When is Myopic Retrospection Rational
Since the 1930s, political scientists have marshaled a great deal of statistical evidence in support of a proposition long familiar to politicians: Hard times hurt incumbents. In nearly all these studies, voters’ retrospections are myopic: Only the most recent year or two seem to matter, and only changes in the economy (not levels) are influential. The usual view is that this behavior is irrational, or at best, a very imperfect cognitive shortcut, although standard political economy models make stylized assumptions under which myopia is rational. This paper does three things: First, it generalizes slightly the conventional political economy models, showing that their accordance with myopic reality is not robust: Adding just a little realism makes them predict bizarre voter behavior. Second, the paper presents a new model for voter thinking that does robustly imply the myopic voter behavior that scholars usually observe under ordinary economic conditions. Third, the model also predicts that voters will be less myopic when the economy is highly volatile. The paper verifies that prediction in a study of the brutally volatile economic circumstances of Montana wheat-growing counties in the 1930s.