Are State Elections Affected by the National Economy? Evidence from Australia

13 Pages Posted: 19 May 2009

See all articles by Andrew Leigh

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

MARK MCLEISH

affiliation not provided to SSRN

Abstract

Using data from 191 Australian state elections, we test how voters respond to economic conditions. We find that unemployment has a strong impact on election outcomes, with each additional percentage point of unemployment reducing the incumbent's re-election probability by 3–5 per cent. However, when we separate luck (unemployment in other states) from competence (unemployment in that state relative to the rest of Australia), we find that both luck and competence are equally important. This is consistent with a psychological theory of the ‘fundamental attribution error’, in which observers consistently underestimate the importance of situational constraints. We also find evidence that unemployment driven by a clearly exogenous source – the US economy – has a non-trivial impact on the re-election probability of Australian state governments. Our results suggest that Australian voters either retain too many state governments in economic booms, vote out too many state governments in recessions, or perhaps both.

Suggested Citation

Leigh, Andrew and MCLEISH, MARK, Are State Elections Affected by the National Economy? Evidence from Australia. Economic Record, Vol. 85, Issue 269, pp. 210-222, June 2009, Available at SSRN: https://ssrn.com/abstract=1403583 or http://dx.doi.org/10.1111/j.1475-4932.2009.00549.x

Andrew Leigh (Contact Author)

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

MARK MCLEISH

affiliation not provided to SSRN

No Address Available

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