration enters office, it enjoys a window of opportunity to manipulate the economy before actors, who now know that inflation will differ from their pre-electoral expectations, re-draft their contracts to reflect the new political reality. Thus, the model predicts short-run expansions at the beginning of Democratic administrations and short-run contractions at the outset of Republican ones. Alberto Alesina and Howard Rosenthal argue that surprise about the outcomes of US presidential elections accounts for two important features of the American political economy: the regular loss of votes experienced by the president's party in midterm congressional elections, and the systematic relationship between the party of the incoming president and macroeconomic performance. Scholars recently have begun conducting rigorous tests of the relationship between surprise and economic performance, but no similar empirical work exists on how surprise affects midterm elections. In this article, we offer the first direct test of the proposition that electoral surprise drives the midterm loss. Our analysis shows that the more surprised moderate voters are about the outcome of a presidential election, the lower the probability that they will support the president's party in the following midterm contest. Alberto Alesina and Howard Rosenthal argue that surprise about the outcomes of US presidential elections accounts for two important features of the American political economy: the systematic relationship between the party of the incoming president and macroeconomic performance, and the regular loss of votes experienced by the president's party in midterm congressional elections.1 To establish a link between electoral surprise and the macroeconomy, the authors develop a model in which individuals respond rationally to government policy, given available information. In their model, economic actors know that the Democratic party is more inflation-prone than its Republican counterpart, so they design wage contracts based on their beliefs about each party's chances of winning the White House in the upcoming presidential election. Unless some party is expected to win with a probability of 1, actors hedge by basing their contracts on a rate of inflation somewhere between the ideal levels of the two parties. When a new administration enters office, it enjoys a window of opportunity to manipulate the economy before actors, who now know that inflation will differ from their pre-electoral expectations, re-draft their contracts to reflect the new political reality. Thus, the model predicts short-run expansions at the beginning of Democratic administrations and short-run contractions at the outset of Republican ones.