Campaign econometrics

White House/Pete Souza

President Barack Obama and former Massachusetts Gov. Mitt Romney talk in the Oval Office following their lunch, Nov. 29, 2012.

Article Highlights

  • Models that predict elections using only economic variables have an almost perfect track record.

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  • As weak as the recovery has been, the econometrics suggested that it was strong enough to reelect an incumbent.

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  • Fundamentals of the economy were a boost to the president. Maybe no strategy or candidate could have overcome them.

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This article appears in the December 17, 2012, issue of National Review.

Since the presidential election, Republicans have offered numerous explanations for their defeat. These range from President Obama’s superior get-out-the-vote organization to demographic changes, and almost everyone seems to agree that Republicans must make changes in their party if they are to win the presidency again.

But was the election really so surprising? Ever since the pioneering work of Ray Fair at Yale found a clear link between economic conditions and election outcomes, economists have known something: Models that predict elections using only economic variables have an almost perfect track record. When the economy is improving, incumbents tend to win. When it is worsening, they tend to lose.

The fact is, though the recovery from the recent recession has been long and tepid, conditions have slowly but steadily improved over the last year. This has been especially true in some swing states, such as Ohio, where the unemployment rate currently sits at 6.9 percent, down from 8.3 percent last October.

As weak as the recovery has been, the econometrics suggested that it was strong enough to reelect an incumbent. The most sophisticated extension of Fair’s model has been tracked for almost a decade by Moody’s Analytics. The Moody’s model uses state-level economic data to predict the outcome of the presidential election in each state, and then aggregates the information to make a prediction for the Electoral College. In February, Moody’s published the nearby electoral map. Comparing its analysis with the actual outcome, one sees that the model called every state correctly except Florida.

Poll numbers fluctuated throughout the campaign, but Moody’s projections after the February article showed a steady improvement for Obama as the economy inched forward. The only change in its prediction over this period was Florida’s flipping back and forth between the candidates. The analysis narrowly favored Obama in Ohio, something  Moody’s confirmed with a county-level model that predicted that the counties having the strongest economies would go almost uniformly for Pres ident Obama.

While it may be tempting to treat the results of this election as a referendum on the Republican party, this model suggests that the fundamentals of the economy were a decisive boost to the president. It may be that no strategy, and no candidate, could have overcome them.

Kevin Hassett is the director of economic policy studies at AEI

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About the Author


Kevin A.
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.

    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

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