The Economy Through a Public Lens: Shifting Canadian Views ... · real per capita personal disposable income (Charts 1, 2, and 3). While the nomenclature of the eco-nomic realm remains

63

INTRODUCTION: AIMS AND STRATEGY

The impact of economic performance onperceptions of economic and socialwell-being and attitudes toward redis-

tribution in Canada is an intimidatinglybroad topic. There are really two basic andquite separate questions: how does the publicsee the performance of the economy, and howdoes the performance of the economy influ-ence attitudes toward redistribution?

We will begin by considering the basicterms of the first question. What do we meanby economic performance? Are we referring toGDP, job creation, standard of living, unem-ployment or wealth creation? Clearly, each ofthese disparate dimensions of the economyrefers to some important aspect of economicperformance. Moreover, “the public” is hardlya monolith and the perception of the differentdimensions of the economy will vary signifi-cantly according to one’s location in society.

Moving from the official economicworld of GDP, or productivity and unem-ployment rates, we enter the decidedlymurkier realm of public perception. We care-

fully use the term “official” rather than objec-tive economy to point out that an official sta-tistical description of economic reality is notnecessarily the ultimate criterion, or ultimatetruth. While official statistics are clearly morescientific than public perceptions, public per-ceptions are not always “wrong” just becausethey are not synchronized with official statis-tics. For example, official unemployment ratesseriously understated real unemployment inthe mid-1990s (e.g., due to the high inci-dence of discouraged workers).

Although the social science literature isnot entirely consistent on this point, it does sug-gest that there is a close relationship betweenperceived and “real” economic indicators, andthat public opinion concerning the economybears a close relationship to what is actually hap-pening in the economy (i.e., public opinion mir-rors economic indicators such as unemploymentand inflation).1 However, Canadians’ views ofeconomic performance are, at times, only loose-ly connected to objective accounts of the “offi-cial” economy. Repeatedly, respondents to socialsurveys and participants in focus groups stren-uously question the veracity/meaning of “objec-tive” indicators of economic performance.

TH

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The Economy Through aPublic Lens: Shifting

Canadian Views of the Economy

Frank L. Graves

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one component of perceived quality of life.Most people believe that social well-being isa much broader and more elusive conceptthat includes both equality and wealth and ahost of other non-economic factors (e.g.,human rights and freedoms, environmentalquality, health outcomes, security from crimeand violence).4 In fact, one of the most basicpublic policy dilemmas is the relative impor-tance and trade-off of the economic and socialdimensions of well-being.5 We will commentlater on a growing tendency for the public toexplicitly connect the social and economicrealms of well-being.

The literature suggests that it is oftenhard to separate out the specific factors thatcause shifts in public opinion. Public opin-ion on social issues differs from that on otherkinds of issues (Page and Sharpiro 1992). Asa result, the nature of the interplay betweensocial indicators and economic growth, forexample, is not well understood (Krause1997; Fedderke and Klitgaard 1998). Whileit seems clear that stability of public institu-tions, stability of political regimes and levelof rights play a definite role in economicgrowth, the same cannot be said for othersocial indicators or values — that is, thosethat are more closely linked to “quality oflife.”6

This leads to the final area of discussionimplied by our topic. What is the relation-ship between perceived economic perform-ance and attitudes toward redistribution? Atthe most basic level, does a sense that theeconomy is performing well make the pub-lic more or less supportive of the distributiverole of the State? While we can provide someanswers to this narrow question, it becomesmore meaningful when set against a broaderquestion: how do changes in perceived eco-

64

Frank L. Graves

Our data show that during the secondhalf of the 1990s we noticed a significant lagbetween recovery of economic confidenceamong consumers/citizens and apparentrecovery of the objective economy. Also, ourresearch with focus groups showed a broadtendency to discount the legitimacy of manyconventional measures of economic perform-ance. For instance, very few Canadiansbelieve that the unemployment rate is anaccurate measure of the real extent of unem-ployment. It is our sense that the gap,volatility and lag factors were especially pro-nounced (in both qualitative and quantita-tive evidence) during the middle part of the1990s. These vagaries in public perceptionare not simply a function of low levels of eco-nomic literacy, although this factor certainlyaccounts for a good deal of the tensionbetween official and public accounts of theeconomy.

