The Political Economy of Labour Support
1997-2005
David SandersDepartment of Government
University of Essex, UK
1. The objective economy, economic perceptions and political preferences, 1974-2005
2. A decline in economic voting under New Labour?
3. Rival ‘political’ and ‘economic’ models of party support 1997-2005
4. Empirical results
Four Sections:
1. The Objective Economy, the Subjective
Economy and Governing Party Support
A model that worked in the 1980 and 1990s:
Interest Rates Personal Expectations Government Support
Govt = a + b1Govt-1 + b2dPexpt-1 + bkEvents + ut
Pexpt = a + b1Pexpt-1 + b2dInterestRatet + bkEvents + ut
A mixed ‘political business cycle’/economic voting model
Economic Expectations and (Poll-of-Polls) Governing Party Support, 1974-2005
GOV
PERSEXP
Months
20
30
40
50
60
1974M1 1981M7 1989M1 1996M7 2004M11977M10 1985M4 1992M10 2000M4
Models of Governing Party Support, 1974 -2005
Clear role for lagged changes in Expectations; none for the objective economy
OLS Estimation AR(1) Estimation OLS Estimation
Govt Supportt-1 .94** (.02) .96** (.01) .94** (.02) Nov 1976 dummy -5.41* (2.24) -5.48* (2.23) -5.48* (2.46) May 1982 dummy 8.74** (2.34) 9.08** (2.31) 8.89** (2.37) June 1982 dummy 5.27* (2.34) 4.71* (2.31) 5.15* (2.37) June 1997 dummy 25.84** (2.35) 26.24** (2.27) 25.08** (2.37) dExpectationst-1 .05* (.02) .07** (.02) .05* (.02) dUnemploymentt .25 (.91) dUnemploymentt-1 -1.03 (.93) dInflationt .05 (.21) dInflationt-1 .05 (.20) dInterest Ratest -.15 (.21) dinterest Ratest-1 -.11 (.22) Constant 2.21** (.65) 1.53** (.56) 2.18** (.66) Ctd R2 .90 .90 .90 Durbin-Watson 2.34 1.99 2.35 LM Chisquared 39.79 [.00] Ut-1 -.20 [.00] 40.49 [.00] Reset 2.76 [.10] 3.74 [.05] Akaike IC -850 -843 -855 N 373 373 373 Sample 1974m3 – 2005m3 1974m3 – 2005m3 1974m3 – 2005m3
Modelling Aggregate Personal Economic Expectations, 1974- 2005: the impact of changes in interest rates
Clear role for (changes in) Interest Rates over 30-year period
OLS Estimation AR(1) Estimation
Personal Expectationst-1 .86** (.03) .91** (.02) June 1983 dummy 11.10* (5.08) 10.86* (5.13) March 1990 dummy -16.30** (5.37) -15.36** (5.10) Change in Interest Ratest -1.17** (.47) -1.26** (.43) Constant -.89** (.32) -.55* (.27) Corrected R2 .74 .74 Durbin Watson 2.36 1.97 Akaike -1161 -1150 LM(12) chisquared 21.96 [.04] Ut-1 -.23 [.00] Reset 1.41 [.24] N 374 374 Sample 1974m2 – 2005m3 1974m2 – 2005m3
A decline in economic voting under New Labour?
(a) Change in the political business cycle component:
• An immediate decline in New Labour’s ability to manipulate interest rates in line with the electoral cycle – ceding of interest rate control to the Bank of England
• Manipulation of taxation burden as substitute?
Changes in Taxation Index, 1997-2005
TAX
Months
-0.5
-1.0
-1.5
0.0
0.5
1.0
1997M6 1998M4 1999M2 1999M122000M10 2001M8 2002M6 2003M4 2004M2 2004M12
Taxation index constructed by subtracting RPI from Tax and Price Index
A decline in economic voting under New Labour?
(b) Economic success breeds complacency about the economy?
