Yet Another Problematic Polling Fallacy

 

One of the conundrums that is confounding the economists, well actually everyone is the disconnect between the US markets/economy and the public’s opinions about the economy. But it is not just the economists who are puzzled; it’s the financial experts and industry, and the news media and journalists, the politicians, and especially the political strategists. Well, then there is the public but they’re often confused about the economy, which isn’t exactly unusual.

Now, add to this the politics of an election cycle and the confusion of the conundrum is complicated by the chaos of confounding one causal factor with another. Want to know what the two causal factors are? They are: political party and the economics of inflation. You may not think that political party, or politics for that matter, has anything to do with the state of the US economy; and you would be right. However, that doesn’t mean that politics doesn’t have anything to do with polling about the US Economy. In a weird way, economic theory is non-partisan and yet partisan politics is an influential factor in economic policies, economic conditions, and public perception about the economy.

What does this mean about public opinion about the US economy? It means that economists and economic commentators are highly likely to be misreading and thus misinterpreting what is driving public opinion and how it corrupts their forecasts and predictions. It means we are contaminating our perceptions and understanding of the US’s Economy with a factor that isn’t accounted for in any competent economy theory. Unfortunately, this is assuredly happening, and it is producing bad decisions by, well, everyone. I don’t find this unusual, in fact, I have come to expect it.

But how to provide information that might help a small percentage of the population, even some economists, to see the problem for what it is; that’s the quandary.

Let’s try the following.

Suppose we separated the public into three groups, along a political spectrum. Just for simplicity purposes each group will be basically equal in size. One group are designated as Republicans and as 33% of the population. Another group is designated as Democrats and is also 33% of the population. The final group is Non-aligned and is 34% of the population (their extra 1% is just non-partisan simplicity).

If we assume that 80% of the Republican and of the Democrat groups will voter exactly opposite to each other and remaining 20% will vote a middle choice response on an economic question because of political views than we can create a view of how that would impact understanding polling data that is influenced by such a political factor. The third group’s views on economic questions could be divided into equal parts/numbers for the poll’s results.

A pretty simple model of how partisan politics might impact polling numbers/results.

Now, we are ready to conduct a theoretical poll. Here’s the poll question: “How do you rate X’s handling of the US Economy?” Respondents are given a choice of: Good, So-so, or Bad.

What then are the “results” ?

·   37.6% of the public approves (a rating of Good) of X’s handling of the US Economy.  

·   24.8% of the public rate X as doing So-so. 

·   37.6% of the public disapproves of X’s handling of the US Economy.

If the So-so rating is not considered a favorable rating, then X is not doing well with a partisan influenced polling reaction. But what if the partisan factor were discounted? What would that mean? This is calculated by eliminating the either one the partisan sides; and when we do that we get:

·          56.1% approve.
·         27.1% are So-so.
·         16.7% disapprove.

Clearly the political views have a significant and substantive impact on the poll’s results. This is a problem for assessing and making economic policy decisions. Politics as it usually does, pollutes the process of intelligently using polling information to gauge how the economy is being perceived. And in a world where public perception contributes to economy reality, actions, and processes nothing good will come of it.

What is X’s real rating then? It’s likely to be found somewhere between the two extremes, but where will depend upon just how inanely partisan and informed each of the three population sub-groups is.