Does the state of the economy matter when explaining presidential approval ratings in Taiwan?

Written by Eric Chen-hua Yu.

Empirical studies on presidential approval ratings in the US and other OECD countries have long concluded that the state of the economy is an important factor explaining the rise and fall of presidential approval ratings. Specifically, when economic conditions are good, the sentiment toward the president will be positive. Yet, when economic conditions deteriorate, the presidential approval rating will decline. These findings are particularly salient in aggregate level data analyses.

In light of this correlation, does the presidential approval rating in Taiwan follow such a pattern? Using quarterly data starting from President Ma Ying-jeou’s second term (the second quarter of 2012) to the middle of President Tsai Ying-wen’s first term (fourth quarter of 2018), Figure 1 shows the changes of presidential approval rating (percent of the survey respondents who are satisfied with the president’s performance) along with economic growth rate. The red dash line separates the eras between the two presidents, with Ma’s era on the left and Tsai’s on the right. While the economic growth rates went up and down between under 2% to above 4% during Ma’s second term, the president’s approval rating remained low at under 20% for most of the time. President Tsai’s approval rating was high at above 50% right after her inauguration (Q2 and Q3 in 2016) but dropped by more than 20 percentage points just one year later. Yet, during the same period, Taiwan’s economy was very strong as the growth rate steadily increased from negative number to over 3%. Additionally, as the growth rate stayed high roughly from the middle of 2017 to the middle of 2018, President Tsai’s approval rating kept declining from around 30% to just above 20%. Given the limited number of data points, it is hard to conduct a rigorous time-series data analysis to see the linkage between the approval rating and economic growth rate. But at least from eyeballing the two trends in Figure 1, it is indeed hard to observe any clear pattern or linkage between the two.

pic 2
Figure 1: Approval Rating vs. Economic Growth Rate

While the objective aggregate level data show that the linkage between the presidential approval rating and state of economy seems to be weak in Taiwan, does it necessarily suggest that economic development is not a crucial factor to determine how voters evaluate the president’s overall performance? In TEDS surveys, respondents are asked to assess the conditions of national economy over the past six months as well as in the next six months—that is, retrospective assessment and prospective assessment of national economy, respectively. Figure 2 illustrated that the respondents who have different perceptions of economic conditions indeed assess the president’s performance in different ways. For example, the left panel of Figure 2 shows that the respondents who think the national economy has been worse off over the past six months clearly have the lowest rate of satisfaction with the overall presidential performance. In contrasts, those who think the national economy has been better off over the past six months have the highest satisfaction rate. And the trend of the satisfaction rate for the respondents who think the national economy remained the same lies between the two trends mentioned above. The right panel of Figure 2 shows a very similar pattern. That is, the president’s satisfaction rates can also be differentiated by different perceptions of future economic conditions. Thus, Figure 2 suggests that subjective economic evaluations seem to be highly associated with the overall evaluation of the president’s performance.

pic 4
Figure 2: Approval Ratings, by Different Perceptions of Economic Conditions

Furthermore, by using individual-level survey data, we adopt a statistical modeling approach (i.e., logistic regression model) to analyze the extent to which the evaluation of the president’s overall performance can be affected by the perceptions of economic conditions. Specifically, the dependent variable is whether a respondent is satisfied with the president’s performance. We include both retrospective and prospective evaluations as the key independent variables. Additionally, the model also incorporates a number of variables such as vote choice in the last presidential election ( “winner/loser” effects) and partisanship and national identity measures, as well as multiple demographics (gender, age, education).

To fully explain the estimates of the logistic regression analyses, we interpret our findings in a substantial way by using the coefficient estimates to calculate predicted probability changes with respect to various levels of assessments of retrospective/prospective economic conditions in Ma’s and Tsai’s periods, respectively, holding all other variables constant. For example Figure 3a illustrates that as the retrospective evaluation of economic conditions changes from “worst” to “better” (from 1 to 3), the probability of giving President Ma a positive overall evaluation increases by approximately 17 percentage points (from 7% to 24%). Similarly, the probability of giving President Ma a positive overall evaluation increases by about 14 percentage points (from 7% to 20%) when the prospective evaluation of economic conditions changes from “worst” to “better”. Thus, these moderate probability changes suggest that the evaluations of economic conditions are significant but not necessarily crucial factors to explain President Ma’s approval ratings, particularly for his second term between 2012 and 2016.

pic 2
Figure 3: Changes in Predicted Probability of Positive Presidential Evaluation by Changes in Retrospective/Prospective Economic Conditions

Figure 3b shows that as the retrospective evaluation of economic conditions changes from “worst” to “better” (from 1 to 3), the probability of giving President Tsai a positive overall evaluation increases by about 32 percentage points (from 20% to 52%). Similarly, the probability of giving President Tsai a positive overall evaluation increases by about 46 percentage point (from 7% to 53%) when the assessment of prospective economic condition changes from “worst” to “better”. Thus, unlike the situation in Ma’s period, the changes of Tsai’s approval ratings could be the result of changes in the assessments of economic conditions.

In conclusion, the state of the economy indeed serves as a crucial factor to determine the evaluation of the president’s overall performance in Taiwan, at least from a viewpoint of subjective measures of economic conditions. Future research may pay more attention on explaining the lack of consistency with respect to the linkage between objective and subjective economic measures and presidential approval rating.

Eric Chen-hua Yu is an associate research fellow of the Election Study Center and jointly appointed as an associate professor of political science at National Chengchi University, Taiwan. His research interests include electoral politics, public opinion, and public policy analysis. This article draws from a part of a forthcoming full length paper. Image credit: CC by Studio Incendo/Flickr.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s