It should also be recognized that per-ceived economic performance is segmentedaccording to the social and economic circum-stances of the perceiver. Typically, affluent andeducated members of society are more likelyto be aware of and agree with economists’accounts of economic performance.2 InCanada, governments typically lose the sup-port of public opinion during economic hardtimes and see a less dramatic return of supportwhen economic good times return (Clarke etal. 1992b)3 (although our own analysis showsthat economic optimism is a consistent, strongand significant predictor of support for theincumbent government).

This article focuses not only on eco-nomic well-being but also on social well-being. This expanded focus presents adaunting problem. Economic performance asit translates into standard of living is only


nomic performance influence the perceivedrole of the State? In particular, how haveshifts in attitudes toward the economy andeconomic performance affected public sup-port for the achievement of social progressthrough State intervention?

To simply look at attitudes toward (forexample) taxation, social assistance or region-al transfer payments is to miss the point thatthese views are modified by fundamentalshifts in attitudes towards the role of theState. Moreover, we are witnessing a broadhistorical transformation in the role of theState concerning its economic and socialfunctions. There is a voluminous literatureon these shifts in attitude.7 Furthermore, ourinternal research confirms the broad findingthat both trust in and support for govern-ment in its “passive” redistributive role havedeclined over the past 20 years. Decliningsupport for the welfare state has, however,been somewhat overstated. In fact this sup-port has been disguised by a shift in strate-gies for achieving social well-being. Forinstance, support for social assistance hasbeen replaced by support for “activemeasures” (e.g., skills investment, self-employment assistance, early-childhoodintervention) to deal with some of the verysame social and economic issues.8 Focusingmerely on redistribution may serve toocclude the more fundamental question ofthe role of government in achieving socialprogress and improved quality of life.

Public attitudes toward change, inno-vation and technology have undergone pro-found shifts. These shifts are linked to theemergence of globalization and the new econ-omy and are producing significant pressureon State/economy/society linkages, with out-comes that are still highly uncertain. In fact,

65

The Economy Through a Public Lens: Shifting Canadian Views of the Economy

the cumulative evidence suggests that thepast decade has seen complex structuralchanges in public attitudes towards the State,the economy and social well-being, and thatthese changes are both driving and reflectingshifts in the institutional spheres (Graves andReed 1999).9

Although we have set our problemagainst a complex historical backdrop, ourintentions in this brief discussion are quitemodest. We will attempt to shed some pre-liminary empirical light on the matter basedon ongoing research at EKOS (EKOSResearch Associates 1997). We will provide alargely descriptive synthesis of some of ourmain conclusions. Our focus will be on fourcore questions:1. What is the relationship between pub-

lic perceptions of economic perform-ance and the broad statisticalperformance of the Canadian economy?(Our focus will be on the areas of pro-ductivity/growth, employment andincome levels.)

2. What is the relationship between eco-nomic and social well-being? (Ourfocus will be on public perceptions ofthis relationship.)

3. How has national economic perform-ance (both statistical and perceived)influenced attitudes toward redistrib-ution in Canada?

4. How has economic performance influ-enced broader attitudes toward activegovernment involvement in theachievement of social progress?The literature on the relationship

between the official economy and the per-ceived economy is quite mixed in its conclu-sions but tends to agree that there is adiscernible imperfect relationship between


the economy was perceived as considerablymore turbulent than it was, particularly inthe middle part of the decade. It was alsoperceived as failing to strengthen for a sig-nificant period while it was in fact growing.Both of these phenomena were most evidentin the middle part of the decade.

Before considering public perceptions,we present three statistical economic indica-tors for the three domains of economic per-formance noted in our first core question —unemployment rate, real GDP growth andreal per capita personal disposable income(Charts 1, 2, and 3).

While the nomenclature of the eco-nomic realm remains mysterious for manyCanadians, the core concepts of these threeindicators are seen as having a “real world”impact and meaning. We have also added ameasure of inequality (the inequality ratio)(Chart 4), which, although not directly ameasure of economic performance, is ger-mane to our discussion.

