The Valence Gap: Economic Crises, Valence Perceptions, and Party System Volatility

The political consequences of economic crises are a central concern to governments today. Political scientists, however, are only starting to understand these relationships. How does sustained economic downturn shape party competition in democracies? In this paper, our answer to this question focuses on the role of mass perceptions of party competence, or valence.  Drawing on spatial models of the vote, we theorize a link between economic growth, managerial competence, and party system stability. To this end, we describe differences in perceived competence between the incumbent and non-incumbent parties in good and bad times. We define this difference as the “valance-gap,” and argue that a narrowing valence gap will induce party system volatility and party extremism. Empirical evidence from Germany, 1990-2007, shows how this “valence gap” is fundamental to understanding party polarization and system volatility.  By linking economic growth, a narrowing valence gap, party system volatility, and increased polarization, we provide a mechanism that brings together and explains common observable consequences of protracted economic crisis.