In the US, we—the voters—elect our presidents using a potentially problematic decision rule: we largely decide who will be president based on the election-year economy…. If the economy is on an upswing before the election, we usually retain the president or his party’s nominee. If it isn’t, we usually elect the challenger.
Why is this decision rule problematic? Because it means we pick our president in large part by the toss of a coin. Economists have long known that whether the economy is on the upswing or downswing in any given year—that is, where the economy is in the business cycle—is mostly chance. CONT.
Andrew Healy (Loyola Marymount) & Gabriel Lenz (UC Berkeley)