Possums Pollytics

Politics, elections and piffle plinking

Leading Vote Indicators

Posted by Possum Comitatus on May 19, 2007

Could the ratio of total interest payments to disposable income have become a leading indicator of the government primary vote?

Below the governments primary vote is on the left axis, the ratio of interest payment to disposable income as a percentage is on the right axis as an inverse scale and the interest payments to disposable income was taken as the year to the month

govip1.jpg

 

 

 

 

 

12 Responses to “Leading Vote Indicators”

  1. watt said

    The graph does look interesting.

    So if it is a leading indicator can it be used to predict? Or is the margin of error to big?

  2. possumcomitatus said

    Hi watt,
    It’s not so much “predictive” on the government primary vote in a specific “because that ratio is value X, the government primary vote will therefore be value Y in November 2007” sense. But it certainly appears to be something that is having a serious influence on the governments vote and needs to be kept in ones thought orbit. I’m currently building a model for the government primary vote based on lagged values like these that will (hopefully soon) allow some predictions for the election.

    What makes it interesting is the lagged effect that the percent of disposable income that is used for interest rate payments has on the primary vote. To show how this works, I’ve made two regressions in the update above. The first is a standard autoregressive model which measures the governments primary vote in terms of its own value in the previous period plus the effects of “interest payments to disposable income” in the current period.

    The second is another simple autoregressive model which measures the governments primary vote in terms of its own value in the previous period plus the effects of “interest payments to disposable income” in the period 24 months ago.

    Notice how the coefficient for interest payments in the first equation is statistically irrelevant, but the coefficient for interest payments in the second equation is significant and has a value of -1.1.That suggests that the governments primary vote decreases by 1.1 percentage points on the basis of a 1% increase in the interest payments to disposable income percentage ratio 2 years ago.

    Hence it being a possible leading indicator. That would make sense since financial burdens are a cumulative effect. As they slowly build, they slowly start to piss you off. So the level of your “pissed offness” is a function of what has happened in the past. As far as the government primary vote is concerned, that “past” is about 2 years.

    The third equation is with lagged interest payments for just the Howard period of government, and that is a value of -1.5!!

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