Estimating Presidential Elections: The Importance of State Fixed Effects and the Role of National Versus Local Information

Explaining the outcome of presidential elections is central to any model of American government. Previous researchers have found that economic conditions explain a substantial portion of the variation in vote outcomes. We make two contributions to this literature. First, we show that state partisan predisposition is the most important explanatory variable for the period 1972–1992. Several states are simply out of reach for one of the parties, no matter how favorable is the information about their candidate. Second, we find that national economic indicators have an effect on votes that is an order of magnitude larger than state-level aggregates. Presidents who try to curry favor with certain states through pork barrel projects are unlikely to be rewarded with large vote margins. Our model does a reasonable job forecasting the state-level vote for the 1996 election when the actual economic conditions are used as regressors. None the less we are skeptical that these type of models can accurately forecast the Electoral College winner because of the wide confidence intervals on each state's vote forecast and the potential error in predicted economic conditions.     

Battleground states and voter participation in US presidential elections: an empirical test

The winner-take-all method of allocating Electoral College votes (in 48 of the 50 states) in US presidential elections has promoted interesting behaviours by politicians and states that are evident throughout US (economic) history. This analysis explores the impact that being a ‘battleground state’ in presidential elections has on future voter participation rates. After quantifying the degree to which each state is a battleground state, the empirical analysis proffers what it refers to as the ‘battleground voting hypothesis’, which argues that the greater the degree to which a given state is a battleground state, the greater the expected benefits from voting in that state and hence the greater the voter turnout in that state. The empirical results suggest that the top-to-bottom ‘battleground state effect’ generated an average of 7.8 additional percentage points in voter participation in presidential elections over the period 1964–2008 for those states at the top of the scale.     

Can a corrupt ruling party win a re-election through vote buying?

In many developing countries, it is common for electoral candidates to use embezzled money to buy votes. We develop a dynamic model to analyse the trade-off between economic performance and free handouts resulting from corruption on an incumbent party’s chances of being re-elected. The results show, because voters anticipate handouts from the politicians, politicians engage in corrupt behaviour early in the election cycle while minimizing unemployment and maximizing vote buying at the end of the election cycle.     

The 2020 US Presidential election and Trump’s wars on trade and health insurance

The trade war initiated by the Trump administration is the largest since the US imposed the Smoot-Hawley tariffs in the 1930s and was still raging when he left office. We analyze how the trade war impacted the 2020 US Presidential election. Our results highlight the political salience of the trade war: US trade war tariffs boosted Trump’s support but foreign retaliation hurt Trump. In particular, the pro-Trump effects of US trade war tariffs were crucial for Trump crossing the recount thresholds in Georgia and Wisconsin. Even more important politically, voters abandoned Trump in counties with large expansions of health insurance coverage since the Affordable Care Act, presumably fearing the roll-back of such expansion. Absent this anti-Trump effect, Trump would have been on the precipice of re-election by winning Georgia, Arizona, Nevada, and only losing Wisconsin by a few thousand votes. These effects of the trade war and health insurance coverage expansion cross political and racial lines, suggesting the mechanism operates through the impact on local economies rather than political polarization.     

The financial costs of political uncertainty: Evidence from the 2016 US presidential elections

The victory of Mr. Donald Trump came as a surprise to a wide range of market participants. Some of the elements of his economic plan were envisaged to affect all US sectors. This paper assesses the reactions of disaggregated US stock market to the 2016 US presidential election results, and possible deregulation that is to follow after his inauguration. We find that the different US sectors were significantly and varyingly influenced by the election result, and were greatly reactive during the days after the inauguration. This underscores that uncertainty tends to persist and even rises since the President-elect took office.     

Threshold Effects of Inflation on Economic Growth: Is Africa Different?

