Use the data in PresVote.dta to answer the following questions about the relationship between changes in real disposable income and presidential election results. Table 3.4 describes the variables.

(a) Create a scatterplot like Figure 3.1.

(b) Estimate an OLS regression in which the vote share of the incumbent party is regressed on change in real disposable income. Report the estimated regression equation, and interpret the coefficients.

Figure 3.1:

(c) What is the fitted value for 1996? For 1972?

(d) What is the residual for 1996? For 1972?

(e) Estimate an OLS regression only on years in which the variable Reelection equals 1-that is, years in which an incumbent president is running for reelection. Interpret the coefficients.

(f) Estimate an OLS regression only on years in which the variable Reelection equals 0 - that is, years in which an incumbent president is not running for reelection. Interpret the coefficients, and discuss the substantive implications of differences from the model with incumbents only.

Transcribed Image Text:

Incumbent party's vote percent 60 55 50 45 1980 T 1996 1972 1964 1984 1956 1988 1948 2012 2016 2004 2000 1960 1976 2008 1952 1992 1968 1 2 3 Percent change in income 4 5 10