The political participation puzzle and marketing

1. The political participation puzzle and marketing Ron Shachar (Tel Aviv and Duke)

2. The first puzzle: why vote? The basic model The problem: unless B is bigger than C, the participation rate should be close to zero. Why? Because π is basically zero The value of winning in Alaska (1960) should be 2.5 million dollars The probability of dying in a car accident on the way to the polls is higher What about the probability of getting hit by a lightning on the way to the polls? Behavioral explanations Difficulty to assess probability of unlikely events Regrets

3. It is an absurd idea… • “Saying that closeness increases the probability of being pivotal [in elections]. . . is like saying that tall men are more likely than short men to bump their heads on the moon.” (Schwartz 1987)

4. The consumption approach • This leads to the consumption approach to participation • People vote because they enjoy it, not because they are concerned with affecting the outcome • For example, people vote because of a feeling of civic responsibility • In other words, we need to rely on B being larger than C and ignore the πV factor

5. But wait. The pivotal fights back • The consumption approach suggests that “people vote because they enjoy it, not because they are concerned with affecting the outcome” • However, the participation rate tells a different story

6. The effect of the strategic variables Thus, neither approach is consistent with the data

7. Follow-the-leader story • Shachar and Nalebuff (AER 1999): The population is organized in social groups • There are two types of people in the population • Leaders • Not necessarily political leaders • Consider strategic aspects • Followers • Do not consider strategic aspects of their vote • Leaders effort increases the participation rate of followers • An equilibrium model in which the strategic variables affect turnout indirectly – through the effort of the leaders

8. However • SN did not have data on effort, and thus were not able to show that the strategic variables affect turnout only indirectly

9. Marketing to rescue • This study claims that • Marketing activities depend on the strategic variables • Marketing activities affect political participation • When accounting for marketing activities, the estimated effect of the strategic variables on turnout would be zero • In other words, the strategic variables affect turnout only indirectly – through the marketing variables

10. 2 3 1 The main aims of this study Turnout Marketing Strategic

11. The secondary aims of the study • Does the effectiveness of the marketing variables vary across the states? • If yes, does the resource allocation reflect the heterogeneity in the effectiveness? • What is the real impact of marketing on turnout? • Do candidate maximize their winning probability?

12. Related literature • The effect of marketing variables on turnout • GOTV: Gerber and Green 2000 • Advertising: Freedman, Franz and Goldstein 2004 • Allocation of campaign resources • Advertising [1972]: Nagler and Leighley 1992 • GOTV: Shachar and Nalebuff 1999 • Campaign visits [2000]: Strömberg 2002 • Marketing budget allocation • Manchanda, Rossi and Chintagunta 2004

13. Order of presentation • A model • Data • Preliminary results • Structural estimation • Implications • Conclusion

14. Data Implications Voters Equilibrium Model Game Parties The rules of the game • Two candidates, R and D, compete on the presidency • The elections are being held in S states on the same day • The candidate that gets more votes in state s wins all the electoral votes of that state, vs • The candidate that gets more electoral votes wins the elections Results

15. Data Implications Voters Equilibrium Model Game Parties Sequence of events and choices • Step 1 (beginning of the campaign): The two parties D and R decide on • Allocation of the ad budget • Grassroots campaign • Step 2 (election day): people decide on • Participation • Which party to vote for Results

16. Data Implications Model Game Parties Equilibrium Voters Participation and voting choices • Assumption: marketing does not change voting intentions • Consistent with previous studies • Given our data, it is just a normalization • Thus, voters first decide which party to vote for and then decide whether to participate in the elections Results

17. Data Implications Model Game Parties Equilibrium Voters Voting choices • The share of democrats in the population (of each state in each election year; ds) is a random variable with mean and variance • The variables in zs include a liberalism index of the state, the composition of the state legislature party division, etc • The realization of ds is unknown prior to election day • Actually it is unknown also on election day… Results

18. Data Implications Model Game Parties Equilibrium Voters Participation • The share of supporters of the candidate of party j who participate in the elections is: where Additional factors (e.g., rain) Number of ads Party contact Marketing effectiveness Results

19. Data Implications Model Game Parties Equilibrium Voters Participation assumptions • The marketing variables affect the participation rate • There is heterogeneity in this effectiveness across states • The strategic variables do not affect the participation rate Results

20. Data Implications Model Game Parties Equilibrium Voters Constraint and cost • Ads: national allocations => budget constraint • Contact: local activists (resources) => cost function Results

21. Data Implications Model Game Parties Equilibrium Voters Ads and spending • The number of ads depend on the spending (expenditure) of the parties • The cost is convex • γa <0: For example, reaching the same proportion of voters in California is more expensive than in Rhode Island • The two parties have the same budget in each election year • Consistent with the data • Focus on the main issue at hand Results

22. Data Implications Model Game Parties Equilibrium Voters Contact and grassroots • The proportion of contacted voters depends on the grassroots effort of the local activists • The cost of effort is: • γc > 0: for the same reasons • The cost function is convex in effort Results