This study examines nonlinearities in the inflation-growth nexus in Africa. The study employs a novel dynamic panel threshold regression method developed by Kremer et al. [(2013). Inflation and growth: New evidence from a dynamic panel threshold analysis. Empirical Economics, 44, 861–878. doi:10.1007/s00181-012-0553-9] that extends Hansen’s [(1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93, 345–368. doi:10.1016/S0304-4076(99)00025-1] non-dynamic panel threshold model as well as Caner and Hansen [(2004). Instrumental variable estimation of a threshold model. Econometric Theory, 20, 813–843. doi:10.1017/S0266466604205011] cross-sectional threshold model to deal with potential endogeneity problems. The findings of this study confirm a non-linear relationship between inflation and economic growth in Africa. More specifically, the results show that the inflation threshold values are 6.7% for the whole sample, 9% for the sub-sample of low-income countries and 6.5% for middle-income countries. The regression results suggest that relatively lower level of inflation appears to be in favor of higher economic growth only in African middle-income countries. However, inflation rate beyond a certain threshold is more likely to be detrimental to economic growth for all the cases. These results are robust by considering additional control variables and using three-year averages of the data. The findings of this study may be useful to African monetary policymakers as they decide on inflation targets to adopt to avoid the detrimental effects of high inflation while reaping the growth benefits of low inflation.     

Economic burden of hypoglycemia: Utilization of emergency department and outpatient services in the United States (2005–2009)

Objective: To estimate the economic burden of hypoglycemia on the healthcare system at the national level in the US between the years of 2005–2009.

Methods: This study analyzed the National Hospital Ambulatory Medical Care Survey (NHAMCS), including emergency department (ED) and outpatient department (OPD) components, and the National Ambulatory Medical Care Survey (NAMCS). The annual rates of ED and OPD visits associated with hypoglycemia were reported. Subsequent medical services after disposition were studied. The unit cost of specific medical service was estimated from the Medical Expenditure Panel Survey (MEPS). All annualized costs were adjusted to US 2009 dollars. We also estimated the rates of injury and ambulance use incurring within a visit for hypoglycemia.

Results: The total direct medical cost of hypoglycemia was estimated as $3.49 billion in 2005 and decreased gradually to $1.84 billion in 2009. The declining trend was correlated with hospital admissions from ED, which decreased from 170 665 in 2005 to 71,751 in 2009. Consequently, the estimated annual expenditure of hospitalization for hypoglycemia from ED declined over time by more than half ($2.90 billion in 2005, $1.25 billion in 2009). Injury was reported among 9.5% of the ED visits for hypoglycemia. Ambulances were used among 58% of the ED visits for hypoglycemia.

Conclusion: Hypoglycemia poses a significant burden on the healthcare system; however, annual direct medical cost of severe hypoglycemia in the US decreased over the 5 years studied, which is attributable to tremendous decrease in need of hospitalization following an ED visit.     

Cost-effectiveness of adding carfilzomib to lenalidomide and dexamethasone in relapsed multiple myeloma from a US perspective

Objective: To assess the economic value of carfilzomib (Kyprolis), this study developed the Kyprolis Global Economic Model (K-GEM), which examined from a United States (US) payer perspective the cost-effectiveness of carfilzomib-lenalidomide-dexamethasone (KRd) versus lenalidomide-dexamethasone (Rd) in relapsed multiple myeloma (RMM; 1–3 prior therapies) based on results from the phase III ASPIRE trial that directly compared these regimens.

Methods: A partitioned survival model that included three health states of progression-free (on or off treatment), post-progression, and death was developed. Using ASPIRE data, the effect of treatment regimens as administered in the trial was assessed for progression-free survival and overall survival (OS). Treatment effects were estimated with parametric regression models adjusting for baseline patient characteristics and applied over a lifetime horizon. US Surveillance, Epidemiology and End Results (1984–2014) registry data were matched to ASPIRE patients to extrapolate OS beyond the trial. Estimated survival was adjusted to account for utilities across health states. The K-GEM considered the total direct costs (pharmacy/medical) of care for patients treated with KRd and Rd.

Results: KRd was estimated to be more effective compared to Rd, providing 1.99 life year and 1.67 quality-adjusted life year (QALY) gains over the modeled horizon. KRd-treated patients incurred $179,393 in total additional costs. The incremental cost-effectiveness ratio (ICER) was $107,520 per QALY.

Limitations: Extrapolated survival functions present the greatest uncertainty in the modeled results. Utilities were derived from a combination of sources and assumed to reflect how US patients value their health state.

Conclusions: The K-GEM showed KRd is cost-effective, with an ICER of $107,520 per QALY gained against Rd for the treatment of patients with RMM (1–3 prior therapies) at a willingness-to-pay threshold of $150,000. Reimbursement of KRd for patients with RMM may represent an efficient allocation of the healthcare budget.     

