ISET Economist Blog

Why Elections Happen in the Fall?
Tuesday, 19 June, 2012

In May 2012, the ISET Policy Institute piloted a new monthly survey to measure consumer sentiment and expectations. The first pilot included about 60 randomly selected individuals who were asked about their well-being, saving and spending plans, etc. While based on a relatively small sample, the pilot points to a very large gap in consumer confidence among Tbilisi and the rest of Georgia. Tbilisi households perceive themselves to be marginally better at present, yet they report a much larger drop in wellbeing during the last 12 months and are less optimistic about the future. The overall Consumer Confidence Index (running from -100 to 100) takes a value of -18 for Tbilisi and -7 for the rest of Georgia.

In planning the first full-scale survey we had to decide when to conduct the interviews since survey results may be very sensitive to timing. For instance, people are likely to have a very different perception of their financial status on June 30 and July 1, that is before and after receiving their monthly pay. Likewise, people may provide very different responses if called before and after they had their early morning coffee. Thus, we settled on conducting interviews during normal business hours in the middle of each month.

More importantly, consumer sentiment will certainly change with the time of the year. For instance, many US consumers may feel ecstatic in the midst of the Christmas shopping spree paid for by year-end bonuses. With no year-end bonuses in the cards, for most rural households in Kakheti, the best time is September and October when farmers reap the fruit of a long agricultural season, harvest their grapes, and work traditional wine presses. By December, wine festivities will be long forgotten. Farmers will be living off their savings and eagerly waiting for the new agricultural season, the return of tourists, and lower food prices.

For the vast majority of Georgian households, consumer sentiment may be strong, albeit negatively, correlated with the seasonal fluctuations in food prices. Higher food prices affect the real income and consumption of the poorer households for which food accounts for a very large share of monthly expenditures. Seasonal food price hikes are stronger in the outlying regions of Georgian, making provincial consumers (and voters) particularly susceptible to the low season doom and gloom.

This hints at a possible answer to the question we posed in the title of this blog post: if held in early fall (say, in October), when prices are low and consumer sentiment is at its peak, political elections – the ultimate “consumer confidence survey” – are more likely to favor incumbent governments.

The views and analysis in this article belong solely to the author(s) and do not necessarily reflect the views of the international School of Economics at TSU (ISET) or ISET Policty Institute.