Partisan Preferences, Electoral Prospects, and Economic Expectations

Research shows that economic expectations reflect partisan preferences. Those who support the current government tend to think the future will go well, at least by comparison with those who oppose the government. But, there always is uncertainty surrounding the political future, especially in the period before elections. This article considers whether the uncertainty matters. Specifically, it examines whether people's economic expectations are conditional on their own estimates of who will win. The analysis relies on data from five election study panels in the United States and the United Kingdom, both majoritarian systems, where the effects of partisan winning and losing are most likely. The results imply that people in these countries do anticipate election outcomes; that is, economic expectations prior to elections reflect both the political present and future. This tells us not only that expectations in these systems are substantially rational but that politics plays a much bigger role in our economic thinking than originally thought.