Percent Unemployed
Percent Inflation
Interest Rates
Economy most important issue
1974m3 – 1979m5 5.1 15.8 10.5 71% 1979m6 – 1983m5 7.6 12.6 13.6 77% 1983m6 – 1987m5 11.1 4.7 10.6 77% 1987m6 – 1992m4 7.5 6.5 12.1 49% 1992m5 – 1997m5 8.7 2.6 6.4 57% 1997m6 – 2001m5 4.1 2.7 6.2 17% 2001m6 – 2005m3 2.9 2.4 4.2 9%
Success breeds complacency?The declining salience of economic issues
UNIMP
INFIMP
OTHEC
Months
0
20
40
60
80
100
1974M1 1977M5 1980M9 1984M1 1987M5 1990M9 1994M1 1997M5 2000M9 2004M1 2005M3
Success breeds complacency?The declining salience of economic issues
ECIMP
Months
0
20
40
60
80
100
1974M1 1977M5 1980M9 1984M1 1987M5 1990M9 1994M1 1997M5 2000M9 2004M1
Success breeds complacency?Governing party support and expectations
weighted by salience, 1974-2005
GOV
PEXPECIM
Months
20
30
40
50
60
1974M1 1977M5 1980M9 1984M1 1987M5 1990M9 1994M1 1997M5 2000M9 2004M1
Fit is stronger until mid 1990s; then even weaker
3. Alternative Models of Party Support, 1997-2005
CON
LAB
LIB
Months
10
20
30
40
50
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
2005M3
The dependent variables….
Why the objective economy doesn’t matter: an illustration
LAB
UNEMPLOY
Months
30
35
40
45
50
55
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
Labour support and Unemployment: a positive trend relationship in which both trend down
Core ‘Political’ Model
Labt = b0 + b1Labt-1 + b2Costs of Ruling
+ b3Honeymoon + b4Sep2000
+ b5Oct2001 + b6Occupation + ut [3a]
Costs of Ruling = time trend (-), Honeymoon (+);
Fuel Crisis (-); 9/11 bounce (+); Iraq War and
Occupation (-)
Additions to Core Political Model[3b] Valence short-cut: Blair’s leader ratings
[3c] Government honesty and trustworthiness
[3d] Service delivery on health and education
[3e] Aggregate Personal Expectations
[3f] Labour versus Conservative economic management capabilities
[3g] Blair’s ratings plus economic expectations
Labour Support and Blair’s ratings as PM
LAB
BLAIR
Months
20
30
40
50
60
70
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
2005M3
Labour Support and Government Honesty
LAB
GOVHONST
Months
30
35
40
45
50
55
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
Labour Support and Service Delivery on Educations and NHS
LAB
SERVICES
Months
30
35
40
45
50
55
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
2005M3
Labour Support and Aggregate Personal Economic Expectations
LAB
PERSEXP
Months
30
35
40
45
50
55
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
2005M3
Expectations scale adjusted to Labour Support scale
Labour Support and Labour versus Conservative Economic Management Competence Perceptions
LAB
LABMANAGE
Months
30
35
40
45
50
55
60
1997M6 1999M2 2000M10 2002M6 2004M21998M4 1999M12 2001M8 2003M4 2004M12
2005M3
Economic Management scale adjusted to Labour Support scale
4. Empirical Results: Labour Core Blair GovHon Services Pexp Labm BlairPex