Estimated non-linearities and multiple equilibria in a model of distributive-demand cycles

We introduce the results of a non-parametric estimate of the US wage-Phillips Curve into a simplified version of the model of the wage-price spiral by Flaschel and Krolzig (2008). Making use of Okun’s law, the non-linearity in the wage inflation-employment relation translates into a non-linearity in the so-called ‘distributive curve’ of the economy. Exploiting the observed non-linearity in extending an otherwise standard demand-distribution model (Taylor 2004 Taylor, Lance. 2004. Reconstructing macroeconomics. structuralist proposals and critique of the mainstream, Cambridge, MA: Harvard University Press.  [Google Scholar]), we provide a dynamical analysis both in wage-led and profit-led effective demand regimes. In a profit-led scenario, shown to be the empirically relevant case for the US economy, there are two stable equilibria of Goodwin (1967 Goodwin, R.M. 1967. “A growth cycle”. In Socialism, capitalism and economic growth, Edited by: Feinstein, C.H. Cambridge, , UK: Cambridge University Press.  [Google Scholar]) growth cycle type, identified as a stable depression and a stable boom, and a saddle-path stable equilibrium in between them. Both stable steady states are surrounded by trajectories that cycle counterclockwise around their basins of attraction. The obtained type of growth fluctuations can be verified by a long phase cycle estimation for the US economy using a method developed by Kauermann, Teuber and Flaschel (2008 Kauermann, G., Teuber, T. and Flaschel, P. 2008. “Estimating loops and cycles using penalized splines”. Bielefeld: CEM working paper.  [Google Scholar]).     

Judicial impartiality in politically charged cases

This paper examines under which institutional and political circumstances tenured public officials make partisan decisions. It analyzes the decisions of the judges from the French supreme administrative court regarding the validity of controverted mayoral elections between 1958 and 2007 and uses the vote differential between winners and losers in each election as a quasi-natural experiment to assess the judges’ impartiality. It appears that the judges became partisan after 1981, when the far-right Front National party started to gain more votes. Before 1981, judges cancelled elections only when the vote differential between the election winner and the closest challenger was small. Afterwards, the affiliation of the parties’ candidates also mattered as judges seldom cancelled elections won by communist, mainstream left-wing and mainstream right-wing politicians.     

Promising politicians,rational voters,and election outcomes

Overwhelming anecdotal evidence suggests that politicians often promise more during an election campaign than they are willing or able to deliver once elected. In this paper, we present two signaling models to explain this phenomenon. In the first model, two candidates maximize their share of the vote. In the second model both try to convince the median voter. In each model, candidates rationally distort their true policy position. Voters, however, are not fooled. Upon observing election promises, they can rationally infer the true position of each candidate. Hence, the election outcome is not affected.JEL Classification: D72, D82The author thanks Peter Kooreman, Wilko Letterie, Bert Schoonbeek, and two anonymous referees for useful comments. Financial support from The Netherlands Organization for Scientific Research (NWO) is gratefully acknowledged.     

A swing state theory of trade protection in the Electoral College

This paper analyzes trade policy determination in the Electoral College in the presence of swing voters. It determines the circumstances under which incumbent politicians have an incentive to build a reputation for protectionism, thus swaying voting decisions and improving their re‐election probability. Strategic trade protection is shown to be more likely when protectionist swing voters have a lead over free trade supporters in states with relatively strong electoral competition and in states representing a larger proportion of Electoral College votes. An empirical test using a measure of industrial concentration in swing and decisive U.S. states lends support to the theoretical findings.     

Mirabegron for the treatment of overactive bladder: cost-effectiveness from US commercial health-plan and Medicare Advantage perspectives

Background and objective: The first class of oral pharmacologic treatments for overactive bladder (OAB) are antimuscarinics that are associated with poor persistence, anticholinergic adverse events, and increased anticholinergic burden (ACB) with risk of cognitive impairment. Mirabegron, a β3-adrenoceptor agonist, is an oral treatment that does not contribute to ACB and has early evidence of improved persistence. The objective of the analysis was to assess the cost-effectiveness of mirabegron for OAB vs six antimuscarinics in the US.

