The politics of economics

Weekly Updates

Politicians weaponize economic statistics, particular at election time. To paraphrase that iconic economic resource “The Princess Bride”, the voters’ response is often “you keep using that data; I do not think it means what you think it means.” Economic data does not win votes.
Inflation is an obvious problem for politicians. Consumers judge inflation using a narrow range of prices—high frequency purchases like food and fuel. They also think in terms of price levels, not price changes. Politicians who broadcast a slowdown of inflation are met with the skeptical response “then why are prices higher than a year ago?”.
Higher real wages are an antidote to inflation. But voters tend to regard higher pay as the just reward for harder work, not as gratuitously higher living standards. If better pay is perceived as the result of personal endeavor, politicians receive no credit.
GDP is even harder to sell to voters. GDP measures output, not living standards—and it is living standards that matter at election time. If GDP shifts from mildly negative to mildly positive, almost no voter will notice in terms of their day-to-day living. Politicians relying on hard economic statistics are not likely to succeed. It is voters’ perception of the economic story that wins elections.