The charts clearly show that unem-ployment has fallen steadily since the early1990s recession, that economic growth has

66

Frank L. Graves

the two. It also speaks of lags between eco-nomic shifts and public perceptions of thoseshifts. Some public perceptions may in factprecede changes and even influence the“objective” economy. For example, in theUnited States the Conference Board’sConsumer Confidence Index fell for the fifthconsecutive month beginning in October2000 (Conference Board 2001). Thesedeclines in consumer confidence actually pre-date, or at least are contemporaneous with, areal slowing of the American economy(Greenspan spoke of zero growth in January2001). In the case of consumer confidence,public perceptions certainly do not lagbehind the official economy and may welllead economic performance. This, however,is not a central question for our analysis.

PUBLIC PERCEPTIONS OF ECONOMIC PERFORMANCE: THE PAST DECADE IN REVIEW

The public view of the Canadian econ-omy is quite different from the official sta-tistical record, although there is an imperfectrelationship between the two. In the 1990s

CHART 1

Unemployment Rate, 1990 to 2000

6

0

8

2

10

4

12

1990 1992 1994 19981996 2000

Une

mp

loym

ent

rate

(%)

Source: Statistics Canada.

CHART 2

Real GDP Growth, 1990 to 2000

3

-3

0

4

-4

2

-2

5

1

-1

6

1990 1992 1994 19981996 2000

Note: Annual percentage change, quarter to quarter, ingross domestic product at market prices, in constant1992 dollars.



67

increased since the mid-1990s and that realper capita disposable income increasedthroughout the 1990s. Chart 4 indicates,however, that, despite this rosy economic pic-ture, income inequality rose in the latter partof the decade, implying that the fruits of thegood economic performance observed werenot well distributed. Moreover, it should benoted that in the latter part of 2000 theeconomy showed signs of slowing down,reflected in flattening growth in the GDPand little change in the unemployment rate.As well, recent news about an anticipatedrecession south of the border may soon bemanifested in the indicators in Canada.

The Perceptual IndicatorsEKOS has conducted interviews with

hundreds of thousands of Canadians over thepast 20 years, and our databases contain hun-dreds of variables germane to the topics at hand.While we will use other variables later in thisarticle, we begin our examination of the pastdecade by tracking three variables — fear of jobloss (Chart 5), sense of loss of control over one’s eco-nomic future (Chart 6) and views on thestrength of the Canadian economy (Table 1).


Our time series for fear of job loss andsense of loss of control are much more complete.We also have the advantage of some new(January 2001) data that allow us to evaluatewhether the pervasive media discussion of animpending downturn, slowdown or recession(particularly as it applies to the Americaneconomy) has broadly influenced economicsecurity amongst Canadians.

The charts show different aspects of thesame story. First of all, insecurity declined inthe latter part of the decade in a highly sig-nificant manner. The personal security indi-cators fear of job loss (Chart 5) and sense of lossof control (Chart 6) both dropped by nearlyhalf. Similarly, perceptions of an improvingoverall economy shifted from a slight bet-ter:worse ratio of 45:31 in 1996 to a defini-tive 56:19 ratio in May 2000 (Table 1).

Another important characteristic of oursecurity indicators is the high degree of seg-mentation in these responses by region andsocio-economic status (Charts 7 and 8).

Fear of job loss and broader insecurityare higher amongst less-educated and lower-income groups. Comparing the underlying

CHART 3

Real Per Capita Personal DisposableIncome, 1990 to 1999

15,500

16,500

17,500

16,000

17,000

18,000

15,0001990 1992 1994 19981996

$ p

erp

erso

n

Note: Per capita personal disposable income in constant1992 dollars.


CHART 4

Income Inequality Ratio, 1990 to 19985.4

5.0

4.7

4.9

5.2

4.51990 1992 1994 19981996

Ineq

ualit

yra

tio

Note: Computed as the ratio of the average after taxincome of top quintile to the bottom quintile of eco-nomic family units.



demographic structure from 1994 to 2001,we find that the education effect is strongertoday than it was in 1994, suggesting thatthe new economy is placing a greater accenton human capital.

There are also sizeable regional, gen-erational and gender effects. Also, today’sregional patterns are quite different fromthose of 1994. Otherwise the underlyingdemographic correlates of insecurity are fair-ly stable. Economic security is stronglylinked to expectations of government in amanner that we will explore in the final sec-tion of this article.

