Ray Fair Election Equation
VOTE = 55.57 + .691*GROWTH - .775*INFLATION + .837*GOODNEWS
Ray Fair'selection equation is getting a lot of attention. The media hook is obvious: a distinguished scholar defies conventional wisdom to predict Bush landslide. Over the last few months Fair's predictions have been cited by such influential sources as the The New York Times, The New Yorker, MSNBC, and the NRO. Eugene Volokh has even commented the Fair coverage , so we know we've facing a phenomenon.
Unfortunately, the press has glossed over the reasoning behind Fair's predictions. The celebrated election equation is a linear regression on economic and electoral data for American presidential elections (1919-2000). The line that best fits the data is expressed as an equation which assigns different weights to a handful of economic and political variables. The model assigns weights the following factors: incumbency, economic growth and inflation during the election year, and "goodnews" (how many of the last 15 quarters saw growth >3.2%). Fair also claims that his model captures a causal relationship between the economy and electoral results. Allegedly, the model predicts because people vote to maximize their expected utility. Fair makes the further claim that voters calculate their expected utility based on a handful of current economic indicators and the assumption that they are better off under an incumbent with a reasonable economic track record.
Some question Fair's assumption that the economy will get a historically average amount of attention in 2004. But even if we set aside these Humean worries, Fair's model is seriously compromised. The unreported story is that bad economic news has steadily eroded Bush's projected lead. Even so, Fair steadfastly maintains that Bush has this in the bag (unless the model is deeply flawed). To satisfy readers that Bush's projected advantage is not due to overly optimistic projections for Q3 2004, he allows readers to plug their own data into his equation. The model projects a Bush victory even for dire Q3 predictions. Why? Largely because incumbents have historically enjoyed such a big advantage over challengers.
One reason for Bush's strong standing is that he gets a substantial head start by virtue of the incumbency effect. As calculated by Fair, any member of the incumbent presidential party is presumed to derive some benefit, but none more than a Republican whose party has been in office for only a single term. Based on Fair's analysis of elections since 1916, Democrats always have a slight disadvantage, and voters tend to tire of the incumbent party the longer it has occupied the White House. [MSNBC]
When asked to explain the gap between his predictions and the best measures of political opinion, Fair dismisses polls as "flaky" [NYT]. Fair can't afford to be so cavalier. His model ought to fit the preliminary data, but it doesn't. The model assumes that voters deliberate rationally and that they assign the same weight to each variable as the model does. Fair believes that people vote their economic self interest based on the assumption that an incumbent with a decent economic track record will help them.
If Fair is right, voters already have most of the information that they will use to make up their minds in 2004. They know who the incumbent is. They know about the disappointing second quarter data. They know that Bush only has two "goodnews" quarters in his entire presidency.
Today's polls must already reflect Bush's incumbent's advantage and his economic performance to date. If Fair's model is correct, Bush should already enjoy a substantial lead. The fact that he's tied or trailing is already worrisome from Fair's point of view. Moreover, if the electorate were to shift its opinions to match Fair's projections, his theory couldn't explain why. Fair claims that his model is successful because it captures the rational weighting process that voters use to choose their candidates. But if voters do stampede for Bush in the waning days of the campaign, their behavior won't conform to Fair's weighted averages. We know this because the public already knows most of what Fair says they need to know to make up their minds. So, Fair is in a double bind. If his model gives the right answer, we will know it did so for the wrong reasons.