23. Data Implications Model Game Parties Equilibrium Voters Information and objective • Information: when deciding, the parties do not know the realizations of the random variables, but they do know the distribution functions • Objective: • Market share • and thus electoral votes • Victory • and thus the pivotalness probability of the state Results

24. Data Implications Model Game Parties Equilibrium Voters The objective function Results

25. Data Implications Model Game Parties Equilibrium Voters The equilibrium strategies • The marketing variables are indeed a function of the strategic variables (electoral votes, voting age population and predicted closeness) • The marketing variables are also a function of their state-specific effectiveness • which was ignored previously • Unlike the grassroots efforts, the ads spending is a function of the attributes in all the states Results

26. Data Implications Model Game Parties Equilibrium Voters Spurious effect of strategic variables • As expected the strategic variables have an indirect effect on turnout • Thus, if the marketing variables are excluded from the empirical analysis it might seem that the strategic variables affect the participation rate Results

27. Model Results Implications Data Data • State-by-state 1996-2004 presidential elections in the USA • Results: share of Democrats • Turnout • Advertising • Contact

28. Model Results Implications Data Advertising Results Turnout Grassroots Share of Democrats • The exogenous variables (Campbell 1992) • The Democratic share in the national Gallup poll (September) • Home state (for the presidential and v.p. candidates) • A state liberalism index which is based on the ADA and ACA ranking • etc

29. Model Results Implications Data Results Turnout Advertising Grassroots Turnout • The exogenous variables (SN 1999) • The percentage of eligible voters who moved into the state in the year before the elections • Income • Education • etc

30. Model Results Implications Data Results Turnout Advertising Grassroots Advertising • The number of ads sent by the two candidates in each state between September 1st and election day (CMAG) • A comprehensive record of every ad broadcast in each of the nation's top media markets • Including where and when it aired. • Aggregated the data along two dimensions – time and place • aggregated the market level data to the state level using the population size in each market • The number of minutes per day

31. Model Results Implications Data Results Turnout Advertising Grassroots Advertising (sum statistics) • The number of states with almost no ads (less than 2 minutes per day) was 16 in 1996, 26 in 2000 and 21 in 2004 • The median (among states with more than 2) was 42, 62 and 73 • The mean 40, 62 and 68 • Thus, on average the each candidate aired 30 minutes of ads per day

32. Model Results Implications Data Results Turnout Advertising Grassroots Contact • The share of eligible voters who were contacted by a representative of one of the parties to encourage turnout (ANES) • Respondents were asked (in each election year) whether a person from one of the political parties called or visited to discuss the campaign • The share of respondents that were contacted in each state serves as our measure of grassroots campaign • When for a state-year there are fewer than 5 respondents, the data is coded as missing • 32 observation are really missing (i.e., zero respondents) • 18 more are dropped due to the above rule

33. Model Results Implications Data Results Turnout Advertising Grassroots Contact (sum statistics) • The number of missing observations was 9, 2 and 21 in 1996, 2000 and 2004, respectively • The number of states with more at least 5 respondents were 15, 13 and 22 • The median contact share in these elections was 0.28, 0.38 and 0.49 • The mean was 0.31, 0.38 and 0.49 • The number of states with more than 0.25 (0.50) contact was 25, 29, and 26 (3, 8, and 10)

34. Model Implications Data Results 1 Results • Results 1: preliminary non-structural • Predicted share of Democrats => predicted closeness • R2 = 0.84 • Turnout is a function of strategic variables • Ads is a function of strategic variables • Contact is a function of strategic variables • Turnout is not a function of the strategic variables when the marketing variables are included! • Results 2: structural estimation

35. Model Implications Data Results 2 Advantages Results Conclusions Issues Measurement errors and missing data • Problems: • Measurement errors in the marketing variables. Thus the marketing variables are endogenous • There are 50 missing observations for contact • Solution: the marketing variables are not used as independent variables in the estimation. Instead, we are using the equilibrium values

36. Model Implications Data Structural Results Advantages Results Conclusions Issues Segmentation and clustering • Problem: • The number of combination that one needs to integrate over is huge • Thus, even advanced integration methods (e.g., simulation integration with importance sampling) cannot work efficiently • Solution: a new structural clustering approach

37. Model Implications Data Structural Results Advantages Results Conclusions Issues Main result The model gets a strong support from the data

38. Model Structural Results Data Implications Indirect Closeness Implications • Without marketing the number of voters in the 2004 elections would have decreased by 14 million • For 2000 and 1996 the numbers are 9.5 and 6.4 • For 2004: Grassroots – 11.5. Ads – 3 • Candidates seem to maximize market share rather than the winning probability • Heterogeneity plays a significant strategic role (which was ignored previously) • The R2 increases are • Turnout: 70 to 96 • Ads: 45 to 62 • Grassroots: 39 to 45

39. Conclusion • The source of the political participation puzzle is marketing activities • Marketing plays an important role in elections • Grassroots is more effective than advertising • Heterogeneous response plays an important role in marketing allocation decisions Conclusion

40. Future • Dynamic • Information and signaling • The effect of marketing on election results • Political marketing Conclusion