A direct comparison of official eco-nomic indicators and their (roughly)corresponding attitudinal indicator is prob-lematic, largely because of issues relating totiming. While figures on expenditure-basedGDP growth are released quarterly and fre-quently revised, we have asked Canadiansabout their sense of control over their eco-nomic futures irregularly and at differenttimes. Nevertheless, there is merit in direct-

ly examining two variables — the unem-ployment rate and the fear of job loss expressedby employed Canadians (Chart 9).

While objective and subjective meas-ures display the same general downwardtrend, there are important discrepanciesbetween them. First of all, fear of job loss actu-ally rose between early 1994 and April 1996,while the unemployment rate dropped from10 to 9 percent. This was followed by somevolatility until 1998, when fear of job lossstarted dropping in closer alignment toreduced unemployment. The perceptual datashow volatility in the views of Canadians thatis not evident in the unemployment rate.This is particularly true of the 1996-98 peri-od, when Canadians were, it seems, highlyuncertain about whether the recovery wasreal. We will comment on this “unhinged”quality later. Although both job and broadereconomic security indicators are volatile, thebroader measure of sense of loss of control is par-

68

Frank L. Graves

CHART 5

Fear of Job LossPercentage of employed Canadians agreeing with

the statement: “I think there’s a good chance I could

lose my job in the next couple of years.”

30

0

40

10

50

20

60

Apr96

Nov98

Feb94

Mar98

Oct97

Jan01

Source: Rethinking Government, EKOS ResearchAssociates Inc.

CHART 6

Perceived Loss of Control Over PersonalEconomic FuturePercentage of Canadians agreeing with the

statement: “I feel I have lost all control over my

economic future.”

30

0

40

10

50

20

70

60

Nov94

Apr96

Oct98

Mar00

Mar931

Mar98

Nov97

Jan01

1 Small wording change after March 1993.



ticularly mercurial (Chart 6). This mayreflect public anxiety about not only thelabour market but also the broader vagariesof interest rates, public finances, domesticand global stock markets and currency rates.

We would also argue that the sharpreduction on this indicator reflects not onlydifferences in the business cycle but alsostructural shifts as the economy moved togreater dependence on technology and asnorth-south trade grew much more rapidlythan east-west trade. Globalism, trade liber-alization and new technology all caused con-siderable anxiety and turbulence that seemnow to have been replaced by greater levelsof public comfort with the “new” economy.

For example, the first part of Chart 9shows fears rising while unemployment isflat or improving. This may reflect the rela-tively inert quality of insecurity. We specu-late that anxiety and insecurity are morestubborn than confidence and optimism. Inother words, the lagged quality of perceivedinsecurity vis-à-vis the official economy maynot be symmetrical with respect to movingfrom good times to bad. People seem to stub-bornly hold on to their fears but will quick-

69


ly abandon confidence. We saw the sameinertia attached to beliefs about the state ofpublic finances in Canada. This may also be aunique feature of the Canadian public —Americans are less insecure, according to ourrecent comparison survey, although no moreoptimistic.

A Qualitative Check on theOfficial/Public GapAnalysis of these quantitative percep-

tual indicators is of only limited assistance insolving our problem. Qualitative researchusing focus groups is a more subjective or“phenomenological” tool for deconstructingrelationships in the “lived-in world”(lebenswelt). By this we mean that we relymore on the personal accounts and under-standings of the respondent than on externalmeasures and analysis of their situation.

TABLE 1

Tracking Views on the Canadian Economy“Compared to five years ago, do you think that

the Canadian economy is doing much worse,

worse, the same, better, or much better?”

Nov 96 May 00(n=1535) (n=1505)

Better 45% 56%Same 24% 24% Worse 30% 19%DK/NR 2% 1%


CHART 7

Fear of Job Loss – Demographic VariationsPercentage of employed Canadians agreeing with

the statement: “I think there’s a good chance I could

lose my job in the next couple of years.”

Ontario

$40 - 59K 25%

26%

23%

30%

$20 - 39K 27%

20%

23%

<$20K 33%

32%

29%

Man./Sask.

Atlantic

Alberta

Quebec

BC

$60K+1 21%

27%

25%

UniversityCollege

High school or less

0 20 40 60 80 100

1 Refers to household income.



gloom have not affected our most recentmeasures of job and personal security.Second, Canadians tend to be highly scep-tical about the validity of objective macro-economic indicators. It is our sense that thisscepticism (like the lag and turbulenceeffects) was higher in the 1996-98 transi-tional period than at other times.

