(NEW YORK) – Groundbreaking new research released today by Columbia Business School shows that when it comes to the availability of mortgage credit, voters punish incumbents in tough economic times, but don’t always reward them in good ones. The new findings could impact how we view the relationship between the economy and national elections for years to come.

Offering a new window into voter psychology about economic risks and rewards in national elections, the new study – “Mortgage Market Credit Conditions and U.S. Presidential Elections” by Professor Charles W. Calomiris (co-authored with Alexis Antoniades of Georgetown University) – analyzes credit and mortgage data as America entered the depths of the Great Recession. The county-by-county research pins down and sheds new light on how individual economic variables, on the micro level, affect voting behavior. It shows that while Americans hold those in the White House accountable at the polls for tightening credit markets and homeownership, incumbents don’t see electoral benefits when mortgages become more widely available.

In a significant new finding that will help inform elections of the future, the new research discovered that the mortgage crisis of the time was five times more impactful on voting behavior than rising unemployment, an indicator that many traditionally look towards to measure electoral success.

“Pundits, political analysts, and campaign operatives on a national level need to be looking at mortgage availability for everyday Americans to understand who’s going to win the White House. We discovered that mortgage credit crunches are far more powerful than rising unemployment as a barometer for electoral success,” Professor Calomiris said. “We all know that Americans vote with their wallets. When times are tough, incumbents are punished at the ballot box, and when America’s economy is thriving, those in the White House are often rewarded. This new research shows us that when it comes to mortgage markets, that’s not necessarily the case. Instead, if voters are able to purchase a home, they’re likely to credit themselves for their personal achievement, while blaming incumbents for tougher times. That means that if you’re a candidate for the White House, don’t expect to see a bump at the polls even if mortgage credit is flowing freely. But if a bubble bursts, expect to pay the price.”

Since the period between 2004 through 2008 saw a historic swing in mortgage availability – from the most generous underwriting standards ever to a severe contraction during the Great Recession – the study examines data from the 2008 election. The new research reveals that had the housing crisis not happened, swing state outcomes in the 2008 presidential election would have been very different:

• Half of the votes needed – a full 51% – to reverse the election’s outcome in nine crucial swing states would have gone to Senator McCain in 2008 if not for the contraction in mortgage credit between 2004 to 2008;

• In Florida, Ohio, and Indiana, eliminating the credit crisis as an issue would have delivered almost enough to shift these states’ electoral votes from then-Senator Obama to Senator McCain;

• North Carolina and its 23 electoral votes would have flipped for Senator McCain;

The study also extended the analysis to other national elections between 1996 and 2012. Yet, in the halcyon days of mortgage credit expansion, encompassing the 2000 and 2004 election years, there is no evidence that counties with relatively high credit expansion voted in favor of the incumbent party’s presidential candidate.

“When you go county by county, it’s clear that the housing collapse and the availability of mortgage credit played a dramatic role in state-by-state outcomes in the 2008 election. More importantly though, as we gain a more complete understanding of the intersection between economics and voter behavior, we found that voters don’t reward politicians for experiencing a boom in local credit supply, but are quick to punish politicians for a contraction. These new findings are critical to understanding electoral outcomes in the future,” Professor Calomiris said.

To learn more about the cutting-edge research being conducted by Columbia Business School researchers, visit www.gsb.columbia.edu.