Election losers’ depression could cause an actual depression
No matter who won the presidential election, many Americans will be disappointed, and their expectations for the future will affect all of us.
The losing side’s deflation will extend to their economic expectations, according to a new paper from the University of Chicago’s Becker-Friedman Institute. Their irrational belief that their loss will cause a depression could become a selffulfilling prophecy.
“Both Republicans and Democrats expect their preferred candidate to win with a very high probability and the economy to perform poorly when the candidate of the opposing party wins,” according to the paper from Olivier Coibion, Yuriy Gorodnichenko andMichael Weber.
About 87 percent of Democrats expected Biden to win, while 84 percent of Republicans expected Trump to remain in office, according to the research. A significant portion was sure their candidate could not lose and that the economy would do great.
The two sides not only support different candidates, but they rely on different facts.
“Those who follow the election most closely are the ones most likely to hold extreme views about the outcome of the election, suggesting that differences in beliefs are not stemming from a lack of attention to information,” the authors add.
Such certainty fuels disappointment, and consumer confidence is what drives the U.S. economy. When confidence is low, people stay home, spend less and deprive the economy of the cash that fuels growth.
The worst part is that the president has little impact on the economy, according to countless analyses. The president does not control credit markets, business cycles or even government spending.
All that rhetoric about how taxes and regulations drive short-term economic growth does not stand up to scrutiny. The Federal Reserve, consumer confidence and bubbles in financial markets are far more critical.
Yet Americans like to attribute economic success or failure to the occupant of theWhite House.
Political economists attribute this misperception to the country’s increasing polarization and a frightening rejection of scientific research and
statistics. In this way, the mistaken belief that a president controls the economy is only the beginning.
Despite doctors urging people to take common sense precautions, President Donald Trump and other politicians seized on people’s resentment to politicize COVID-19. They encouraged followers to ignore scientists who have spent their careers trying to protect the population.
Infections are shooting up, just as scientists predicted. But millions of people would rather believe their political leader. The refusal of many Americans to wear masks or social distance has contributed to the death toll and misery.
In the 1960s, scientists identified the potential for greenhouse gases produced by fossil fuels to change the climate. President Lyndon B. Johnson formed a committee to study global warming only to have the energy
industry attack him.
The United States has experienced record-breaking tropical storms and wildfires this year, just as scientists predicted. But conservative political leaders have convinced millions of Americans to reject their personal roles in overheating the planet, guaranteeing the climate will be far less pleasant for future generations.
University of Chicago researchers tested how they could shake people’s overconfidence and open their minds to science. It was not easy. As anyone who has studied statistics knows, the mathematical concepts can be hard to grasp, as seen here.
“When we present individuals with polling data that shows not just the mean outcomes but also the span of possible outcomes within the polling margin of error, respondents revised their beliefs by larger amounts towards a tighter election race,” the researchers said.
Too many political partisans, though, only accept information that reinforces their beliefs. They need convincing to consider the science that contradicts them. Most of the time, human nature makes us cling to tribal dogma over cold, hard numbers.
Behavioral research proves why leadership matters. People will follow a charismatic leader who makes them feel part of a heroic mission because it makes them feel good about themselves.
Bad leaders reinforce our pre-existing beliefs, create a sense of grievance, and breed resentment toward anyone who tells us what we don’t want to hear. Bad leaders can convince nations to do horrible things, and they can ignore our most pressing problems.
Good leaders help us understand where we stand and demonstrate howwe can solve the world’s biggest challenges. People can achieve amazing things under good leaders and make the world a better place for all.
No matter who wins the 2020 presidential election, we have major challenges ahead. The president cannot fix or ruin the economy, but whoever holds that office can lead us in solving our biggest problems. But only if we start with the science.