It’s only partially a tongue in cheek question.
Newspoll has released their biannual poll on Living Standards that’s well worth a squiz – although The Oz seems to have ignored it for some reason. The poll was done over the weekend, so it has the same sample size of 1200 that we witnessed with the voting intention questions – giving us an MoE that maxes out around the 2.8% mark.
Newspoll asked the question:
Thinking now about your standard of living. Do you believe your standard of living in the next six months will improve, stay the same or get worse?
What is really interesting about the results is the way partisan identification skews the positive, negative and neutral perceptions of how a respondent’s standard of living will evolve over the next six months – quite significantly at that – leading to a somewhat amusing question at the end. First off though, this is how the headline numbers come in (click to expand) :
Standard of living polls are like are like foundational versions of consumer confidence polls.
Consumer confidence surveys run one of two ways. In various flavours they either ask a respondent how they believe everyone else will react in the near future to economic circumstances, or they ask a respondent how they believe they will personally react to economic circumstances in the near future. Yet in both cases it’s a derivative question because most actual economic behaviour on the ground is driven by ones standard of living, driven by ones personal economic circumstance. Consumer confidence surveys usually aren’t explicit in asking a respondent where they believe their own circumstances will be in the future, but ask instead about a respondents future reactions to those circumstances – but the actual circumstances themselves are left hanging in a sort of implied haze.
What standard of living polls do and what consumer confidence surveys usually don’t, is cut through that haze and go straight to the core question – do you think your personal and economic circumstances will improve, get worse or stay they same.
What is striking about the headline results are the way Australians have suddenly returned to normality in their future perceptions. The June 2009 results are statistically identical to the results obtained in, say, 2006.
This is fundamentally good news!
The results go to the very core of economic expectations – Australians now believe that despite the global economic shenanigans happening around us, our standards of living will improve, stay the same and get worse in roughly the same proportions as they usually do and have done over the last 7 years.
If we believe that our standards of living patterns have returned to normality, we should expect that our actual actions on the ground will return to normality as rational economic behaviour starts flowing on from firstly the perceptions of our economic and personal circumstances, and then later the reality of our own personal and economic circumstances.
Politically, this is a very powerful vindication of not only what the government has done, but also the way they’ve angled the politics to the electorate – they’ve stopped people being scared.
Fear and pessimism is toxic in economic downturns, and usually becomes self-fulfilling in the process. To bring the public back to the situation approaching normality when the GFC is smashing other economies to pieces is nothing short of astounding.
Anyhoo, the actual point of this post was something else entirely – how partisan identification skews the self-perception of living standards.
If we chart the Improve, Stay the Same and Get Worse responses by party vote, what stands out is the way that people who vote for the government are far more optimistic than those whose party of choice is in Opposition – and it holds for both parties as we can see by the way the partisan lines crossed at the last election (again, click to expand the charts).
One theoretically amusing possibility to come from this is that the easiest way to achieve a boost in economic confidence – and as a consequence, a boost in economic activity – may be for the government to be way ahead in the polls.
Which then begs the question – has having a popular government contributed to Australia’s economic performance through the GFC? Turnbull and Nelson may have helped Australia in ways they never thought possible – via their poor political performance.
Mayhap the Coalition really are the superior economic managers – to the point of willingly sacrificing their own political capital for the good of the country 
12 Comments
Cheeky bugger
It’s obviously an open question as to whether perception of living standards drives vote, or political affliation drives perception of living standards. Probably a bit of both.
It’s a pity pollsters don’t ask if respondents are “rusted on” (probably worded something like “Could you see yourself voting for another party in the next 10 years”).
Your analyses over the last few days have been brilliant, as usual. You stand head and shoulders above all other statisticians who analyse polling in this country.
This analysis is fascinating. It reinforces the Government’s view that talking up the economy and fostering confidence and optimism is what the country needs, and gives validity to the assertion that the Coalition’s negative talk about the economy and the Government’s actions is counterproductive.
It just gets worse and worse for the Libs, doesn’t it?
Could be a lot of others joining Costello in leaving at the next election, voluntarily or involuntarily. Not good for democracy, and unless the left flexes its muscle and forces Rudd to step even further away from Rattus, back to a a more centre-left position rather than the current right-centre position, we’ll just have more of the same Keating/Howard lunacy.
It’s interesting how the election provided such a strong flip for the partisans. In one way you could say that our parties do their job well, representing and promoting the interests of their constituents. Although this would have to take into account changes in their ‘bases’ over time.
