The famous catch phrase, “It’s the Economy Stupid”, coined by Clinton campaign strategist James Carville in 1992, appears to still be prescient today. Dr. Alan Abramowitz, Professor of Political Science at Emory University, has developed an excellent analysis of long-term national election results. His prediction model appears to provide a very accurate forecast of Presidential Election results. His statistical analysis has found that three indicators of the national political climate have accurately predicted the outcomes of presidential elections since the end of World War II:
1. incumbent president's approval rating at mid-year
2. growth rate of the economy during the second quarter of the election year
3. length of time the president's party has held the White House.
The higher the president's approval rating and the stronger the growth rate of the economy, the more likely it is that the president's party will be victorious. However, if the president's party has controlled the White House for two terms or longer, it is less likely to be successful. Time-for-change sentiment seems to increase after eight years regardless of the president's popularity or the state of the economy.
These three factors can be combined to produce an Electoral Barometer score that measures the overall national political climate. The formula for computing this score is simply the president's net approval rating (approval minus disapproval) in the Gallup Poll plus five times the annual growth rate of real GDP minus 25 if the president's party has held the White House for two terms or longer. Mathematically, this formula can be written as:
EB = NAR + (5 x GDP) - 25
EB= Electoral Barometer score
NAR= Presidential Net Approval Rating
GDP= Annual Growth Rate of Gross Domestic Product
I wanted to dig a little deeper into this model. To help visualize his prediction model I have developed the above chart, it is a linear regression plot of the Electoral Barometer (EB) score versus the popular vote margin for the incumbent president party’s candidate, based on Prof. Alan Abramowitz data set. His data set covered all the Presidential Elections from 1948 to 2004.
The strength of this prediction model (how actual voting results data fits the prediction score) is measured by the Coefficient of Determination (R-Squared ) The R-Squared value of .903 indicates that 90.3% of the variation in the popular vote margin is related to the changes in the EB score. This indicates a very strong predictive model.
Which brings us to our current situation… from Dr. Abramowitz calculations,
1. President Bush's net approval rating in the most recent Gallup Poll = minus 40%
2. Annual GDP growth rate of the economy Q2 2008 = plus 0.4 % (estimated)
current "Electoral Barometer" calculated score is a "negative 63"
Using my regression model, this predicts a popular vote margin of negative 13.75%, meaning that John McCain could lose to Barack Obama by almost 14%.
Other factors would likely close a portion of this gap, however this Barometer is fundamentally predicting some very bad weather ahead for the Republican Party.
While a majority of state electoral votes determine the winner, this popular vote prediction model gives us glimpse, maybe some insight, into the underlying will of the voters, by looking past the individual characteristics of the current candidates.
“… it appears very likely that the Republican Party is dealing with the dreaded "triple whammy" in 2008: an unpopular president, a weak economy, and a second term election. “
Will John McCain be able to beat the long-term odds?
Can Barack Obama take full advantage of the cards stacked in his favor?
Game On, for the General Election!