Labourt-1 .32** .23** .32** .38** .31** .10 .22** Hon 1997 4.14** 4.58** 4.09** 3.48** 4.53** Sept 2000 -10.77** -8.80** -8.98** -10.70** -10.50** -7.82** -8.53** Oct 2001 6.22** 5.69** 5.01** 5.90** 6.32** 3.94** 5.80** CostRule -.10** -.05** -.06** -.09* -.11** -.11** -.05** War -2.34** -2.65** -2.02** -2.02 -1.59* -.55 1.89** Blairt .19** .18** GovHont .07* Servicest -.05 Expectt .07* .07** EcMant .21** Constant 64.67** 41.28** 50.85** 55.53** 67.52** 74.03** 44.17** Adj R2 .92 .93 .91 .83 .92 .94 .94 Akaike -194 -186 -174 -201 -190 -175 -182 LM (12) [.14] [.02] [.19] [.47] [.24] [.09] [.12] RESET [.68] [.23] [.03] [.10] [.90] [.68] [.42] N 94 94 87 56 94 94 94 Sample begin/end
1997m6 2005m3
1997m6 2005m3
1998m1 2005m3
2000m7 2005m2
1997m6 2005m3
1997m6 2005m3
1997m6 2005m3
All the models work, except for Services; Labm has odd dynamics
Empirical Results: Conservative and Liberal Democrat Conservative
version of [3g] Model
Reduced form Cons Model
LibDem version of [3g] Model
Reduced form LibDem Model
Cons Support t-1 .36** (.08) .40** (.08) LibDem Supportt-1 .31** (.10) .33** (.09) Honeymoon 1997 -3.15** (.76) -2.46** (.73) -.21 (.83) September 2000 4.46** (1.40) 4.91** (1.35) 2.39 (1.56) October 2001 -2.10 (1.46) -1.94 (1.64) Cost/Benefit Ruling .03 (.02) .06** (.02) .06** (.01) Occupation .97 (.59) -.04 (.65) Blair PM ratingt -.15** (.04) -.10** (.02) -.03 (.04) PersonExpectationst -.01 (.02) -.06** (.02) -.06** (.02) Constant 37.7**(8.23) 23.0** (3.08) -4.7 (7.88) -9.2**(2.40) Adjusted R2 .76 .74 .76 .76 Durbin Watson 1.78 1.73 1.98 1.98 Akaike -171 -172 -181 -180 LM (12) chisquare 13.85 [.31] 16.31 [.18] 7.46 [.83] 7.46 [.83] RESET .00 [.99] 1.04 [.31] 1.39 [.24] .02 [.90] N 94 94 94 94 Sample 1997m6 – 2005m3
ConclusionsLabour Support affected by:• Costs of ruling• Blair’s rating as PM• Personal economic expectations• Honeymoon, 2000 fuel crisis, 9/11 bounce• Iraq War/Occupation (cost 2.5 points)
Conservative Support affected by:• Blair’s ratings as PM• Honeymoon, 2000 fuel crisis
Liberal Democrat Support affected by:• Costs of Ruling, • Personal economic expectations
Forecasts of Labour Support, December 2004
Blair ratings fall to 25%
Blair ratings remain at 31%
Blair ratings rise to 37%
Blair ratings rise to 44%
War Effect Continues Expectations rise to 0
35 36 37 38
Expectations rise to +5
35 36 37 39
Expectations rise to +10
35 37 38 39
War effect fades to 0 Expectations rise to 0
37 38 39 41
Expectations rise to +5
37 39 40 41
Expectations rise to +10
38 39 40 42
Forecasts of Con and LibDem vote share
Forecasts of Conservative Support for May/June 2005 Blair ratings
fall to 25% Blair ratings remain at 31%
Blair ratings rise to 37%
Blair ratings rise to 44%
War effect continues
34 33 31 30
War effect fades
32 31 30 28
No expectations effect on Conservative support.
Forecasts of Liberal Democrat Support for May/June 2005 Expectations rise to 0
23
Expectations rise to +5
22
Expectations rise to +10
22
No war effect or Blair effect on Liberal Democrat support.
Long term PM ratings/Expectations Model of Governing Party Support, 1974-2005
Coefficient St err Governing Party Supportt-1 .98** 0.01 Change in PM Approval/Ratingt .25** 0.02 Change in Aggregate Expectationst-1 .05** 0.02 November 1976 dummy -4.70* 2.00 May 1982 dummy 7.84** 1.90 June 1997 dummy 26.21** 2.03 Constant .82 0.45 Corrected R2 .92 Akaike Information Criterion -815 Ut-1 -.30 N=373. Sample: 1974m3 – 2005m3
Top Related