Are Voters Rational? Evidence from Gubernatorial Elections

Stanford GSB Working Paper No. 1730

32 Pages Posted: 18 Apr 2002

See all articles by Justin Wolfers

Justin Wolfers

University of Michigan at Ann Arbor - Department of Economics; University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; The University of Sydney - Discipline of Economics; Brookings Institution - Economic Studies Program; Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

Date Written: March 2002

Abstract

Standard agency theory suggests that rational voters will vote to re-elect politicians who deliver favorable outcomes. A second implication is that rational voters will not support a politician because of good outcomes unrelated to the politician's actions. Specifically, rational voters should try to filter signal from noise, both in order to avoid electing incompetent, but lucky politicians, and to maximize the link between their votes and optimal incentives. This paper provides insight into the information processing capacities of voters, by measuring the extent to which they irrationally reward state governors for economic fluctuations that are plausibly unrelated to gubernatorial actions. Simple tests of relative performance evaluation reveal that voters evaluate their state's economic performance relative to the national economy. However, these tests only provide evidence of rule-of-thumb performance filtering. More sophisticated tests reveal that voters in oil-producing states tend to re-elect incumbent governors during oil price rises, and vote them out of office when the oil price drops. Similarly, voters in pro-cyclical states are consistently fooled into re-electing incumbents during national booms, only to dump them during national recessions. Consistent with an emerging behavioral literature, this suggests that voters make systematic attribution errors and are best characterized as quasi-rational.

Keywords: Voting, rationality, elections, voter rationality, state elections, economics and politics, voting models, governors, behavioral economics, political economy

JEL Classification: D7, E6, H0, H7

Suggested Citation

Wolfers, Justin, Are Voters Rational? Evidence from Gubernatorial Elections (March 2002). Stanford GSB Working Paper No. 1730. Available at SSRN: https://ssrn.com/abstract=305740 or http://dx.doi.org/10.2139/ssrn.305740

Justin Wolfers (Contact Author)

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Kiel Institute for the World Economy ( email )

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