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Partisan Bias, Economic Expectations, and Household Spending

51 Pages Posted: 21 Jun 2015 Last revised: 14 Sep 2017

Atif R. Mian

Princeton University - Department of Economics; Princeton University - Woodrow Wilson School of Public and International Affairs; NBER

Amir Sufi

University of Chicago - Booth School of Business; NBER

Nasim Khoshkhou

Argus Information and Advisory Services

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Date Written: September 12, 2017

Abstract

The well-documented rise in political polarization among the U.S. electorate over the past 20 years has been accompanied by a substantial increase in the effect of partisan bias on survey-based measures of economic expectations. Individuals have a more optimistic view on future economic conditions when they are more closely affiliated with the party that controls the White House. Further, individuals see a sharp rise in relative optimism when the party they support wins the Presidency. Both of these effects are becoming larger over time. Using administrative household spending data, we are unable to find evidence that those most likely to support the winning candidate increased spending after any of the elections. For example, despite the substantial rise in survey-based measures of economic expectations among those most likely to support Donald Trump since November 2016, we are unable to detect higher actual spending on auto purchases among this group after the election. Partisan bias is exerting a stronger influence on economic expectations over time, but shifts in economic expectations driven by partisan bias do not appear to have a size-able effect on household spending.

Keywords: consumer confidence, government, economic, policy, sentiment, news, noise, spending, consumption, elections, voting, polarization, Trump, elections

JEL Classification: E20, E21, E60

Suggested Citation

Mian, Atif R. and Sufi, Amir and Khoshkhou, Nasim, Partisan Bias, Economic Expectations, and Household Spending (September 12, 2017). Fama-Miller Working Paper; Chicago Booth Research Paper. Available at SSRN: https://ssrn.com/abstract=2620828 or http://dx.doi.org/10.2139/ssrn.2620828

Atif R. Mian

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Amir Sufi (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nasim Khoshkhou

Argus Information and Advisory Services ( email )

1 N Lexington Avenue
17th Floor
White Plains, NY 10601
United States

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