29.06.2018 | Ingrid Marie Fossum
On 15 September 2008, the financial crisis hit the western world with the collapse of the American bank Lehmann Brothers. The crisis would not really hit Denmark for another few years. And it would take even longer for the Danish population and the Danish media to realise that we were facing a serious economic crisis.
When first we realise the severity of a crisis, it has a significant effect on our political attitudes and behaviour. In this article, three researchers from Aarhus BSS offer their views on how we react and whom we blame when our society is hit by an economic crisis.
In times of economic recession, we blame the government. In times of economic prosperity, we vote for the government in power. This is a rather simplified version of a classic theory of voting behaviour. However, this is not always the case, and rarely in Denmark, where the multi-party system makes it difficult to blame one party alone. In addition, some of us are such avid fans of a specific party that we let ourselves be affected by its messages time and time again and vote for it regardless of its performance. Voters are different, just like people. Also, we cannot always agree on whether to save or spend money when the crisis hits.
On 20 January 1993, the Democrat Bill Clinton was inaugurated as the 42nd president of the United States. He had beat the incumbent Republican president George Bush, and it was no coincidence that Clinton’s campaign manager chose the following and now world-famous phrase as the internal slogan for the successful campaign: ‘It’s the economy, stupid!”. The economy is an important indicator of the kind of politics we want and who we vote for.
In times of economic recession, the state has less money to pay for all the benefits of the welfare state such as health care, schools, elderly care, etc. There is no money for tax cuts, either.
“If there is no money in the government coffers, we can’t afford anything. In this way, we are all forced to care about the economy - even those of us who are mostly interested in all the great things we can spend the money on,” says Rune Stubager, election expert and professor of political science at Aarhus BSS.
In addition, the economy plays a special role in times of recession, because people start to fear and indeed experience financial problems for example if they lose their job.
For politicians, however, an economic downturn also offers an opportunity to implement policies that they have been waiting to introduce or wish to implement for other reasons than the crisis.
“Just look at Lars Løkke Rasmussen and his party who almost succeeded in abolishing the early retirement pensions. This would hardly have been possible if not for the economic crisis and the population acknowledging the need for extraordinary measures,” says Stubager.
However, not everyone has a clear overview of the economic state of a nation - not everyone notices the economic downturn. In fact, only one third of Danish voters in the 2011 general election were aware that there had been a fall in the GNP from 2008-2010. How, then, are we supposed to consider the economy when we are standing in the ballot box trying to decide who should run our country?
Stubager points out that economic voting based on a real evaluation of the economy is challenging:
“You need to know and understand the economic development, the pursued policy and the responsibility of the government.”
However, you might be able to get by without having a complete overview:
“Evaluating politicians based on the economy is particularly widespread among people with low levels of education - for the simple reason that it is easy. You just need to take a look around you. Do you know anyone who is unemployed? Are people getting fired in your community? Are you afraid of getting fired? Is the construction industry booming? Is the economy? These are things that you are able to pick up on in your everyday life,” says Stubager.
Studies also show that “the politicians’ ability to solve the country’s problems” - including sorting out the economy - is more important to people with lower levels of knowledge about societal matters. In contrast, people who are more well informed state that they emphasise “the parties’ ideology and attitude towards specific issues.”
“If there is no money in the government coffers, we can’t afford anything. In this way, we are all forced to care about the economy - even those of us who are mostly interested in all the great things we can spend the money on."
Rune Stubager, professor
On 15 September 2011, Denmark elected a new Prime Minister, the Social Democratic Helle Thorning-Schmidt. As head of the “red bloc alliance” (the left-wing parties), she won the general election with 50.2% against 49.7% of the votes. A small victory compared to the typical election results in times of crises.
In times of economic recession, we often blame the government and get rid of them. In times of economic prosperity, however, we often vote for the government in power. This is a classic, although somewhat simplified, theory of voting behaviour. The voters are assisted by the opposition, who blames the government for the poor state of the economy. The government, however, tries to convince the voters that they are not to blame.
Studies have also documented that the Prime Minister and his or her party face a so-called “cost of ruling”. One of the reasons for this is that - whether deserved or undeserved - the government gets the blame any problems that may arise, simply because people grow tired of looking at and listening to the prime minister constantly. Generally over time, the incumbent government will lose 2.3 per cent of its support from one election to the next.
