Market dynamics and political decision -making: The economic connection

Economics and politics are deeply connected, but not as conveniently nor superficially as other models might suggest. This dissertation applies a novel approach to an old mystery: the economic connection. I introduce a formal model where, unlike in conventional models, two-party politics does not revolve around a neutral median voter. Political districts vary in their economic characteristics across districts and time; economic cohorts have differing political alignments. The median voter's ideological position depends on the economic composition of the district. Electoral preferences are rarely symmetrically distributed around a moderate median.;The model presents a strategy game where rules govern how political markets respond to economic markets. In the game, politicians seek to (a) obtain their ideal policy preferences, (b) win elections, and (c) procure party benefits. The empirical setting is the U.S. House of Representatives, 1970--1996. I ask three central questions: (1) why political representation and legislative voting patterns vary across districts and time; (2) why and how political markets are linked to economics; (3) how the model bridges many of the empirical regularities and anomalies found in American politics.;Three critical tests determine that district level economics (a) exert significant independent effects on vote shares, (b) are powerful determinants of positions taken, and (c) are a dominant strategic influence on members whose seats are at stake. The tests involve multi-variate regression analysis on a pooled cross-sectional data set (House members, 1972 to 1996). Where competing theories fail, the economic components remain important determinants of positions taken and vote shares won. The economic connection is a more powerful and consistent influence on vote shares and strategy than the party of the President, national disturbances, or state characteristics. By changing a few crucial assumptions about politicians and their electorates, the model generates provocative conclusions about American politics. The ensuing proof rejects the notion that two-party system inevitably lead to Tweedle-dee and Tweedle-dum politics, and offers alternative explanations for the safe seat phenomenon, divided government, and split-ticket voting.