I think it also illustrates, as if we needed any more evidence, that humans aren’t 100% rational. That voters will so clearly change their perception of these factors based on a change of government; i’m amazed that people think that governments can change the country that quickly.
Also I’d repeat Ad Astra’s first sentence. Bravo.
Hey Poss
I had the same thought yesterday re ETS. It’s going to take a fair whack of political capital to get an ETS in place and make it strong enough to count. And Turnball just gave Rudd an extra big helping of juicy political capital. Here’s hoping it gets invested where it’s needed.
The same argument could actually be made re George W. If he hadn’t have been so overwhelmingly unpopular, would Obama now have the political capital to take the measures he is taking?
How wonderfully selfless of these two leaders to sacrifice the the electoral fortunes of thier respective parties for the good on all mankind.
thewetmale: I’m not so sure their perceptions are necessarily changing – I suspect a fair few respondents treat answering a poll like barracking for their footy team.
I think you are taking things a little far in this post…
There are sound economic reasons why Australia is faring better than most other developed countries during the global recession:
We don’t export much of those goods and services for which demand fell off a cliff at the turn of the year.
Our superior fiscal position provided significant room for stimulus
There was no real credit crunch here, which meant that the majority of RBA interest rate reductions were passed through to borrowers
Due to previous underinvestment, there was no excess supply of residential buildings, which has meant that the residential construction sector has been able to hold up well and now respond to the signifcant decline in financing costs
These are all real economic factors
Do you think that European governments haven’t attempted to talk up their economies as well?
The problem there is that such talk in Europe has had to confront the hard data, which is related to economic factors beyond their short-term control.
The way you write, it is as though all those governments needed to do was change their rhetoric and things would be a lot better there!
As if!!
Consumers in Australia are reacting to the relatively better economic circumstances that they face. They were told things might collapse. They didn’t. The government did the right thing by enacting a substantial stimulus early, and that is helping the economy. Most have seen their disposable incomes increase and their interest servicing burdens fall. For those with jobs, and confident of retaining those jobs, the outlook looks bright, particulary compared to a few months ago.
The ALP’s superior polling presumably reflects that the majority of Australians feel like they have handled the crisis well. It is endogenous to the state of the economy, much of which has actually been beyond the government’s direct control.
As a statistician you know better than anyone that you should be wary about confusing correlation with causation.
LO, I think you’re looking too hard at it mate! Must be that northern climate
This is just about expectations, and as far as the politics goes, the management of them.
The question of good polling for a government and boosting of the Australian economy (mind you, just the boosting part that can derived from positive expectations about the future – mostly the non-deferal of consumption and investment) is partially tongue in cheek.
Sure it probably runs mostly from good standard of living expectations *INTO* good polling for the government, but is it entirely that? Is there a chance or an argument for some unspecified chunk of it running the other way?
Does some herd effect play a part where some people might be hesitant about their future standards of living, but see a government being really strong in the polls and it tips them over into positive territory because “everyone thinks the government knows what it’s doing – it must be right”?
I suppose I’m wondering whether good polling creates a level institutional trust in the ability of a government to deliver practical benefits to the economic and personal circumstances of the electorate, and where that very increase in trust itself flows through to more positive expectations than would ordinarily be the case?
Eratosthanes,
It’s a good point on the political capital.
I still think it will all come down to the Coalition – they’ll be forced to decide which will be least damaging to them: Passing an ETS and avoiding a DD, or not passing it and fighting one.
Thanks Ad and WM.
I guess it is possible Poss, but right now I can’t think of a robust way you could test your hypothesis.
That said, it is hard to imagine how low levels of support for a government, combined with little possibility of removing that government in the short-term, could be good for confidence and hence the economy. Here, I’m thinking of current circumstances in the UK.
So, I guess the conclusion would be that there is probably two-way causation, with it hard to determine the relative magnitudes. I suspect most runs from the economy to polling though.
I guess my other point would be that while the government hasn’t performed badly, they are also benefiting from a set of fortunate circumstances. They look great in a relative sense because the rest of the world has tanked, while we haven’t. Voters probably aren’t able to determine the reasons for the relative out-performance, so credit some of it to the government of the day.
caf,
I think the barracking for a footy team metaphor was what i was trying to get at. I always love it when one person’s sentence can sum up another’s paragraph (not that it’s much of a paragraph.)