In addition to anecdotal observationsof their economic circumstances, the objec-tive indicator that Canadians point to mostoften as evidence of real improvement islower unemployment rates. Other key indi-cators used by economists and reported bythe media, such as inflation rates, stock mar-ket performance and GDP growth, are lessfamiliar and relevant to the average person.

Yet even the unemployment rate isseen as an imperfect indicator of economicperformance. Many people erroneouslyassume that it reflects the number ofCanadians who are receiving Employment

Frank L. Graves

Many qualitative studies conductedby EKOS over the 1990s examined publicperceptions of national and local econom-ic performance, social well-being andredistribution (EKOS Research Associates1997). This research elaborates on the exis-tence of an imperfect relationship betweenobjective measures of economic perform-ance, provided by leading macroeconomicindicators, and public perceptions of thestate of the economy.

Two key related factors appear tounderlie this apparent distortion. First, peo-ple tell us that they form their perceptionsabout the state of the Canadian economybased on their personal economic circum-stances and on examples of local economicgrowth. This may help to explain whymedia reports of impending economic

70

CHART 8

Perceived Loss of Control Over PersonalEconomic Future – Demographic VariationsPercentage of Canadians agreeing with the


economic future.”

Ontario

$40 - 59K$20 - 39K

<$20K

Man./Sask.

Atlantic

Alberta

Quebec

BC

$60K+1

UniversityCollege

30%

28%

25%

36%

35%

28%

28%

34%

29%

36%

25%

36%

34%

High school or less

0 20 40 60 80 100

1 Refers to household income.

Source: Rethinking Government, Jan. 2001, EKOSResearch Associates Inc.

CHART 9

Perceived Loss of Control Over PersonalEconomic FuturePercentage of Canadians agreeing with the


economic future.”

30

0

40

10

50

20

6

0

8

2

10

4

12 60

Apr96

Nov98

Feb94

Mar98

Oct97

Jan01

Ura

te(p

erce

ntag

e)

Fear

ofj

ob

loss

(per

cent

age)

U rate fear of job loss

Source: Statistics Canada & Rethinking Government,EKOS Research Associates Inc.


Insurance benefits and thus under-representsa growing proportion of the workforce thatis ineligible to receive benefits. Many peoplealso assume that most of the jobs created overthe past 10 years have been low-paying serv-ice-industry jobs, despite evidence that manyof the jobs created have been well-paying.Scepticism about the worth of economicindicators is also linked to Canadians’increasing distrust of government and elites.Our qualitative findings suggest that manyCanadians feel that economic indicators aremanipulated by governments with a goal ofmaintaining the socio-economic status quo.

Both focus group and survey researchalso suggest that Canadians perceive the

fruits of Canada’s recent positive economicperformance to be unevenly distributed.Focus group participants say the uneven dis-tribution is masked by most popular indica-tors, particularly GDP growth rates. AsChart 4 clearly demonstrates, these concernsare related to a real and steep rise in incomeinequality in the latter part of the decade.

In the mid- to late 1990s, Canadianshad no difficulty reconciling positive eco-nomic indicators with the view that mostCanadians were no better or worse off thanbefore. The explanation was that the newwealth created in the 1990s tended to flowinto the hands of relatively few people whilethe majority saw their incomes stagnate. To

71


TABLE 2

Tracking Demographic Variables on Perceived Economic Indicators

Feb. 1994 Jan. 2001 Feb. 1994 Jan. 2001n=2369 n=3099 n=1532 n=2457

Region RegionAtlantic 42 29 Atlantic 52 32Quebec 41 28 Quebec 33 20Ontario 45 28 Ontario 45 26Man./Sask. 49 36 Man./Sask. 51 26Alberta 46 36 Alberta 46 30British Columbia 42 34 British Columbia 28 25Age Age<25 36 23 <25 42 2525-44 42 29 25-44 43 2545-64 50 37 45-64 39 2665+ 47 31 65+ 38 25Education Education=/<HS 47 36 =/<HS 45 28College 45 28 College 46 24University 37 26 University 32 23Gender GenderMale 38 29 Male 38 25Female 48 32 Female 45 25

Percentage of Canadians agreeing with the

statement: “I feel I have lost all control over

my economic future.”

