Betting on amnesia is almost always a winning, not a losing, wager in America. Angry demonstrators at health care town-hall meetings didn’t remember that Medicare is a government program, and fewer and fewer voters of both parties recall that the widely loathed TARP was a Bush administration creation supported by the G.O.P. Congressional leadership.There may be a real reason for political "amnesia." We might take a "regime switching" model as an explanation. The republican party can take on two values. One in which most Republicans want to reduce government intervention, and one in which they do not. Individuals do not know what state or "regime" Republicans are in, but have signals. (regular readers will see the familiarity between this Regime Switching model and our earlier article introducing the Kalman Filter).
In any case, we can generate a random variable in which Republicans are in a "regime." They have a 95% chance of staying in whatever regime they are currently in next period, and a 5% chance of switching regimes. In our case, we have a signal with noise which broadly tracks the true regime (because of the noise, we can get "false" signals). In this case, we observe the following signal. As the blue line is close to one, we see high legislative activity and Republicans are likely to be in a pro-government mood, though they may or may not be. Using the blue line, our probabilities, and a standard regime switching model, as James Hamilton outlines here (gated) and here (ungated), we can make a "best guess" of what our regime is. Graphically below, we display our signal in blue and our "best guess" as a red dotted line. The red line is the "probability"we assign to each state (click to enlarge).
A measure of our success is the following graphical display, in which we again graph the probability that we assign to each state, while also graphing the "truth" (something we wouldn't ordinarily observe) (click to enlarge). We call this a 'Hamiltonian' Regime Switch simply because we're following Hamilton's outline, not in relation to the mathematical concept. Note that times when our guess (red dotted line) spikes and our regime (solid blue) doesn't change were noise that lead us to believe regimes switched when they did not. Also note that we are (asymptotically) efficient with our estimator--linear weightings cannot do better, ex ante.
This modeling situation appears to be more appropriate than suggesting "amnesia." We can extend this situation in the case of having no signal as well. In the case of having no data and predicting what regime or state we are in, or the case of forecasting what state we will be in at some future period, probabilities will slowly converge to our unconditional probabilities--a 50/50 probability of being in Regime 1 or Regime 2.
This seems to be an adequate story for voter "amnesia." Voters observe strong signals of the regime Republicans are in when they have legislative power. This may be the Medicare Prescription Drug Improvement and Modernization Act of 2003, for instance. In such a case, voters understand with a clear signal "where" Republicans are. When they are out of power for a time, or with a noisy signal, they may be less sure than they were two years ago--they recognize the regime can switch.
Corrections suggests that this sort of model is more satisfactory and economical than a model positing "amnesia" in voters.