Competence of the government

Personal prosperity should not be equated with utility. The relative importance of individual and national economic conditions is a well known controversy. The effects of utility should thus include affective reactions to the conditions of the economy. The government may influence the influence of welfare or utility on the conditions of the economy as it is not necessary for them to remain passive. With this respect, business cycle arguments become relevant.

Equally relevant are the questions concerning government’s drive to provide safety nets or other forms of subsidies meant to protect a given section of the society from the negative influence of economic fluctuations (Lewis-Beck, 1988:89). Most of these issues indicate the diversity and variety of voters as a possible source of systematic bias in the relationship between economics and voting. As suggested, institutions may also play a part since not every political institution allow for the same techniques to manipulate the economy or to protect groups from economic downturns.

In conclusion, how and when economic conditions influence personal welfare of the voters is shaped by the context of voting. Economic conditions supply the vital information about political actors. This is important for the voters. To a certain degree, these informational effects can be distinguished from direct effects on the welfare of individual electorate. However, the view that economic conditions indicate the competence of the government is not very far from the traditional conception of economic voting.

A basic form of signaling is implied by the traditional reward-punishment hypothesis. The assumption of this model is that earlier indicators offer important directives for future behavior and that good times demand stability while bad times demand for change (Kinder & Kiewiet, 1981:67). This implies that the competence of the government is taken into consideration by voters. An even more prominent role to effects of information or signaling is assigned by rational-expectation models which surpass the simplistic reward-punishment hypothesis.

The distinction however raises several issues. The conditions of the economy only provide competency signal when they are disintegrating. This means that the voters should only be concerned about the degree to which economic conditions vary from what a competent government would have achieved. In other words, the electorate should only consider the unexpected components of economic growth and inflation. The signal should not only indicate the level of competency but also should distinguish between the states as well.

It would not matter the kind of party in government when they are all competent or incompetent in handling the economy. Furthermore, the voters’ expectation is that the parties may vary in their ability to handle different dimensions of the economy (Brug et al, 2007). The assessment of competency or incompetence is tied with the stated priorities of the party. Rational-expectations models assume that voters have a high level of sophistication.

The diversity of voters is taken into consideration in the sense that what can be observed is the strong signaling effects for individuals for whom this assumption is relevant. Foe instance, signaling effects are appropriate only for the sections of the population that have a cognitive advantage or a special interest in the economy. Nevertheless, similar effects may also be indirectly observed in mass political behavior which is generally marked by rational ignorance (Sanders, 1986: 203).