Olympics bounce: Cameron may be wrong to play down his chances

Rule one of politics: never assume people are "sensible".

David Cameron is probably right to play down an Olympics polls bounce, but the reason why is not as obvious as he makes out.

The Financial Times reports that the PM told colleagues:

People are too sensible to confuse a sporting event with their day-to-day lives.

Which is just not true. New rule of politics: never assume people are sensible.

A 2010 paper by political scientists Andrew J. Healy, Neil Malhotra, and Cecilia Hyunjung Mo (via WonkBlog), titled Irrelevant events affect voters’ evaluations of government performance, shows just that:

Does information irrelevant to government performance affect voting behavior? If so, how does this help us understand the mechanisms underlying voters’ retrospective assessments of candidates’ performance in office? To precisely test for the effects of irrelevant information, we explore the electoral impact of local college football games just before an election, irrelevant events that government has nothing to do with and for which no government response would be expected.

We find that a win in the 10 d[ays] before Election Day causes the incumbent to receive an additional 1.61 percentage points of the vote in Senate, gubernatorial, and presidential elections, with the effect being larger for teams with stronger fan support.

The authors also find that the more surprising a win, the stronger the incumbency affect; that the effect seems to occur because the happier people feel, the more likely they are to vote for the incumbent; and that if they are made conscious of their reasoning, the effect of irrelevant events diminishes.

So the real question for Cameron isn't whether people are "too sensible" to confuse a sporting event with their day-to-day lives; it's whether the sporting event makes them happier, and, if it does, who they attribute (subconsciously) that happiness too.

The former question is something we'll have to wait until the end of the games to properly answer. The Opening Ceremony, certainly, resulted in a tremendous outpouring of goodwill nationwide, and while it is still a bit too early to tell (literally – the morning rush hour has not yet begun as I write this), it seems unlikely that the much-feared transport chaos will hurt too many people. Partially, admittedly, because many, fearing the worst, have already gone on holiday/arranged to work from home/told their bosses they are planning to contract smallpox for a couple of weeks, so don't expect them in, OK? But also because most of the nation does not actually live in London, and is experiencing most of the games as a televisual event with no real downsides.

National pride will also play a part in any Olympics boost. If Britain wins a lot of medals, then expect at least some people to wander around feeling a lot cheerier than they might otherwise.

The latter question, though, is harder to answer. If the Olympics does make people happier, is it going to be on such a subconscious level that they just attribute it to whoever's in charge? But unlike most sporting events, there is actually some political relevance to consider. It was, after all, Labour who chose to bring the games to London, and who ensure the bid was a success. But it was the Conservatives who oversaw the high-stakes final stretch. And does more of the credit go to the successive Mayors of London, or to the Governments who were ultimately in charge?

Ultimately, the goodwill effects of the Olympics are likely to be too small, too diffuse, and too unclear in provenance to give Cameron much of a boost in the polls. But the reason for that is emphatically not because people are too sensible. Cameron's just lucky he's not being blamed for a tornado.

A spectator walks past the Olympic Stadium. But is she happy? Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump