Inflation at the time of the 1992 election was at its lowest level in 20 years. This fact might have been expected to give the incumbent Administration a significant advantage, since most previous research regarding voters’ economic preferences has found that American voters have a strong preference for low inflation and a great willingness to tolerate unemployment to reduce inflation. Thus, the 1992 election results raise the possibility that voter preferences either have changed or were mistakenly estimated earlier.
The author’s goal is to obtain some estimates of the policies and inflation goals that voters deem optimal. He then uses these estimates of voters’ preferred policy outcomes to determine the price that voters are willing to pay to achieve their desired inflation rate. His findings suggest that strong anti-inflation policies are politically quite feasible.