July 31 2012

This page was updated on July 27 2012 when BEA posted revisions to the National Income and Product Accounts.

See here “Obama’s Re-election Prospects Under ‘Bread and Peace’ Voting in the 2012 US Presidential Election





Douglas Hibbs

February 29 2012



The 2012 US Presidential Election: Implications of the ‘Bread and Peace’ Model

For Obama’s Re-election Prospects as of 2011:q4



Aggregate votes for president in postwar elections are well explained by just two fundamental determinants: (1) weighted-average growth of per capita real disposable personal income over the term, and (2) cumulative US military fatalities owing to unprovoked, hostile deployments of American armed forces in foreign conflicts.  No other objectively measured, exogenous factor systematically affects postwar aggregate votes for president.


The Bread and Peace equation is written



where Vote is the percentage share of the two-party vote received by the incumbent party’s candidate, ΔR is the quarter-on-quarter percentage rate of growth of per capita real disposable personal income expressed at annual rates, and Fatalities denotes the cumulative number of deaths of American military personnel per million of population over the term.


Estimating the Bread and Peace equation for the fifteen postwar presidential elections spanning 1952-2008 yields the following coefficient values and related statistics:


Coefficient estimate:





Adj. R2 = .86

 (Std. error|p-value):





Root MSE = 2.20



The graph below shows the pronounced relationship of vote shares to real income growth, along with the displacement of vote shares from the real income growth prediction line at elections significantly affected by cumulative US fatalities in unprovoked foreign wars: Iraq, and especially Vietnam and Korea.





According to the latest revision to disposable personal income data released by the Bureau of Economic Analysis on February 29 2012, during the first eleven full quarters of President Obama’s term -- 2009:q2 to 2011:q4 -- the annualized, weighted-average quarterly growth rate of per capita real disposable personal income was nil (0.0%), which is way below the post-1948 average growth rate of 1.8%. Over the same period US Fatalities in Afghanistan totaled 1234, which amounts to 4 per million of population. As depicted in the graph below, which combines the real income growth and fatalities variables to one dimension, according to the Bread and Peace model if the presidential election was held under those conditions the notional vote share going to the incumbent party candidate (Obama) would be only 45.5%:

45.5% ≈ 45.7 + 3.6⋅x (0.0) - 0.05⋅x 4






But of course what really matters for Obama’s re-election prospect is the over-the-term performance record at Election Day in 2012, not the notional vote share implied by conditions at the end of 2011. I'll make the plausible assumption that American military fatalities in President Obama’s “war of necessity” in Afghanistan continue running at the (politically relatively low) average quarterly rate of the past two years -- 115 or 0.37 per million of population. At election day cumulative Fatalities then would amount to 1579 or 5.1 per million of population, a number that would detract only negligibly from Obama’s expected two-party vote share: -0.25 percentage points (-0.25 = -0.05 x 5.1). Given my assumption about the flow of fatalities in Afghanistan, growth rates of per capita real disposable personal income during the remainder of the term will be the deciding, as yet unrealized fundamental factor in the 2012 presidential election. Calculations shown in the table below indicate that per capita real income growth must average out at an annualized rate of more than 4 percent per quarter until the end of the term in order for Obama to have a good chance of re-election.



Obama’s 2012 Expected Two-Party Vote Share

at various real income growth rates 2012:q1 - 2012:q4


Hypothetical per capita real income growth rates 2012:q1 - 2012:q4:











+4          +6

=> Resulting weighted-average real income growth rate over the presidential term:











1.5          2.3

=> Expected two-party vote share (assuming cumulative fatalities ≈ 1579 or 5.1 per million of population):










51.0%    53.8%



If the US economy gets into robust recovery mode, real income growth could be high enough to secure President Obama’s re-election. However the pace of recovery from the 2008 Great Recession remains sluggish, and the famous 2009 book This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff documents that recoveries from contractions originating with the bursting of speculative financial bubbles are not V-shaped as in garden-variety recessions, but instead are typically prolonged U-shaped affairs lasting 5 to 6 years. The statistical properties of the time path of US per capita real disposable personal income indicate that the chances of a year-long run of quarterly growth rates on the order of 4% or higher are no better than 1/7. I judge it likely that real income growth rates during coming quarters will be in the vicinity of 2%, yielding Obama an expected two-party vote share of around 48% (shown by gray shading in the table above).


Yet remember that every election is affected to some degree by idiosyncratic factors, which at times are important enough to overwhelm the persistent influence of fundamentals. Indeed idiosyncratic events contribute a lot of the fun to political affairs and their unexpected appearance and impact from one election to the next are why many of us follow election cycle developments so carefully in the media.


The Bread and Peace model aims to explain election outcomes in terms of objectively measured political-economic fundamentals, rather than to predict optimally voting results or to track them statistically after the fact. For those reasons the model does not include arbitrarily coded dummy, trend and count variables, or pre-election poll readings of voter sentiments, preferences and opinions. Trends and related time-coded variables are ad-hoc, statistical junk without scientific merit, no matter how much they improve statistical fits or forecasting accuracy in various samples. Attitudinal-opinion poll variables are themselves affected by objective fundamentals, and consequently they supply no insight into the root causes of voting behavior, even though they may provide good predictions of election results.


I believe that the best predictions of 2012 election results, as of earlier elections, will almost surely be delivered by price data at betting sites like Intrade and the Iowa Electronic Markets (which of course contribute nothing to explanation). At the end of February 2012 trading prices at both places implied that President Obama had a 60% chance of being re-elected, with betting in the Iowa vote share market putting his vote at 51.3%. The Bread and Peace model implies that President Obama's chances are more doubtful.


Here is a pdf file of slides for seminars I’ve given on the 2012 election, which supplies more detail on the issues discussed at this web page.


Applications of the Bread and Peace model to previous elections, along with links to my academic papers on the topic, can be found here.


Here are the Stata program (“do”) file and the Stata data (“dta”) file that generated the statistical results on this page.




A Note on the 1948 election: A retired professor of physics recently wrote to me, motivated by some web chatter he read on the topic, asking why I do not include the 1948 election in my analyses of postwar Bread and Peace voting in presidential elections. I referred him, as I do other interested parties, to note 5, p. 173 in my Public Choice (2000, 104: 149–180) article titled “Bread and Peace Voting in US Presidential Elections,” which reads as follows:


Studies like this one frequently include the 1948 election. I omit it not so much because the quarterly National Income and Product Accounts begin in 1947 (and the Bread and Peace model requires quarterly disposable income data over the whole administrative term) but mainly because the transition from a total war economy after the defeat of Japan renders the meaning of the measured economy during demobilization wholly incomparable to the rest of the postwar period.”