Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/73170 
Year of Publication: 
2013
Series/Report no.: 
Working Paper Series in Economics No. 271
Publisher: 
Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre, Lüneburg
Abstract: 
This paper investigates social preferences towards unemployment and inflation in the United States. Estimating a popularity function with monthly data for the recent Obama administration, we find that U.S. voters react strongly to both unemployment and inflation. However, reducing unemployment is more important to society as voters would trade off 1 point of unemployment against 2.5 points of inflation. One point of unemployment costs the president about 4 points, one point inflation costs him 1.5 point. Moreover, we provide evidence that macroeconomic preferences are not stable over time. Finally, we show that public preferences towards unemployment and inflation are not homogeneous a ross different groups in society. The poor and low-educated, for example, react more strongly to changes in the unemployment rate than other groups.
Subjects: 
social preference function
popularity function
unemployment
inflation
Obama
JEL: 
D72
H11
Document Type: 
Working Paper

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