Obama and the macroeconomy estimating social preferences between unemployment and inflation

Arbeitspapier

This paper investigates social preferences towards unemployment and inflation in the United States. Estimating a popularity function with monthly data for the recent Obama administration, we find that U.S. voters react strongly to both unemployment and inflation. However, reducing unemployment is more important to society as voters would trade off 1 point of unemployment against 2.5 points of inflation. One point of unemployment costs the president about 4 points, one point inflation costs him 1.5 point. Moreover, we provide evidence that macroeconomic preferences are not stable over time. Finally, we show that public preferences towards unemployment and inflation are not homogeneous a ross different groups in society. The poor and low-educated, for example, react more strongly to changes in the unemployment rate than other groups.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series in Economics ; No. 271

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Structure, Scope, and Performance of Government
• Subject: social preference function ; popularity function ; unemployment ; inflation ; Obama

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Enkelmann, Soeren
• Event: Veröffentlichung
• (who): Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre
• (where): Lüneburg
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/73170
• Last update: 10.03.2025, 11:42 AM CET