Are You Better Off Than You Were 4 Years Ago?

In the final week of the 1980 presidential campaign between Democratic President Jimmy Carter and Republican nominee Ronald Reagan, the two candidates held their only debate. Going into the Oct. 28 event, Carter had managed to turn a dismal summer into a close race for a second term. And then, during the debate, Reagan posed what has become one of the most important campaign questions of all time, "Are you better off today than you were four years ago?" Voters answered with a resounding "NO," and in the final, crucial days of the campaign, Carter's numbers tanked. On Election Day, Reagan won a huge popular vote and electoral victory.

The "better off" question has been with us ever since. Its simple common sense makes it a great way to think about elections. And yet the answers are rarely simple.

There are some years in history when the question would have trumped everything, even party affiliation. Take 1932 for instance. In the four years preceding that election, the stock market crashed and the country was in a depression so deep that, by election day, one in four Americans was out of work. Franklin D. Roosevelt won in a landslide. But since then the answers to the "better off" question have been more difficult to sort out.

Amid all the partisan spin about the recent jobs numbers, the unemployment rate is, interestingly enough, not a very good predictor of presidential election outcomes. In fact there is no correlation between the unemployment rate and the margin of victory for the incumbent party in all the presidential elections between 1912 and 2008. There is a weak correlation between the change in the unemployment rate — obviously, if it is coming down quickly before election day the incumbent party might get a boost. But given all the talk about jobs, it is interesting that job numbers in and of themselves don't tell us much.

Other economic variables do a bit better. For instance, there is a weak relationship between how much the economy grows in the first three quarters of the election year (real GDP growth rate) and election outcomes, but it is most predictive at the extremes. In 1964, 1972 and 1984, three years in which the economy was really hot and growth rates were in the 6 to 7 percent range, the incumbents — Johnson, Nixon and Reagan — had landslide victories. We tend to remember those elections for the weakness of the challengers in each election: Barry Goldwater, George McGovern and Walter Mondale. But the growth numbers tell us that George Washington himself might have lost those elections.

A third economic variable, real disposable income, seems to do a little bit better predicting presidential elections — probably because it captures a variety of complex factors that go into whether or not an individual voter has more money in his or her pocket. When one other variable, military fatalities, is added to this one, the measure does a pretty good job of predicting what will happen to the incumbent party. Thus the political scientist Douglas Hibbs has dubbed his model the "Bread and Peace" model. By adding in this one variable, Hibbs' model manages to explain why the Democrats did poorly in 1952 even though real disposable income had grown (fatalities in Korea) and why the Democrats did poorly in 1968 in spite of robust growth (fatalities in Vietnam).

Finally, what makes the "better off" question especially difficult this year is the presence of an economic variable that is not to be found in all the modeling that has been done by political scientists and economists — the housing market. We don't know what the effect of a real estate crash and thousands of "underwater" homes are on elections.

Of course some of the effect of the dismal real estate market is captured in other economic variables, but some of it isn't. As with the unemployment numbers, there is something here for everyone: As of this summer the number of foreclosures was falling. In some of the states with high foreclosure rates it clearly doesn't matter — California will go Democratic; Texas will go Republican — in spite of their poor real estate markets.

But there are critical swing states like Florida and Nevada with very high foreclosure rates, and we really don't know much about how their voters will react. Will they reward Obama for stabilizing the economy and for not being George W. Bush? Or will they punish the president because they are stuck with real estate that's still worth less than it was four years ago?

The "better off" question has no easy answers this time around. That's one reason that each party is pretty nervous about November.

The views and opinions expressed in this piece are solely those of the writer and do not in any way reflect the views of WBUR management or its employees.