Why Economic Crises Trigger Political Turnover in Some Countries but Not Others
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Politics & Elections Sep 4, 2018

Why Eco­nom­ic Crises Trig­ger Polit­i­cal Turnover in Some Coun­tries but Not Others

The fall­out can hinge on how much a country’s peo­ple trust each other.

Voters who do not trust each other.

Michael Meier

Based on the research of

Nancy Qian

Nathan Nunn

Jaya Wen

In 2009, the Greek econ­o­my crashed, send­ing the coun­try into a severe reces­sion. The finan­cial fail­ure also churned up polit­i­cal unrest: the gov­ern­ment was forced to call for an ear­ly elec­tion and lost power.

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The eco­nom­ic cri­sis that rat­tled Greece was not iso­lat­ed — it affect­ed sev­er­al coun­tries in the Euro­pean Union. Nor­way, for exam­ple, also expe­ri­enced a dip in its gross domes­tic prod­uct. Yet there was lit­tle polit­i­cal tur­moil in the country. 

Why the difference? 

There was a lot of news about peo­ple being angry with the Greek gov­ern­ment and feel­ing lied to by their politi­cians,” says Nan­cy Qian, pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences at the Kel­logg School. It was strik­ing that in oth­er Euro­pean coun­tries going through a reces­sion, we weren’t hear­ing about polit­i­cal unrest or riots.” 

Through­out his­to­ry, eco­nom­ic crises have sparked dif­fer­ing polit­i­cal respons­es. But it can be dif­fi­cult to pin­point the under­ly­ing rea­son for any dif­fer­ences because coun­tries like, for instance, Greece and Nor­way dif­fer in many ways, includ­ing their over­all lev­els of prosperity.

So Qian and coau­thors decid­ed to focus on one spe­cif­ic met­ric: how much the peo­ple of a coun­try typ­i­cal­ly trust oth­er people.

It’s about how like­ly I am to attribute the eco­nom­ic prob­lems to cir­cum­stance or luck ver­sus to the polit­i­cal leadership.”

They found that in coun­tries where gen­er­al trust lev­els are high, an eco­nom­ic cri­sis is less like­ly to trig­ger polit­i­cal unrest. But in coun­tries where peo­ple feel less trust­ing of oth­ers, signs of a flail­ing econ­o­my are more like­ly to lead to the rul­ing par­ty being vot­ed out of power.

If I’m a less trust­ing per­son, I might say some­thing like, I don’t under­stand the details of what our leader is doing, but most politi­cians are bad and they’re lazy, so it is prob­a­bly his fault,’” Qian explains. Alter­nate­ly, a trust­ing per­son might blame fac­tors beyond politi­cians’ con­trol. It’s about how like­ly I am to attribute the eco­nom­ic prob­lems to cir­cum­stance or luck ver­sus to the polit­i­cal leadership.” 

Mea­sur­ing Polit­i­cal Unrest and the Economy

To test the role of trust in polit­i­cal fall­out, Qian and her col­leagues Nathan Nunn of Har­vard Uni­ver­si­ty and Jaya Wen of Yale Uni­ver­si­ty merged pub­licly avail­able data sets that includ­ed events across most of the world’s countries. 

They gath­ered glob­al data from 1945 to 2014 from the Archi­gos data­baseon whether the head of gov­ern­ment was replaced in any giv­en year. (Rather than look­ing at the des­ig­nat­ed leader — in some instances, a cer­e­mo­ni­al monarch — the researchers con­sid­ered effec­tive rulers of state, such as the prime min­is­ter in par­lia­men­tary sys­tems or the chair­man of the par­ty for com­mu­nist countries.) 

Sep­a­rate­ly, they cal­cu­lat­ed the aver­age lev­el of trust in a coun­try using sources such as the World Val­ues Sur­vey, which sam­ples a rep­re­sen­ta­tive pop­u­la­tion in each coun­try. Ques­tions include ones such as: Gen­er­al­ly speak­ing, would you say that (A) most peo­ple can be trust­ed or (B) that you need to be very care­ful in deal­ing with people?”