According to Rune Stubager, this mechanism is most pronounced in the UK, the US and in other countries where one party typically holds the power. In Denmark, it is not so easy to blame one party alone as we often have coalition governments and cross-party agreements.
During the economic crisis, there were international as well as domestic reasons for why the crisis hit Denmark as hard as it did. The banks, property millionaires and careless consumers must all take their part of the blame. However, according to Stubager, many people also partly blame the government as it liberalised the mortgage market.
However, in the time leading up to the 2011 crisis election, Lars Løkke Rasmussen and his government almost succeeded in shifting the focus from the domestic economic crisis to the global crisis. Thus, the opposition was never quite able to convince voters that the government was to blame for the economic downturn. For this reason, many Danes still believed that the “blue bloc” (the right-wing parties) would be best suited to handle the country’s economy.
On 19 May 2010 - the year before the crisis election, the then Prime Minister Lars Løkke Rasmussen changed his communication about the state of the nation and now explicitly addressed the budget deficit as a serious problem that needed to be solved. This was a unique opportunity for Assistant Professor Martin Bisgaard and Professor Rune Slothuus from the Department of Political Science to explore how the communication of the party elite affects voters.
The two researchers wanted to challenge the traditional theory of how we punish the government in times of economic crises by comparing it to the psychological theory that we see the world in a certain way because we our attitudes to be confirmed.
According to the psychological theory, unconscious psychological mechanisms motivate us to see reality in a way that fits with what we would like to see. If our preferred party is in power and we are asked about the state of the nation’s economy, we prefer to think that everything is fine. In our answer, we are driven by our psychological bias.
Martin Bisgaard explains that psychologists believe that we process information in a way that corresponds with our attitudes.
“People don’t necessarily seek information to get wiser. Rather, they are looking for confirmation for their existing attitudes. It seems that we behave in this manner when it comes to politics where things are rather abstract and the relationship full of conflicts. The psychological approach also serves to explain how people can have different perceptions of the state of the nation’s economy,” says Bisgaard.
According to Bisgaard and Slothuus, the way the party elite talks about things may also serve to explain the very different ways in which voters interpret reality. In fact, we are a bit like football fans - we support our team no matter how bad it is doing. We listen to the party leaders and form our political attitudes in accordance with what they would like us to think. For this reason, supporters of the left and right wing may perceive the same reality in completely different ways.
“When the Danish Liberal Party states that the country’s budget deficit is a problem, supporters of the party will also increasingly see the deficit as a problem. If the Social Democratic Party states that the rate of unemployment is not a great problem, the Social Democratic voters will agree that it is not,” Bisgaard and Slothuus state in the 2018 Politological Yearbook (2018).
A good example is Prime Minister Lars Løkke Rasmussen, who actually changed his message about the state of the economy during the crisis.
Before May 2010, he hardly ever mentioned the budget deficit, but after May 2010, he was suddenly explicitly stating that the country was in the middle of an economic crisis.
Would the change in how the Prime Minister talked about reality lead to changes in the voters’ perception of reality?
The graph below clearly shows the answer:
Before the government changed its message, voters supporting the government would say “no” to the question of whether ‘a budget deficit of this size is a problem in the current situation?”. After the government started talking about the economic problems, the supporters would say yes to the question - just like the opposition. The gap between the attitudes of government and opposition supporters was now getting much smaller, and this may benefit society.
“If the party elite can agree to send out the same messages and get the voters to view reality in the same way, it can create a common basis for our discussions of the problems in society. This would be very beneficial,” says Bisgaard.
Once the left and right-wing parties agree that we are in fact experiencing an economic crisis, people will typically start disagreeing about who is to blame.
Martin Bisgaard conducted an experiment in which American participants had to state whether they agreed or disagreed with the statement: ‘President Obama is more than anyone responsible for the strong/neutral/weak economic growth in the country, because the President can easily increase or decrease government spending.’ Before answering the question, participants had read either a positive/neutral/negative article on the state of the country’s economy.
