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Economics and voting behaviour

M. A. Taslim | November 25, 2018 00:00:00

In an election-oriented set-up the incumbents tend to advertise their achievements. The leadership of our government also does not waste any opportunity to zealously narrate the development work it has done since Bangladesh Awami League-led alliance took over the reign of the nation's administration, and the benefits that have supposedly flowed from it to the people. Glitzy images of the done, partly done and yet to be done mega projects have been paraded ad nauseam in the print and electronic media over the years. Large bill boards listing the achievements of the government have been put up in strategic places to impress the people of the government's achievements and woo them to its fold.

Many of the numbers churned out by the statistical arm of the government, Bangladesh Bureau of Statistics (BBS), are also suggestive of impressive progress. Both GDP and per capita GNI have shown marked growth on the back of double digit growth of the industrial sector. The GDP growth has maintained the trend of decadal growth of the first four decades. It has not only remained over 6.0 per cent during the 2010s, importantly it has shown a steady increase to over 7.0 per cent. Per capita income also increased continuously such that Bangladesh has already crossed the threshold per capita income needed to be graduated out of the 'least developed country' category of the UN; it is expected to do so formally in 2025. It has also graduated to a 'middle income country' category of the World Bank in 2015. A number of other indicators such as life expectancy, women empowerment, literacy and power generation estimated by BBS have shown significant improvement.

Like many other governments around the world, our government probably assumed that if the story of its economic achievements were told repeatedly to the people, they would reward it with their electoral support. Hence, the government narrative focusing on economic development, and the tireless propaganda blitz to inform the people. But the narrative may have lost traction; the government is essentially preaching to the converted. A large section of the population do not seem to be much impressed by the story of the 'development tide' or the primacy of economic growth over democracy.

In an electoral system the voters are expected to appreciate and reward good work if they are given a chance to vote freely, and conversely. Several factors may influence the voting behaviour of the public, and some of these have been discussed widely in the media. This write-up will not retrace the trodden path, but focus attention only on the economic motivation of the voting behaviour.

People are likely to view a regime more favourably if they are satisfied with their own situation. According to a fundamental axiom of economic theory the level of satisfaction ('utility' in economic jargon) of a person increases monotonically with his/her consumption, and higher utility is preferred to lower utility. Since consumption is strongly related to income it follows that satisfaction or utility is ultimately determined by income. People will be more satisfied with their situation only if they have higher income, and hence higher consumption. This is the idea behind the refrain 'people vote with their wallets' heard so often during election hustings in developed countries. The propaganda efforts of the government could be electorally successful only if the people perceive that the development works of the government have resulted in higher income and consumption now than what they had enjoyed previously.

The environment in which income is earned and consumed also has an influence on the level of satisfaction. The satisfaction derived by a person from having dinner peacefully with his family at his home will be much reduced if he perceives a threat of being kidnapped or his property looted. A loss of the sense of security of life, limb and property diminishes the pleasure of consumption. If news reports are to be believed there has been such a loss of sense of security for a large section of the population.

Gross domestic product (GDP) is a standard measure of the aggregate income or output of the country. It is a convenient aggregate measure for international comparisons as well as a measure of the rate of economic progress of the economy. Another very similar measure is gross national income (GNI). Per capita gross national income (GNI pc) is often used as a measure of the level of economic development of the country and an indicator of the standard of living of the average person. By both these criteria, government data suggest that Bangladesh has done remarkably well during the period 2008-09 and 2017-18. GNI increased by 72 per cent (GDP increased by 77 per cent) and GNI pc increased by 53 per cent. These are large increases, and only a small number of countries have achieved similar increases during this time. If the people did perceive an increase in their income of this magnitude it would be really very unusual if they did not support the incumbent. No wonder that the government is so keen to advertise these numbers to convince the people of the supposedly large improvement in their wellbeing.

However, the great majority of the people neither understand these measures nor care much how large these are. There are very good reasons why this is so. GNI pc is the income that each person in the country would have received if GNI were distributed equally among all the people. What matters to the people is not this hypothetical equal share, but what they actually get in their hands to freely spend. A large part of the GNI is taken away by the government and is not available for distribution to the people. What they get is further influenced by the fact that income is never equally distributed, some always gain excessively at the expense of the others. It is very much possible that a large increase in GNI may not benefit a majority of the people. These people who lose out are unlikely to be as happy with the government as those who gain disproportionately.

The income actually received by the average person is captured well by household income which is routinely estimated along with GDP and GNI in many countries. But BBS does not provide estimates of household income in its national income accounts. It is estimated only periodically every five years or so through an extensive household income and expenditure survey (HIES). These surveys are a rich source of data on numerous household attributes that could be used for many types of analyses including assessing their standard of living. Importantly, these also allow tracking of any changes in income distribution. The last three surveys were done in 2005, 2010 and 2016.

Household income and expenditure data are

Economists have explained economic factors and their impact on economic growth for centuries. The evolution of economic growth theories can be traced back from Adam Smith's book, Wealth of Nation. Smith emphasized that the growth of an economy depends on division of labor. This view was further expounded by classical economists, such as Ricardo, Malthus, and Mill. The theory developed by these economists is known as the classical theory of economic growth.

shown in nominal terms in the survey reports. The HIES data of different years expressed in nominal terms are not directly comparable because of substantial changes in the price level. Hence, the relevant nominal data must be converted to real amounts to make them comparable. Both nominal and the estimated real amounts (at 2005-06 prices) are shown in the Table below.

The results are very surprising. The increase in household real income per capita between 2005 and 2010 (31 per cent) was indeed comparable to the increase in real GNI pc (39 per cent), but there is absolutely no reflection of the large increase in real GNI pc between 2010 and 2016 (31 per cent) in the household per capita income which actually declined by 6.0 per cent. The household real consumption per capita increased by whopping 51 per cent between 2005 to 2010, but it declined by 5.0 per cent in the following six years.

These dismal results from the HIES2016 are given a strong support from another monthly publication of BBS namely The Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh. The nominal wage index rose between 2010 and 2016 by 41 per cent, but the price index during the same period rose by 55 per cent suggesting a 9.0 per cent decline in real wages. Since the wage earners comprise about 40 per cent of the employed people of the country, this reduction in their wages must have had a significant negative impact on the household income; and this is strongly corroborated by the aforementioned HIES2016 data.

There is little doubt that the high economic growth suggested by the national income estimates of BBS did not benefit the average households at all during the period 2010-2016 for which we have data. (The wage data, available till 2017-18, show that the real wage of the workers fell by 4.0 per cent during the long period 2010-11 to 2017-18.) HIES2016 also finds a worsening of the income distribution and a reduction in the average calorie intake. These findings lead to the inescapable economic conclusion that a majority of the population had their income and consumption reduced during the tenure of this government.

A straight forward application of the fundamental axiom of economics mentioned earlier would then imply that these people had their satisfaction or utility reduced over this period. It then follows that they would not be as supportive of the incumbents as before. Thus it will not be surprising if the expected support of the incumbents declines at the forthcoming general election. They may find it difficult to sway the majority public opinion in their favour without a more persuasive narrative and a complementary strategy.

The author is a former Professor of Department of Economics, University of Dhaka.


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