Economic performance and electoral volatility: Testing the economic voting hypothesis on Indian states, 1957–2013

The consequences of variations in economic growth for vote volatility are analyzed on a panel of 14 Indian states between 1957 and 2013. Two measures of volatility are used: changes in party vote shares at the assembly level and changes in the state average of vote volatilities constructed at the constituency level. While the results find that both vary inversely with income growth rates, volatility at the constituency level is found to be more sensitive to growth rates. Examination of the periodicity of income growth’s impact finds that growth in the final year of governance has a stronger effect on volatility than does the average growth rate arising over the incumbent’s tenure. We confirm for Indian states that vote volatility responds more to negative changes than positive changes in the growth rate and, by decomposing volatility we find, contrary to most studies, that growth rates affect internal vote shifting more than shifting between exiting parties and newcomers. The responsiveness of volatility to economic and political characteristics of the state reinforces the hypothesis that theories of economic voting have an important role to play in understanding electoral volatility and may provide a more insightful way of approaching the political business cycle.