In this way, Bisgaard attempted to manipulate whether participants considered the actual content of the argument of whether the president can be held responsible for the state of the economy or whether they were simply just pro or con Obama. The result showed that Democrats and Republicans reply differently to the question of whether the argument is strong or weak depending on whether it supports the “right” conclusion:
When Democrats are told that the economy is doing well, they believe that the argument is stronger than if they are told that the economy is in a slump. In this case, the suddenly believe that the argument is weak. For Republicans, the exact opposite happens.
Are voters actually qualified to hold the government responsible for how things are going and get rid of them if things are going badly? Bisgaard’s research suggests otherwise. According to his research conducted among British voters, no less than 40 per cent of voters support their party so strongly that they find other explanations for who is to blame for the economic crisis.
Thus, the party elite is able to convince their supporters to perceive reality in a certain way, and voters will not automatically get rid of the government as it is claimed in the classic theory.
“This means that party leaders shouldn’t be so afraid of taking leadership and saying that certain measures are necessary. Voters are able to understand that this may be important in times of crises. If you have the guts to do so, you will be able to convince at least your own supporters of why certain measures may be necessary. And indeed the party’s own voters are important for the party to maintain its position,” says Bisgaard.
22 October 2009 saw the first of many subsequent downgradings of the Greek credit rating. This marked the beginning of the Greek debt crisis in the wake of the financial crisis. Associate Professor of Political Science Ann-Kristin Kölln observed the financial crisis and talked to people about it. She noticed that we react very differently to the crisis and pose different demands on aspects such as social policy, which is an area where people have strong opinions.
“Some people felt that it was OK to introduce cutbacks in Greece, decrease spending on social welfare and make people work for longer. Others said the opposite: Now that times are hard, we need to help people. This means that we should increase social welfare spending,” Ann-Kristin Kölln explains.
Her findings inspired her to study how our attitude towards social policy changes according to the economic state of the nation.
Within socio-economic research, you talk about the pro-cyclical and counter-cyclical perspective. According to the pro-cyclical perspective, people demand less social welfare spending during times of crisis in order to protect the scarce economic resources. In contrast, the counter-cyclical perspective argues that during an economic recession, citizens demand a stronger social policy because they are more dependent on it and can see why it matters.
According to Kölln, the two opposing views can exist side by side if you take political sophistication into account. She defines this concept as an individual’s cognitive abilities (measured according to level of education) and how motivated he or she is to be informed about political matters (measured according to level of political interest). The population differs on these dimensions.
“The less politically sophisticated base their assessments on superficial problem-solving strategies without thinking much about the future. These people acknowledge that economic hard times equal fewer resources to increase social welfare spending. They act according to their own interests and wish to protect the scarce economic resources. Thus, they do not want to spend money on social welfare when the economy is in a slump,” Kölln explains.
The pro-cyclical perspective is most common in the less politically sophisticated part of the population.
“People who are more politically sophisticated are abstract, complex and systematic in their problem-solving strategies. They also spend more time contemplating the future. These people notice that there is a need for social policy in society during economic hard times. For this reason, they support social welfare spending due to increased costs of living, an increased risk of being personally affected by the weak economy and because crises create a feeling of being financially vulnerable. They would rather save on spending during times of prosperity,” Kölln explains.
The counter-cyclical perspective is more common among the more politically sophisticated part of the population.
However, if the entire population were all as well informed, we would agree to increase social welfare spending during economic crises. This is the result of a study conducted by Kölln.
A study of 32 countries conducted over 10 years (European Social Survey 2002-2012) shows the level of social policy desired by Europeans. On a scale from 1 to 5, where 1 is a low level of social policy and 5 is a high level of social policy, the European average is 3.8. However, according to a simulation carried out by Kölln, the average would be 8.4 if all Europeans had a high level of political sophistication. Thus, it would completely break the scales for what would be possible in the real world.
“In a typical population, we find a slight majority of less politically sophisticated citizens. This means that even though the politicians themselves belong to the more politically sophisticated group, they have been elected by the population and are as such dependent on its support. Thus, politicians cannot simply do as they please. Just look at the riots in Greece in the wake of the political reforms that were implemented during the crisis,” says Kölln.
Kölln points out that it is important that politicians are aware of the fact that people react very differently to economic crises, and that not all voters can be treated in the same way.
“For example, politicians who want fewer social polices might choose not to inform citizens and let them remain ignorant. While politicians who want more social policies would benefit more from informing citizens,” says Kölln.