A Money Driven Dichotomous Union: The Relationship between

Political Polarization and Economic HealthRyan Trower

Departments of Political Science and Finance, Carthage CollegeCelebration of Scholars 2016: Exposition of Student & Faculty Research, Scholarship & Creativity

Results and DiscussionSupport

The first section was strongly supported in regards to the growth of polarization in recent years. The only inconsistencies within the

research was with whom polarization is increasing, and by how much. It is almost universally agreed upon that the government and the

political elite have become increasingly polarized in recent years. However, when the focus was turned to the general population and the

individual citizen, the results of the data and research became less concrete. There are many arguments, especially from Morris Fiorina,

stating that the general public has not become more polarized, rather the media portrays the nation as becoming more polarized. This

conclusion by the media is drawn by using data from the already polarized political elite. On the other hand, Delia Baldassarri’s research

suggests the political middle is decreasing due to the ability to place oneself in a “zone” of political seclusion provided by the media,

especially online sources. Shanto Iyengar supports this with his study of affected polarization, in which the general population is becoming

more polarized, not based on ideology, but because of the side that they identify with. These different arguments make it difficult to

determine whether or not the common individual is becoming more polarized, but they do seem to point at the media as being a major

causal factor of polarization. The thesis also supports the idea that polarization has significant effects on consumer behavior, thus having

influence on the economy. These effects stem from the rhetoric of the political elite and government officials, and are then amplified through

the media. Increases and decreases in a consumer’s feeling of risk aversion have significant short term effects, and potential to create long

term economic difficulties.

Support for the second section, data analysis of correlations between levels of polarization in congress and different economic

indicators, is best described as inconclusive. Though some indicators show moderate to high levels of correlation and others show

insignificant to no correlation, one variable of the extremely complex economy does not have enough information to claim or even suggest

a cause or effect relationship with the also extremely complex subject of polarization. The only indicator with causal support is the GDP-to-

debt ratio due to its relation to the congressional budget committees. There is more support for the second part of the section covering

effects of economic health on polarization. This part discusses the political actions and reactions to economic health and how it can lead to

policy changes and changes in campaign strategies. John Hibbing and John Alford, in stride with historical data on policy changes in

different economic conditions, support the notion that polarization and economic health have a cyclical relationship in terms of cause and

effect. Therefore, the second section of the paper was inconclusive as far as polarization having direct effect on different indicators of the

economy, but there is support for the idea that polarization and economic health have a co-dependent relationship in terms of agendas,

policy proposal, and policy implementation.

The third and final section of the paper offers a theory that was derived from results found during research, focusing on the economic

ranges at which polarization is more feasible than others, and if extreme privation or prosperity forced political alignment. The theory has

loose support through historical data, but there was not enough research done to adequately verify the success of the theory at this time.

Adverse Conditions

This thesis focuses on the interdependence of political polarization and the health of the economy, which was discussed in several

different fashions. Throughout these discussions, the second focus of this thesis, adverse conditions resulting from this interdependence,

was mentioned, but not outlined directly. The first section discusses polarization trickling down from the political elite to the individual

through rhetoric and the media, which has potentially adverse effects on consumerism. Consumer behavior is known to directly influence

the Gross Domestic Product, economic growth, employment levels, tax revenue, yearly national deficits, and other facets of the economy.

Due to the level of possible influence that the elite have through what they say and how it is received by the populace, the increase in

polarization could greatly hinder consumer behavior through the escalation of negative rhetoric toward the opposing side and their policy

positions. This alone could begin, maintain, or deepen economic recession. Due to the cyclical nature of polarization and economic health,

the recession would further increase polarization and negative rhetoric.

The second section discusses the danger of political gridlock and its potential effects on the economy. Due to increased levels of

polarization, the ability of Congress to coordinate effective budgetary policy solutions is greatly hindered. The more polarized the

government is, the less it is able to perform at the necessary levels to effectively run the country.

