Yes — with striking accuracy. When researchers examined U.S. elections with both large stock market moves and lopsided results, big market advances almost always preceded landslide victories for incumbents, and big declines almost always preceded landslide defeats. The relationship held at a 93% classification rate (Fisher’s exact test, p = 0.009).
The finding proved robust across dozens of threshold and measurement variations — reaching a perfect 12-of-12 classification under one definition.
Source: Prechter, R. R., Jr., Goel, D., Parker, W. D., & Lampert, M. (2012). “Social Mood, Stock Market Performance and U.S. Presidential Elections: A Socionomic Perspective on Voting Results.” SAGE Open. Read the complete study on SSRN →
Extreme Mood, Extreme Margins
The landslide analysis tests a specific prediction of socionomic theory: that the biggest swings in social mood should produce the biggest swings at the ballot box.
Socionomic theory proposes that more extreme changes in social mood tend to motivate more extreme voting preferences for or against the leader.
To test this rigorously, the authors defined “landslide” and “large stock market move” in advance, using deliberately asymmetric thresholds to reflect the built-in positive bias of both incumbency and the stock market:
We deem an election a landslide victory if the incumbent competed for and won re-election by defeating the nearest competitor with an electoral vote margin of 40% or greater. We deem the election a landslide loss if the incumbent running for re-election trailed the winner by an electoral vote margin of 20% or greater. We define a large positive stock market change as a net gain of 20% or more in the preceding three-year period, and a large negative stock market change as a net loss of 10% or more.
Landslide (as defined in the study) A landslide victory is a re-election won by an electoral vote margin of 40% or greater; a landslide loss is a defeat by an electoral vote margin of 20% or greater. A “large” prior stock market move is a net gain of 20%+ (positive) or a net loss of 10%+ (negative) over the three years before the election. The thresholds are intentionally asymmetric because incumbents historically win more than half the time and the stock market tends to rise.
Sorting every qualifying election into a contingency table produced a lopsided pattern: large market advances lined up with landslide wins, and large declines with landslide losses.
Incumbent election result
Large positive prior stock move
Large negative prior stock move
Landslide victory
11 (73.3%)
0 (0%)
Landslide loss
1 (6.7%)
3 (20.0%)
Table 3 (percentage-change measure), 15 qualifying elections, data 1792–2004. A lognormal measure produced an even cleaner split (9–0 victories, 0–3 losses; p = 0.005).
Fisher’s exact test indicates a high degree of association between the two variables (p = 0.009). Although only 15 elections meet the criteria for analysis, we can have confidence that the observed association is unlikely to have arisen due to chance in view of the exceptional predictive accuracy associated with these data (i.e., a 93% classification rate). Results as good or better would occur less frequently than 1 time in 100 if there is, in fact, no relationship between the variables in the theoretical population.
A skeptic might worry the result depends on where the thresholds were drawn. The authors anticipated this and re-ran the analysis under many variations — different landslide cutoffs, different stock-move cutoffs, nominal versus inflation-adjusted prices, electoral versus popular vote margins, and one-to-four-year measurement windows. The relationship held throughout. A few representative results:
Inflation-adjusted DJIA with stock thresholds of {+10%, –5%}: 82% (14 of 17, p = 0.03).
Electoral-vote thresholds {+20%, –10%} with nominal DJIA {+20%, –10%}: 94% (15 of 16, p = 0.007).
Popular-vote-margin thresholds {+10%, –5%} with three-year stock thresholds {+10%, –5%}: 87% (13 of 15, p = 0.01).
Combined electoral/popular-vote landslide definition with lognormal stock thresholds {+0.2, –0.1}: a perfect 12 of 12 (p = 0.005).
Pooling the evidence, the authors state their conclusion plainly:
Observing confirmatory findings in response to numerous methodological and analytical variations allows us to conclude with a high degree of confidence that large stock market advances tend to be strongly associated with subsequent landslide victories as opposed to landslide defeats for incumbent candidates in re-election bids. Conversely, large stock market declines tend to be strongly associated with subsequent landslide defeats as opposed to landslide victories for incumbents.
The authors also point to dramatic historical episodes that fall outside their strict statistical boundaries but illustrate the same force — extreme social mood ending the tenure of leaders:
King George III’s ousting as ruler of the American colonies in the late 1700s near the end of a 64-year bear market in English stocks, the regional rejection from ballots of many candidates in 1860 following a 24-year period of lower stock prices, and Richard Nixon’s resignation in 1974 during the biggest stock market decline in 36 years.
Landslides matter because they are where the socionomic signal is loudest. Ordinary elections involve small mood shifts and close margins, where noise can obscure the pattern. Extreme elections strip that away: when mood has swung hard in one direction, the outcome is rarely in doubt. That is exactly what the authors summarize in the paper’s Discussion:
Large stock market advances during the final three years of incumbent candidates’ terms tend to be strongly associated with subsequent landslide victories, as opposed to landslide defeats, for incumbents in their re-election bids. Conversely, large stock market declines during the final three years of incumbent candidates’ terms tend to be strongly associated with subsequent landslide defeats, as opposed to landslide victories, for incumbents in their re-election bids.
Crucially, the stock market here is a proxy for social mood, not the cause of the vote. Both the market and the electorate are responding to the same underlying wave of optimism or pessimism — which is why a large market move and a landslide result tend to arrive together. For the full study and the underlying theory, see the related pages below.
All excerpts on this page are drawn from: Prechter, R. R., Jr., Goel, D., Parker, W. D., & Lampert, M. (2012). Social mood, stock market performance and U.S. presidential elections: A socionomic perspective on voting results. SAGE Open, 2(4).
Affiliated institutions: Socionomics Institute (Gainesville, GA); Emory University School of Medicine (Atlanta, GA); University of Cambridge, Faculty of Human, Social and Political Science (Cambridge, UK).
