Ivory Towers: Calculating the popularity formula

WHAT is a 1 per cent cut in interest rates worth to the government's popularity? Is unemployment a price worth paying for low inflation? These questions are tackled in a study, 'Modeling Government Popularity in Postwar Britain: A Methodological Example' (American Journal Of Political Science, Vol 37, 1993, pp 317-334) by Simon Price and David Sanders of Essex University.

'The basic notion underlying all popularity function analysis', they write, 'is that an individual elector will support the government if the government's performance exceeds some critical value.' So starting with the general formula: P = f(M,Z) where P is popularity, M is a measure of competence, and Z is a collection of specific (non-economic) factors, they set about determining the mathematical function 'f' that would fit the figures best.

One original intention of the research, Dr Price explained, was to show that perceptions had been changed by the Thatcher years. Folk wisdom among political economists maintained that the electorate had grown in sophistication to accept that inflation was the greatest evil. If this was true, the Government popularity formula for 1960 would be very different from that of 1990; but the reseach showed that nothing has changed. They found, to their surprise, that 'voter preferences have remained broadly constant throughout the postwar years.'

Voters' preferences depend on three main factors: inflation, real interest rates and unemployment. The figures show that a rise in unemployment takes three months to have any effect after which it rises rapidly before falling away after nine months. Interest rates have hardly any effect for 12 months, and take about two years to make their full impression.

The average approval of the government is 42 per cent, at which level a 1 per cent rise in inflation costs 1.1 per cent in popularity, whereas a 1 per cent rise in real interest rates lowers popularity by 1.7%. But it is the Z in the formula which causes most of the trouble. Special features can swamp the economic good sense of the electorate. The Falklands war brought Mrs Thatcher a massive boost of 30 per cent, while the three day week cost Edward Heath 20 per cent.

So where does it leave Mr Major? If this is right, he can enjoy the benefits of falling inflation at least until 1995. Which is also about when the political scientists will be able to judge the Z of Norman Lamont's departure.