Percentage of employed Canadians

agreeing with the statement: “I think

there’s a good chance I could lose my

job in the next couple of years.”


some extent those feelings are corroboratedby the evidence (Chart 4). Moreover, manyCanadians felt that while cuts to the socialsafety net had allowed Canadian governmentsto improve their fiscal situation and bolsterCanada’s international competitiveness, theyhad hurt the average family. This helps toexplain why broader perceptual indicators ofsocial well-being remained stable or evendecreased during the 1990s despite objectiveindicators of positive economic performance.Our most recent survey evidence shows thatthis has changed, with most Canadians nowagreeing that their economic circumstancesare better.

It will be helpful to review our exami-nation of the interplay between the officialand perceived economy in the 1990s by look-ing at three broad phases — the early, mid-dle and late 1990s. For this we return toCharts 1, 2, 5 and 6.

The Early 1990s: Through aGlass DarklyThe decade began with the country

sliding into what was an unusually deepand protracted recession. Unemploymentreached well into double digits (Chart 1)and there was huge downside adjustment,first in the private sector and then in thepublic sector. The economy contracted 3percent (Chart 2). Interest rates were rela-tively high and public finances reachedsuch a desperate state that by the mid-1990s there was talk of IMF interventionand Wall Street Journal references likeningCanadian public finances to those of a“banana republic.” Real per capita dispos-able income declined until past mid-decade even while productivity increased,albeit slowly.

The cumulative weight of this grimpicture produced a sense of gloom and anxi-ety in the Canadian public, with a stunningtwo-thirds of Canadians agreeing with thebleak proposition that they had lost controlof their economic future (Chart 6) and underone-quarter feeling comfortable disagreeing.Similar numbers expressed anxiety over theirpersonal risk of job loss. All in all, the firstthird of the decade concluded withCanadians’ views on the economy under acloud of gloom bordering on despair.

The Mid-1990s: InsecurityUnhingedTowards the middle part of the decade

the economy had climbed out of recessionand was demonstrating consistent albeitrather tepid growth (Chart 2). Canada puta-tively hit the “fiscal wall” in 1995, and thecrushing combination of huge public deficitand debt, record-high tax levels and a sector-limited recovery led most Canadians to dis-count any claims of recovery by the officialeconomy. This inertia of public despair andanxiety continued well into 1997 (Chart 6),even as the economy continued to recover;job creation burgeoned and public deficitswere largely arrested and eliminated. This ledus to question why, if GDP was up,Canadians were so down.

By 1997-98 public confidence wasunhinged and we witnessed wild fluctua-tions in people’s sense of job security andbroader economic security (Charts 5 and 6).There was a tendency to largely discountgovernment claims of fiscal progress,although public concerns with debt anddeficit did begin to abate. Concern aboutpublic finances had gone from a strong plu-rality holding the view that the deficit was

72

Frank L. Graves


mostly a “manufactured” issue at the outsetof the 1990s to a pinnacle of public concernby mid-decade.10

From a qualitative perspective, manyCanadians saw (or experienced) the employ-ment losses of the first third of the decadeas profound and permanent and the gainsof the middle third as selective and volatile.For many, there was a virtual collisionbetween the conclusion to the “old econo-my” and the awkward, first steps into thenew, which in part explains the unhingingdiscussed above. Compounding the impactof this collision was the speed at which ittook place and the amount of “traffic”involved. Coinciding with the emergenceof new economic “realities” were theground-level impacts of governmentretrenchment and broader institutional andsocietal shifts. These profoundly inter-relat-ed, dynamic forces challenged Canadians’resilience. In a sense, a great number ofCanadians realized that they could notcling to what they had known (because itwas gone) and had yet to fix in their mindswhat the future would hold.

