Mecro-Economic Voting: Local Information and Micro-Perceptions of the Macro-Economy

We develop an incomplete-information theory of economic voting, where voters' perceptions of macro-economic performance are affected by economic conditions of people similar to themselves. Our theory alleviates two persistent issues in the literature: it shows how egotropic motivations can lead to behavior that appears sociotropic, and why relying exclusively on aggregate data may underestimate the amount of economic voting. We test our theory using both cross-sectional and time series data. We document new stylized facts in aggregate data: state-unemployment is robustly correlated with national economic evaluations and presidential support. A novel survey instrument that asks respondents their numerical assessment of the unemployment rate confirms that individuals' economic perceptions respond to the economic conditions of people similar to themselves. Further, these perceptions associate with individuals' vote choices.