The researchers then defined a met­ric of aver­age trust as the frac­tion of respon­dents from a coun­try who said most peo­ple can be trust­ed. Nor­way ranked high­est, with a val­ue of 0.79, and Cape Verde scored the low­est at 0.03, mean­ing only 3 per­cent of peo­ple said they gen­er­al­ly trust­ed others. 

Pre­cise­ly why trust varies in coun­tries is unclear, Qian says, but it is a mea­sure that remains rel­a­tive­ly unvary­ing with time. 

The researchers also used the data to mea­sure how polit­i­cal turnover cor­re­lat­ed with eco­nom­ic down­turns — defined as peri­ods of neg­a­tive GDP growth — in coun­tries with dif­fer­ing lev­els of trust. We com­pared the prob­a­bil­i­ty of polit­i­cal turnover for any giv­en coun­try between when they had a reces­sion and when they did not,” Qian says. 

Then, they stud­ied how those odds var­ied with dif­fer­ing lev­els of aver­age trust in a country. 

Trust’s Role in Polit­i­cal Turnover

Indeed, trust played a part in deter­min­ing which coun­tries vot­ed their lead­ers out of office after a recession. 

Eco­nom­ic down­turns were less like­ly to cause polit­i­cal turnover in high-trust coun­tries than in low-trust ones. For exam­ple, a reces­sion was 12 per­cent more like­ly to trig­ger a change in polit­i­cal lead­er­ship in Italy, where only 29 per­cent of peo­ple say they are gen­er­al­ly trust­ing, than in Swe­den, where 63 per­cent of the pop­u­la­tion has high lev­els of trust. 

This rela­tion­ship was only seen in democ­ra­cies, where peo­ple had the pow­er to vote offi­cials out of office. 

We didn’t see this pat­tern in autoc­ra­cies, which makes sense,” Qian says. You can change your lead­er­ship in an autoc­ra­cy by hav­ing a rev­o­lu­tion or a coup, but that is more dif­fi­cult to pull off, so there’s not much peo­ple can do,” even if they are gen­er­al­ly slow to trust.

So does elect­ing a new gov­ern­ment help an econ­o­my recov­er after a recession? 

The researchers found that high-trust coun­tries that did not vote gov­ern­ments out of office after a reces­sion tend­ed to bounce back faster than nations that vot­ed for a change in the rul­ing par­ty. The cor­re­la­tion is not a causal link, Qian explains. High-trust coun­tries also have oth­er fac­tors, such as more media free­dom, high­er incomes, and stronger democ­ra­cies, which may play a part in this recovery.

Last­ly, the researchers exam­ined the inter­na­tion­al impacts of eco­nom­ic slumps. After all, reces­sions can rip­ple across bor­ders. But the team found that a down­turn in one coun­try did not trig­ger polit­i­cal events in a neigh­bor­ing nation or a trade partner. 

We didn’t expect to find such a clear result that it’s only reces­sions in one’s own coun­try that mat­ter,” Qian says. It implies vot­ers are able to sep­a­rate what’s hap­pen­ing in their home coun­try, where they might want to blame their politi­cians, from what’s beyond their lead­ers’ control.”

Pars­ing Eco­nom­ic Policies

The results have direct impli­ca­tions for how nations approach eco­nom­ic interactions. 

For exam­ple, we are now enter­ing a trade war with sev­er­al coun­tries,” Qian says. If we think our trade deci­sions are going to have eco­nom­ic effects in those nations, we need to also con­sid­er the poten­tial polit­i­cal consequences.”

Featured Faculty

Nancy Qian

Professor of Managerial Economics & Decision Sciences

About the Writer

Jyoti Madhusoodanan is a Bay Area-based science writer.

About the Research

Qian, Nancy, Nathan Nunn, and Jaya Wen. 2018. "Distrust and Political Turnover." Working paper.

Read the original

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