The Close of One Century andOpening of Another: Fluxophiliaand the New EconomyHowever, as the 1990s closed and the

new century opened, Canadians could nolonger ignore the sustained strong per-formance of the Canadian economy.Aggregate unemployment continued todrop dramatically (Chart 1), GDP contin-ued to grow, and the Canadian economybegan to rival and even surpass theAmerican juggernaut, which had left mostadvanced Western economies in its dustthroughout the 1990s. The yawning pro-

ductivity and standard-of-living gapbetween Canada and the United States wasstabilized and there was some evidence thatthe Canadian economy was beginning tonarrow the American advantage. Moreover,interest rates remained low and real percapita disposable income was rising. Whilethe common perception may be that theenfeebled Canadian dollar is not part of ourrosy economic picture, the low dollar has infact contributed to this success.

Perhaps even more pointedly, thestate of Canadian public finances had beendramatically reversed. Record deficits werebeing replaced by large surpluses at thesenior levels of government. This reversalis important for two reasons. First, ourresearch, even up to 1997 and 1998,showed that most Canadians still believedthe rate of growth of the public debt wasaccelerating. Second, and more important-ly, our multivariate analysis of attitudestowards government (expectations, trust,appropriate expenditure levels) showed thatconcern over public finances explained asmuch and possibly more of the observedvariance than any other single factor(including perceptions of the broader econ-omy) (EKOS Research Associates 1995).Canada had magically transformed itselffrom a banana republic into a northerntiger, leading growth in the G8 and withsound public finances and the lowest unem-ployment rates in well over a decade. All ofthis occurred against a backdrop of analmost miraculous new global economythat appeared poised to repeal the laws ofbusiness cycles and to continue withunabated growth, floated on the magic car-pet of globalization, the electronic revolu-tion and exotic new biotechnologies.

73



SynthesisHow does this brave new economy

appear through the prism of public attitudes?The most recent data suggest that the publichas indeed registered the official success of theeconomy, although there are entrenched divi-sions across class lines as to the extent of thissuccess. Fear of job loss is well down and senseof loss of control has been virtually halved fromits mid-1990s apex. It must be noted thateconomic insecurity is still fairly volatile andconfidence levels are not firmly entrenched,particularly amongst certain segments ofCanadian society. Our US-Canada compara-tive survey shows that although the incidenceof Canadians believing they had lost all con-trol of their economic future was well down,it was twice as high as that among Americansin 1999. In EKOS’s most recent soundings,however, Canadian insecurity continued todecline while American insecurity rose almost10 percentage points on our loss of control indi-cator (Chart 10).11

There is also a sense that economicpolarization has not decreased as the economyhas rebounded and that, in fact, a wideningand hardening gap between rich and poor isa permanent feature of the new economy, partof the price that must be paid for negotiatinga successful strategy to deal with globaliza-tion.12 It is, however, instructive to note thatwhile the majority of Canadians believepoverty is growing and the gap between richand poor is widening, the size of this majori-ty has shrunk over the past two years.

The more impressive evidence is, how-ever, the breadth of Canadian confidence inthe economy. In late 1997 only slightly moreCanadians believed the economy was bettercompared to five years previously thanbelieved it was worse (Table 1), but in May

2000 the better-to-worse ratio had risen tonearly 3:1.13 The future looked even brighterfor the majority of Canadians, with only sin-gle-digit percentages now characterizingthemselves as pessimistic and close to four infive declaring themselves optimistic abouttheir personal futures (Chart 11).

Meanwhile, we have seen a dramaticreversal in attitudes towards globalization,technology and trade liberalization. In theearly 1990s most Canadians were opposed toNAFTA, almost none had even heard of theInternet and new technology was associatedmore with risk than with opportunity. Inearly 2000 globalization was seen in deci-sively positive terms, the Internet was seenas the most powerful agent of positive changein the lives of the over 60 percent ofCanadians who were online, and further tradeliberalization was supported by the clearmajority of Canadians. Only 4 percent ofCanadians believed that change was mostly“a bad thing” while 66 percent thought itwas mostly a “good thing” (30 percent wereindifferent or did not know) (EKOS ResearchAssociates 2000a).

Canadians have emerged from the tur-bulence and insecurity of the 1990s with afundamentally different outlook on the econ-omy. They have moved from “future shock” towhat we call “fluxophilia” (love of change).This transformation may represent the emer-gence of a new postmodern personality. It maybe as significant as the shift in worldview andvalues that accompanied the transformationfrom mercantilism to industrialism (althoughcompressed into a tiny fraction of time com-pared to that great transition).

