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Monday, November 28, 2016

Win the election, buy some wheels. Seriously

Before the election that swept Tony Abbott to power in 2013, his incoming treasurer, Joe Hockey, forecast an explosion of spending as consumers opened up their wallets in celebration of a Coalition win.

As unlikely as it sounded, that's exactly what happened for some voters, even though the official figures didn't show it at the time.

The Reserve Bank has gone back and examined spending by postcode and used it to calculate what happened to spending by the supporters of each side of politics.

In the years after the 2013 election, Coalition supporters bought far more cars than did Labor supporters. Yet in the years after Labor took office in 2007, it was Labor voters that spent big on cars, an effect economists Christian Gillitzer and Nalini Prasad describe as far from trivial.

"Going from a hypothetical postcode with only Liberal/National voters to another postcode with only Labor voters is estimated to have increased per capita motor vehicle purchases by around 30 per cent four years after the 2007 election," they say in a research discussion paper released on Monday.

The purpose of the study was to try to find out whether the answers to questions in consumer confidence surveys reflect actual buying intentions. Those surveys invariably show that after each change of government, supporters of the party that won suddenly become more rather than less confident than supporters of the other side. If the surveys reflected actual buying intentions their purchases would shoot up relative to those of the other side, even though overall purchases hadn't changed.

That is what the study found: "evidence that self-reported spending intentions are indicative of actual consumption behaviour". And it has told us something else: we take politics seriously enough to vote with our wallets.

In The Age and Sydney Morning Herald