Methods: A Markov state-transition model assessed US commercial health-plan and Medicare Advantage perspectives over a 3-year time horizon in an OAB patient population. Transition probabilities between five micturition and five incontinence severity states were derived from a network meta-analysis of 44 trials of oral OAB treatments. Therapy beginning with an oral OAB agent could discontinue or switch to another oral agent and could be followed by tibial nerve stimulation, sacral neuromodulation, or onabotulinumtoxinA. The primary outcome was cost per quality-adjusted life year (QALY). Utilities were mapped from incontinence and micturition frequencies as well as demographics. Based on analysis of data from a large healthcare system, elevated ACB was associated with increased healthcare utilization and probability of cognitive impairment.

Results: From both commercial and Medicare Advantage perspectives, mirabegron was the most clinically effective treatment, while oxybutynin was the least expensive. Tolterodine immediate release (IR) was also on the cost-effectiveness frontier. The analysis estimated costs per QALY of $59,690 and $66,347 for mirabegron from commercial health plan and Medicare Advantage perspectives, respectively, compared to tolterodine IR. Other antimuscarinics were dominated.

Conclusions: This analysis estimated that mirabegron is a cost-effective treatment for OAB from US commercial health plan and Medicare Advantage perspectives, due to fewer projected adverse events and comorbidities, and data suggesting better persistence.     

Majority cycles in a multi-dimensional setting

Summary. We consider a set of alternatives (electoral platforms, bills, etc. ...) defined as a Cartesian product of k finite discrete sets. We assume that the preferences of the individuals (voters) are marginally single-peaked and separable. The main result of this paper states that the pairwise majority relation satisfies these two properties but that it might exhibit several cycles. This result is important when related to classical problems of multi-dimensional decisions such as logrolling and vote trading. We relate our result with a continuous version of it (McKelvey, 1976). Received: March 21, 2000; revised version: April 12, 2001     

Is transcatheter aortic valve implantation (TAVI) a cost-effective treatment in patients who are ineligible for surgical aortic valve replacement? A systematic review of economic evaluations

Objectives:

Health Technology Assessment (HTA) agencies often undertake a review of economic evaluations of an intervention during an appraisal in order to identify published estimates of cost-effectiveness, to elicit comparisons with the results of their own model, and to support local reimbursement decision-making. The aim of this research is to determine whether Transcatheter Aortic Valve Implantation (TAVI) compared to medical management (MM) is cost-effective in patients ineligible for surgical aortic valve replacement (SAVR), across different jurisdictions and country-specific evaluations.

Methods:

A systematic review of the literature from 2007–2012 was performed in the MEDLINE, MEDLINE in-process, EMBASE, and UK NHS EED databases according to standard methods, supplemented by a search of published HTA models. All identified publications were reviewed independently by two health economists. The British Medical Journal (BMJ) 35-point checklist for economic evaluations was used to assess study reporting. To compare results, incremental cost effectiveness ratios (ICERs) were converted to 2012 dollars using purchasing power parity (PPP) techniques.

Results:

Six studies were identified representing five reimbursement jurisdictions (England/Wales, Scotland, the US, Canada, and Belgium) and different modeling techniques. The identified economic evaluations represent different willingness-to-pay thresholds, discount rates, medical costs, and healthcare systems. In addition, the model structures, time horizons, and cycle lengths varied. When adjusting for differences in currencies, the ICERs ranged from $27K–$65K per QALY gained.

Conclusions:

Despite notable differences in modeling approach, under the thresholds defined by using either the local threshold value or that recommended by the World Health Organization (WHO) threshold value, each study showed that TAVI was likely to be a cost-effective intervention for patients ineligible for SAVR.     

Campaigning and election outcomes in a presidential primary election

This article presents new evidence from the US presidential primary setting on the role campaigning plays in determining election outcomes. Using candidate visits as a measure of campaign intensity, I estimate a discrete choice model of voting using a differentiated products framework where I allow for abstention and create instruments for campaigning based on Democratic Party rules for delegate allocation. On average, a visit by a candidate increases the vote share of this candidate by about 2.4 percentage points and decreases the abstaining share by 0.7 percentage points.     

