Why Economic Crises Trigger Political Turnover in Some Countries but Not Others
Skip to content
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.

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

James J. O'Connor 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

Most Popular This Week
  1. Will AI Kill Human Creativity?
    What Fake Drake tells us about what’s ahead.
    Rockstars await a job interview.
  2. Sitting Near a High-Performer Can Make You Better at Your Job
    “Spillover” from certain coworkers can boost our productivity—or jeopardize our employment.
    The spillover effect in offices impacts workers in close physical proximity.
  3. Podcast: How to Discuss Poor Performance with Your Employee
    Giving negative feedback is not easy, but such critiques can be meaningful for both parties if you use the right roadmap. Get advice on this episode of The Insightful Leader.
  4. 2 Factors Will Determine How Much AI Transforms Our Economy
    They’ll also dictate how workers stand to fare.
    robot waiter serves couple in restaurant
  5. How Are Black–White Biracial People Perceived in Terms of Race?
    Understanding the answer—and why black and white Americans may percieve biracial people differently—is increasingly important in a multiracial society.
    How are biracial people perceived in terms of race
  6. Will AI Eventually Replace Doctors?
    Maybe not entirely. But the doctor–patient relationship is likely to change dramatically.
    doctors offices in small nodules
  7. What’s at Stake in the Debt-Ceiling Standoff?
    Defaulting would be an unmitigated disaster, quickly felt by ordinary Americans.
    two groups of politicians negotiate while dangling upside down from the ceiling of a room
  8. The Psychological Factor That Helps Shape Our Moral Decision-Making
    We all have a preferred motivation style. When that aligns with how we’re approaching a specific goal, it can impact how ethical we are in sticky situations.
    a person puts donuts into a bag next to a sign that reads "limit one"
  9. How to Manage a Disengaged Employee—and Get Them Excited about Work Again
    Don’t give up on checked-out team members. Try these strategies instead.
    CEO cheering on team with pom-poms
  10. One Key to a Happy Marriage? A Joint Bank Account.
    Merging finances helps newlyweds align their financial goals and avoid scorekeeping.
    married couple standing at bank teller's window
  11. Which Form of Government Is Best?
    Democracies may not outlast dictatorships, but they adapt better.
    Is democracy the best form of government?
  12. What Went Wrong at AIG?
    Unpacking the insurance giant's collapse during the 2008 financial crisis.
    What went wrong during the AIG financial crisis?
  13. Take 5: Research-Backed Tips for Scheduling Your Day
    Kellogg faculty offer ideas for working smarter and not harder.
    A to-do list with easy and hard tasks
  14. Why Do Some People Succeed after Failing, While Others Continue to Flounder?
    A new study dispels some of the mystery behind success after failure.
    Scientists build a staircase from paper
  15. Daughters’ Math Scores Suffer When They Grow Up in a Family That’s Biased Towards Sons
    Parents, your children are taking their cues about gender roles from you.
    Parents' belief in traditional gender roles can affect daughters' math performance.
  16. How Has Marketing Changed over the Past Half-Century?
    Phil Kotler’s groundbreaking textbook came out 55 years ago. Sixteen editions later, he and coauthor Alexander Chernev discuss how big data, social media, and purpose-driven branding are moving the field forward.
    people in 1967 and 2022 react to advertising
  17. How the Wormhole Decade (2000–2010) Changed the World
    Five implications no one can afford to ignore.
    The rise of the internet resulted in a global culture shift that changed the world.
  18. Take 5: Yikes! When Unintended Consequences Strike
    Good intentions don’t always mean good results. Here’s why humility, and a lot of monitoring, are so important when making big changes.
    People pass an e-cigarette billboard
  19. Leave My Brand Alone
    What happens when the brands we favor come under attack?
More in Politics & Elections