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How would you evaluate these economies?⚓︎

Let's start with a simple test, in your opinion which economy had a better performance?

  • Evaluate each economy from 1 to 10

{ "schema-url": "assets/charts/carterclinton.json" }

Even when presented with data from all years of a President's Term in a simple format, most participants put substantially more weight on the economy in the final year of presidents’ terms.

  • To illustrate this behavior, consider the two examples in Figure 1. In the left panel, which shows Bill Clinton’s first term, growth was only moderate on average, but ends on a relatively strong note.

  • In the right panel, which shows Jimmy Carter’s only term, growth was stronger in the first two years, but it slows substantially by the election year.

  • Although cumulative income growth was the same during Carter’s term (5.9% versus 5.9% in Clinton’s), participants rated the economy during Clinton’s first term as much stronger.

Election's Margin vs RDI Growth and Economy Evaluations⚓︎

Over a series of experiments, Healy and Lenz1 reveal that participants tend to overweight the last year's performance, despite intending to weigh growth equally across all years. Results are shown in Figure 2 below.

  • The graph to the left presents the Vote Margin for each election and the RDI Growth Rate, while the second one the Vote Margin and the Economic Evaluations by participants.

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{ "schema-url": "assets/charts/margingrowtheval_rep.json" }

{ "schema-url": "assets/charts/margingrowtheval_sep.json" }

Why is this happening?⚓︎

  • The end bias, a cognitive tendency to substitute the end for the whole, plays a significant role in voters' evaluations of economic performance.

  • Retrospective voting involves citizens assessing the past economic performance of incumbents when making electoral decisions.

  • The concept of “Attribute Substitution”, illustrated by Kahneman2 and Kahneman & Frederick3, reveals how individuals unconsciously replace a target attribute with a more readily accessible, related attribute when making judgments.

  • This phenomenon, exemplified in experiments by Kahneman, Fredrickson, Schreiber4 involving immersion of hands in cold water, showcases people's inclination to remember experiences based on peak and end conditions, termed the "Peak-End Rule."

  • This bias extends to diverse retrospective evaluations ranging from vacations to colonoscopies that underly the tendency to substitute overall assessments with easily accessible peak and end information. The video by Wireless Philosophy does a great job explaining this phenomenae.

  1. Substituting the End for the Whole https://onlinelibrary.wiley.com/doi/10.1111/ajps.12053 ↩

  2. Maps of Bounded Rationality https://pubs.aeaweb.org/doi/10.1257/000282803322655392 ↩

  3. Spontaneous vs Deliberate Thinking https://www.cambridge.org/core/product/identifier/CBO9780511808098A012/type/book_part ↩

  4. Cold Water Experiment http://journals.sagepub.com/doi/10.1111/j.1467-9280.1993.tb00589.x ↩

Última atualização: October 20, 2023 18:54:20
Criada: July 31, 2023 21:02:18