Budget impact of everolimus for the treatment of progressive,well-differentiated,non-functional neuroendocrine tumors of gastrointestinal or lung origin that are advanced or metastatic

Background: Advanced neuroendocrine tumors (NETs) are a rare malignancy with considerable need for effective therapies. Everolimus is a mammalian target of rapamycin (mTOR) inhibitor approved by the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) in 2016 for treatment of adults with progressive, well-differentiated, non-functional NETs of gastrointestinal (GI) or lung origin that are unresectable, locally advanced, or metastatic.

Objective: To assess the 3-year budget impact for a typical US health plan following availability of everolimus for treatment of GI and lung NETs.

Methods An economic model was developed that considered two perspectives: an entire health plan and a pharmacy budget. The total budget impact included costs of drug therapies, administration, hospitalizations, physician visits, monitoring, and adverse events (AEs). The pharmacy model only considered drug costs.

Results: In a US health plan with 1 million members, the model estimated 66 patients with well-differentiated, non-functional, and advanced or metastatic GI NETs and 20 with lung NETs undergoing treatment each year. Total budget impact in the first through third year after FDA approval ranged from $0.0568–$0.1443 per member per month (PMPM) for GI NETs and from $0.0181–$0.0355 PMPM for lung NETs. The total budget impact was lower than the pharmacy budget impact because it included cost offsets from administration and AE management for everolimus compared with alternative therapies (e.g. chemotherapies).

Limitations: Because GI and lung NETs are rare diseases with limited published data, several assumptions were made that may influence interpretation of results.

Conclusions: The budget impact for everolimus was minimal in this rare disease area with a high unmet need, largely due to low disease prevalence. These results should be considered in the context of significant clinical benefits potentially provided by everolimus, including significantly longer progression-free survival (PFS) for advanced GI and lung NET patients.     

Entrepreneurship and its determinants in a cross-country setting

The relative stability of differences in entrepreneurial activity across countries suggests that other than economic factors are at play. The present paper offers some new thoughts about the determinants of entrepreneurial attitudes and activities by testing the relationship between institutional variables and cross-country differences in the preferences for self-employment as well as in actual self-employment. Data of the 25 member states of the European Union as well as the US are used. The results show that country specific (cultural) variables seem to explain the preference for entrepreneurship, but cannot explain actual entrepreneurship. The present paper also introduces the remaining four papers of the special issue of the Journal of Evolutionary Economics, which center around the theme Entrepreneurship and Culture.

10 Q&A: Experienced Advice for “Lost” Graduate Students in Economics

Editor's Note: Oftentimes economic theorists have insightful things to say about methodology and policy as they relate to teaching, but those insights are often lost to more pedagogically-focused professors who do not follow theoretical developments. This section is the first in a series of occasional pieces by economic theorists and researchers that the editors believe may be of general interest. These informal comments are those of Ariel Rubinstein delivered at a Wine and Cheese party at NYU, October 28, 2011, and were expanded on by the author at the invitation of the editors (revised January 2013). Readers who find Rubinstein's comments interesting are encouraged to go to his Web site, http://arielrubinstein.tau.ac.il, and to look at his new book, Economic Fables, which raises a number of issues directly related to teaching. Readers with suggestions for additional pieces for this series are encouraged to e-mail: Colander@Middlebury.edu.     

Generation and distribution of the total factor productivity gains in US industries

This study estimates productivity gains and their distribution among inputs and outputs for 63 American industries over the period 1987–2012. Using the traditional surplus accounting method, the Total Factor Productivity (TFP) growth rates are divided into their price change components in order to determine the stakeholders who do or do not receive price advantages.

An initial analysis showed that TFP of US industries increased at an average trend of 0.8% and established that remunerations to employees and firms’ profitability constituted 49% and 39%, respectively, of the accumulated economic surplus from the productivity gains. Suppliers of intermediate inputs retained 12.1% of the surplus. Finally, customers, equipment and structure providers were the losers in the distribution of economic surplus via, respectively, a significant growth of relative final demand prices and a substantial price decrease of these assets.

A second step analysis underlined that industries with high TFP growth rates mainly benefited customers and firms via output price decreases and profitability improvements while industries with low or negative TFP changes hurt customers through significant output price increases. The sectoral level analysis also showed that employees’ remunerations depend only slightly on productivity gains produced within their industrial sectors.