Possums Pollytics

Politics, elections and piffle plinking

Budgets bounce like dead cats

Posted by Possum Comitatus on May 17, 2007

I thought I’d use the newspoll results back to 1985 to see if the journo cliche of choice come May – “the budget bounce” was nothing more than a fantasy driven by people that have nothing better to say.

Surprise surpise, that’s the case.

So I also tested the excuse of choice for journo’s and governments alike when the polls dont react the way they apparently ought to – “its a delayed bounce, it hasnt happened yet, but it will happen”.

Surprise, surprise….. that’s twaddle too.

Using the series GOVPRIMARY (which is the newspoll measurement of the governments primary vote) as the dependent variable, I regressed it against 3 seasonal dummy variables S5, S6,and S7 representing the months of May, June and July respectively.If budgets actually do cause a bounce in the government vote in the polls, those seasonal dummy variables would be expected to have a positive coefficient.If those bounces happen as regularly as the commentariat believes, they should also be statistically significant i.e. the Prob value should be less than 0.1, preferably less than 0.05.

So let us see the results (a usual constant C was also added to the mix – just ignore it)

Again, using the quaint little Eviews to do the ugly math:

Dependent Variable: GOVPRIMARY
Method: Least Squares
Date: 05/17/07 Time: 17:05
Sample(adjusted): 1986:01 2007:05
Included observations: 257 after adjusting endpoints
Convergence achieved after 5 iterations
Variable Coefficient Std. Error t-Statistic Prob.
C 42.37000 0.688365 61.55166 0.0000
S5 -0.085694 0.502248 -0.170621 0.8647
S6 -0.686960 0.583794 -1.176716 0.2404
S7 -0.429398 0.511557 -0.839394 0.4020
AR(1) 0.774224 0.039983 19.36391 0.0000
R-squared 0.598817 Mean dep var 42.437
Adjusted R-squared 0.592449 S.D. dep var 3.8455
S.E. of regression 2.454982 Akaike 4.6533
Sum squared resid 1518.788 Schwarz 4.7224
Log likelihood -592.9593 F-statistic 94.035
Durbin-Watson stat 2.216458 Prob(F-statistic) 0.0000

Lo and behold, all of the seasonal dummy variables are utter rubbish.They have no statistical significance and some of the coefficients are negative.Budgets dont bounce polls.

What about just over the Howard term of government.:

Dependent Variable: GOVPRIMARY
Method: Least Squares
Date: 05/17/07 Time: 10:43
Sample: 1996:03 2007:05
Included observations: 135
Convergence achieved after 3 iterations
Variable Coefficient Std. Error t-Statistic Prob.
C 43.11803 0.745668 57.82469 0.0000
S5 0.334513 0.688051 0.486174 0.6277
S6 -1.320608 0.805286 -1.639925 0.1034
S7 -0.321919 0.711838 -0.452237 0.6519
AR(1) 0.713235 0.063750 11.18798 0.0000
R-squared 0.494724 Mean dep var 43.110
Adjusted R-squared 0.479177 S.D. dep var 3.3607
S.E. of regression 2.425422 Akaike 4.64622
Sum squared resid 764.7476 Schwarz 4.7538
Log likelihood -308.6200 F-statistic 31.821
Durbin-Watson stat 2.030240 Prob(F-statistic) 0.0000

Again – utter twaddle.

Budgets dont give governments a bounce in the polls.It is not in any way an expected voter behaviour

UPDATE :GriffithGuy raised an interesting question.Do budgets bounce in election years when the pork is flying?

Lets test the theory again, but this time using dummy variables representing only budgets in election years.First for all governments since 1986:

Dependent Variable: GOVPRIMARY
Method: Least Squares
Date: 05/18/07 Time: 01:17
Sample(adjusted): 1986:01 2007:05
Included observations: 257 after adjusting endpoints
Convergence achieved after 6 iterations
Variable Coefficient Std. Error t-Statistic Prob.
C 42.27549 0.684618 61.75049 0.0000
S5E 0.466934 0.832840 0.560653 0.5755
S6E -0.653364 0.995129 -0.656562 0.5121
S7E -0.318264 0.880077 -0.361632 0.7179
AR(1) 0.774742 0.040092 19.32387 0.0000
R-squared 0.598543 Mean dep var 42.437
Adjusted R-squared 0.592170 S.D. dep var 3.8455
S.E. of regression 2.455822 Akaike 4.6540
Sum squared resid 1519.827 Schwarz 4.7231
Log likelihood -593.0472 F-statistic 93.928
Durbin-Watson stat 2.228653 Prob(F-statistic) 0.0000

Again, no budget bounce as the coefficients are small and mostly negative, and they are statistically insignificant.
But what about Howard from 1996-2007?

Dependent Variable: GOVPRIMARY
Method: Least Squares
Date: 05/18/07 Time: 00:59
Sample: 1996:03 2007:05
Included observations: 135
Convergence achieved after 5 iterations
Variable Coefficient Std. Error t-Statistic Prob.
C 43.04898 0.755544 56.97745 0.0000
S5E 1.098800 1.051503 1.044980 0.2980
S6E -2.281707 1.285617 -1.774795 0.0783
S7E -0.939306 1.151982 -0.815383 0.4163
AR(1) 0.723267 0.063517 11.38701 0.0000
R-squared 0.504229 Mean dep var 43.110
Adjusted R-squared 0.488975 S.D. dep var 3.3607
S.E. of regression 2.402501 Akaike 4.6272
Sum squared resid 750.3613 Schwarz 4.7348
Log likelihood -307.3381 F-statistic 33.054
Durbin-Watson stat 2.065642 Prob(F-statistic) 0.0000

Again no bounce as the coefficients are insignificant, but at the 10% level of significance Howard actually loses over 2% off his primary vote in the June following an election year budget.

Ouch.

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19 Responses to “Budgets bounce like dead cats”

  1. GriffithGuy said

    Possum,
    Does this include all Budgets over that time?Was there any difference between regular budgets and those in election years, as geovernments tend to save their friendlier come love me budget to election years.

  2. possumcomitatus said

    The regressions contain all of the budgets undertaken within their sample.So for the first regression it contains every budget from 1986 through to the current budget in 2007.The second regression contains all of the budgets that were delivered during just the Howard government.

    You’ve raised an interesting point on election year budgets.I just built a dummy variable stack for only budgets in election years and the results are the same for both all governments since 1985 and for the Howard government with one peculiar exception.Under the Howard administration, during election years the Howard government loses 2.3% off their primary vote in June and that coefficient has a p-value of 0.078 meaning its significant at the 10% level.

    So to answer your question, governments don’t even get budget bounces in election years.

  3. Pedro of Canberra said

    Late comment, but – Budgets used to be in August? What year did they shift to May? Could this be signficant?

  4. possumcomitatus said

    You’re right Pedro!

    1998/99 I think was the first May budget.Going back over the 1985 to 1997 period and testing for budget bounces in the polls for August, September and October get’s the same results:Prob Values for those months of between 0.4 and 0.8.Completely statistically insignificant.

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