Larry Bartels’ book Unequal Democracy (Amazon) has many amazing findings, but one that always catches my eye is Figure 2-1.
That graph plots annual levels of income growth in the United States at various quantiles of the income distribution, grouped and averaged by party of the president. Under Democratic administrations, there is very little variation in average levels of income growth across the income distribution; under Republican administrations, poorer people see less income growth (on average) than richer people. At the very top of the income distribution (95th percentile) there is essentially no difference in average levels of income growth across party of the president. For just about everyone else, income growth is higher (on average) under Democratic administrations than under Republican administrations.
Like me, students find this intriguing, even enthralling. The finding leads to obvious questions like (1) “why would anyone ever vote for Republican presidential candidates”?; (2) “why don’t voters and the parties figure this out?” (3) “what the devil is the mechanism? (it is surely spurious, right?)”; and even (4) “is this a product of some outliers or some other oddity in the data?”
More generally, the idea that presidents might have this much sway over the economy goes against so much conventional wisdom (academic and lay): presidents aren’t generally thought to have this much sway over the macro-economy (but — my own view — perhaps they do have sway over the distributional consequences of macro-economic growth, via tax policy, spending priorities, etc).
One of my students had a shot at replicating the finding. I did too. In the end we asked Larry to direct us to the data. He’s working on an update that will appear soon.
In the meantime, I can’t resist sharing some graphs we made out of the data Larry sent through, which is quite simply, Table F-1 from the U.S. Census Bureau’s Historical Income tables.
Here is the update of Figure 2-1 from Larry’s book (click for larger version):
The dark lines connect the percentile average growth rates. Each plotted point is a yearly, real income change (percentage point), for the indicated percentile of the income distribution, by president. The four or five extra years we’ve had since Larry made his Figure 2-1 haven’t changed anything much; the pattern that Larry spends much of Ch 2 in his book analyzing is still there.
What is interesting is the amount of variation around the averages. Larry’s modeling (reported in Ch 2 of his book) takes all of that into account, but it is nonetheless quite striking when you see it graphically. In any given year, income growth bounces around a lot. Thus, presidents don’t exactly control the economy like a puppet-master; but, looking over the post-WW2 era, we’ve still got the finding that on average, almost everyone does better under a Democratic president. Go figure…or go read Ch 2 of Larry’s book for more.
The other thing I’ve done is highlight the one annual observation we have for the Obama administration (2010 income levels over 2009 incomes); we’ll get data 2011 over 2010 in March of 2012, and — using Larry’s classification scheme (a one year lag, of sorts) — 2009 income growth relative to 2008 is assigned to the Bush administration.
The darker dots on the left of the graph are the 2010 over 2009 changes. These all lie significantly below the Democratic average (unsurprising, given the slow pace of economic recovery in the US). Moreover, the hit to lower income households is quite dramatic, symptomatic of stubbornly high levels of unemployment in the US.
Which leads me to also wonder about using these dis-aggregated numbers in some election forecasting work. So much election forecasting work uses aggregate economic numbers. I wonder how an income growth number computed for middle incomes (a) differs from the aggregate growth number; (b) fares in an election forecasting model?