Limitations and Problems

Exploration into certain parts of the paper were limited greatly due to time, available resources, and topic complexity. The second

section of the paper was specifically limited due to the amount of economic data needed, which was different depending on the specific

indicator. Another limitation was defining economic health. Though the economic indicators represented in the paper are commonly used to

determine economic health, they are not the only factors and do not individually represent the complexity of the economy. Polarization is

also extremely complex and many factors in addition to the economy have significant effects, such as religion, war, sex, immigration,

international relations and many others. Determining a causal relationship was much more difficult than previously expected and was

ultimately unattainable at this time.

Acknowledgements & ReferencesSpecial thanks to Professors:

Jerald Mast, Jeffery Roberg, Cassie Lau

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AbstractEconomic health is an issue that every nation struggles with, and the United States of America is no exception. Policy

makers, interest groups, media outlets and ordinary citizens constantly propose new ideas for how they believe the economy

should be handled, and what policies they prefer to improve it. However, not everyone is aligned in their beliefs on not only

the economy, but many different mainstream or obscure issues present today. This difference in beliefs leads to polarization

on both the national and individual level. Due to the heavily structured two-party system in the United States, most align to

one of two sides; the Republicans or the Democrats. Each party is in a struggle with the other to retain or steal congressional

seats and to win the presidency, often citing either economic prosperity or, more often than not, economic disparity to their

advantage. However, the rhetoric of the political elite does not only affect the next polling cycle, but could potentially affect

the levels of risk averting that consumers feel are necessary in their economic environment. Using economic and

congressional voting data, correlations between polarization and economic health can be considered and could potentially

help explain the levels of co-dependency. With this information, an independent theory was made looking into potential

ranges of economic health that create ideal environments for polarization to occur, and if high levels of prosperity or privation

could actually lead to political alignment.

IntroductionIdeological polarization of the United States is an increasingly acknowledged issue. Polarization is seen and portrayed

on television, the internet, in newspapers, and anywhere else the media covers politics. A related issue is how political

polarization affects the way people perceive the state of the economy, and which policies are preferred for improving it.

Historically the health of the economy has been utilized to push political agendas; these agendas in turn affect conditions in

the economy. The interdependence of political polarization and the health of the economy could create adverse conditions

for the future of the United States.

Five major concepts were addressed to determine the level of polarization in America and what effects it could have

on the economy. First, popular wisdom claims that the American public is polarized. This thesis explored the types and

causes of polarization by analyzing congressional voting, political rhetoric, and media representation. Second, an individual’s

economic behavior is affected by political polarization. A study of public choice theory and consumer behavior provides

discussion of how the difference in levels of polarization could affect an individual’s outlook on the economy. Third, reactions

to polarization are sufficient enough to impact the overall economy. Analysis of economic data and the levels of polarization

over time helped determine if polarization, and actions resulting from it, have direct effects on economic conditions. Fourth,

adverse economic conditions force policy makers to introduce legislation that further affects economic health. Analysis of

policy created in response to positive and negative economic conditions helped show that polarization may not only be a

cause, but also an effect of economic health. And finally, extreme economic prosperity or privation leads to political

alignment, suggesting that political polarization is most likely to occur in a certain range of economic health.

ExperimentalPolarization in AmericaLevels of Polarization

Popular wisdom, in regards to politics in the United States, claims that the American public is polarized. In order to determine

the extent to which the American public is polarized, two levels where polarization may occur were distinguished. The first

level involves the political elite who have positions in the government, specifically the House of Representatives, the Senate,

and the President as well as the politically active citizens who give the most support to their adopted party. The second level

is formed by ordinary citizens, Americans who either avoid politics because they are reluctant to get involved, are

uninformed, or have personal ideologies that they feel are not represented fully by either side. Current issues such as the

economy, international conflict, and the “war” between the right wing and the left wing are continuously presented through

the rhetoric of the first level and by large media outlets that ensure Americans are never able to forget these issues.

Types of Polarization

Despite arguments that polarization is limited to elites, there is also evidence of individual polarization of the average

American. During general discussions in everyday lives, it is uncommon that there is conflict with what is said to one another.

Lack of conflict is largely a result of a culture wherein people only confide their strongest beliefs with others who hold similar

beliefs. Listening to media that only represents personal ideologies, and commonly mocking outlets that do not, is a way in

which individuals avoid opposing views and maintain their “zone” of political seclusion. Ideological polarization is a

separation from others based on belief systems and ideological views. Wherein affected polarization is attributed to a

disliking of the opponent, not based on ideological values, but rather on the principle that identifying with the opposing party

is sufficient to form a negative view of that individual or group.

Polarization’s Effect on Economic BehaviorAn individual’s economic behavior, or consumer behavior, is one of the more important facets of the study of economics. The

degree of risk averting by consumers is a major driver in the modern macro-economy, especially since consumer spending

amounts to two-thirds of total US economic activity. An increase of purchasing goods and services by the consumer base will

increase the gross domestic product (GDP) as well as the income per capita. This increase happens when more consumers

are spending more money, allowing businesses to flourish. When consumer behavior is more risk averse the base is no

longer spending money but rather, they are saving it. This reduces both the GDP and the income per capita, resulting in less

growth and less economic health. But how is the average consumer able to determine the current state of the economy so

they know how risk averse they need to be? Consumers will receive cues and information about the current state of the

economy from personal experience, economic reports in the news, and the rhetoric of the political and economic elite.

Effects of Polarization on Economic HealthActions that stem from polarization have the potential to affect economic health in different ways. The views on both the state

and direction of the economy is different depending on who you ask and which side of the aisle they sit on. This difference

can influence economic health depending on who has power during different economic trends. Within this section of the

thesis, the effects of polarization on economic health will be discussed. Topics discussed within this section covered the

effects of the 1974 Congressional Budget and Impoundment Control Act, causes and reactions to government shutdowns in

the U.S., and a correlation study between several economic health indicators and levels of congressional polarization.

Effects of Economic Health on PolarizationOne of the main goals of this thesis is to discuss the cyclical relationship between political polarization and economic health.

The previous section discussed ways in which polarization may affect the economy. Within this section, the effects of

economic health on polarization were discussed such as campaign finances and monetary and fiscal policies in times of

recession and depression like the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act

of 2009 (ARRA).

Does Extreme Prosperity and Privation Lead to Political Alignment?The theory proposed suggests a limit to which the negative economic conditions caused by polarization are sustainable,

after which a forced political alignment will occur due to necessity.

Figure 2: 2008 Presidential Election. SOURCE: Dorling, Daniel, Mark Newman, and Anna Barford. 2008. The Atlas

of the Real World: Mapping the Way We Live. 2nd ed. London: Thames & Hudson

Figure 1: 2008 Presidential Election. SOURCE: Dorling, Daniel, Mark Newman, and Anna Barford. 2008. The Atlas

of the Real World: Mapping the Way We Live. 2nd ed. London: Thames & Hudson

Figure 3: Debt-to-Gross Domestic Product ratio compared to House and Senate Polarization Data. SOURCE:

FRASER. 2015. “Economic Data Publications, Historical Federal Reserve Archive.” https://fraser.stlouisfed.org/

(October 19, 2015) and Voteview. 2015. “The Polarization of the Congressional Parties”

http://voteview.com/political_polarization.asp (October 19, 2015)

Figure 4: Debt-to-Gross Domestic Product ratio compared to House and Senate Polarization Data. SOURCE:

FRASER. 2015. “Economic Data Publications, Historical Federal Reserve Archive.” https://fraser.stlouisfed.org/

(October 19, 2015) and Voteview. 2015. “The Polarization of the Congressional Parties”

http://voteview.com/political_polarization.asp (October 19, 2015)

Figure 5: Prosperity and Privation Chart