All of this suggests that the tradition-al relationships between perceptions of theeconomy and attitudes towards government

74

Frank L. Graves


and society may be undergoing a historicaltransformation beyond the usual fluctuationsof the business cycle. Within this historicalcauldron, equally profound transformationsin the role of the State and broader institu-tions are taking place. This sets the stage forthe final questions of our discussion — howdo citizens weigh and balance economic andsocial well-being, and how do economic per-ceptions influence attitudes towards theredistributive role of the State?

ECONOMY FOR WHAT? THE PUBLIC BALANCE OF ECONOMICAND SOCIAL WELL-BEING

There is a vast philosophical and socialscience literature on the notion of well-being.Our intention is to bypass these intellectualviews and assess public impressions of the rel-ative importance of economic and social well-being. In the public consciousness, economicwell-being refers to the amount and securityof one’s income/wealth set against the costs of

necessities and luxuries. Social well-being is amore complex and elusive concept; for mostpeople the notion of overall quality of life,both individual and collective, would comeclose to the definition of social well-being.Our research indicates that members of thepublic draw a clear distinction between theeconomic and social realms.

Quality of Life Versus Standardof Living: Dominance of theSocial RealmAs noted above, our research has

revealed a profound gap between the reso-nance of “standard of living” and that of“quality of life.” In fact, this gap is at theessence of the conflict between Canadians’views of economic policy and indicators suchas productivity growth. In what we havelabelled the “Bay Street variant,” productiv-ity is primarily linked to improving thematerial standard of living and involves arelatively small tool kit of solutions (chiefly

75


CHART 10

Tracking Economic Insecurity“I feel I have lost all control over my economic

future.”

Aug 99 (n=1005)

July 99 (n=1503)

Nov 00 (n=1204)

Jan 01 (n=3099)

0 20

72

57

52

47

40 60 80 100

disagree (1-3)

Canada

United States

agree (5-7)

neither (4)

11 16

17 25

15 31

21 30

Source: Rethinking Government, EKOS ResearchAssociates Inc., US Surveys.

CHART 11

Optimism“Would you describe yourself as pessimistic or

optimistic about your personal future?”

Oct 99 (n=4686)

May 99 (n=4411)

May 00 (n=4668)

Jan 99 (n=4016)

Oct 98 (n=3624)

0 20 40 60 80 100

pessimistic

optimistic

neither

70

74

76

78

78

1711

1410

149

139

139

Source: CIO Government Communications Surveys,EKOS Research Associates Inc.


tax cuts and minimal government) (EKOSResearch Associates 1999). Formulated inthese narrow, economistic terms, the issuefinds little resonance with Canadians. In thepeople’s variant of this agenda, or what wecall the “Main Street variant,” the issue isconstructed around productivity for qualityof life. This objective brings into play amuch expanded tool kit, which, while notexcluding tax cuts, orders and clusters pri-orities in a more balanced manner, with theemphasis on human capital (e.g., health,education, skills, kids).

As discussed in note 4, our focus-groupparticipants had a great deal of fluency inthese issues and had no trouble discussingstandard of living and quality of life. Mostdescribed standard of living as measurable inincome/assets: “It’s about how much moneyyou have.” They saw quality of life as a muchbroader concept, encompassing a whole rangeof potential factors depending on individualpreferences and motivations.

The connection among macroeconomicperformance, standard of living and quality oflife was much debated in our focus groupsheld in the early part of 1999. For many, theextent of the connection for “average people”like them was determined by governmentaction (i.e., how it distributes economic bene-fits throughout society). All participantsbelieved, for example, that it is quite possiblefor an economy to grow while most people seetheir standard of living decline if the “rich areallowed to keep all the profits.” Most partici-pants believed this may well be what has hap-pened in Canada. The idea of the rising tidelifting all (or at least most) boats was seen astheoretically plausible but did not resonate:“Not everyone has the same chances to benefit;some boats are leaky.”

Moving Beyond the Dualism ofSocial or Economic Agenda:The Emerging Humanomic EthicGiven the two competing models of

Bay Street and Main Street, the majority ofCanadians would line up behind Main Streeton this complex issue. The preferred goal forCanada in 2010 is to have the “best qualityof life in the world” (Chart 12). It is worthnoting that achieving the highest standard ofliving is at the bottom of the list. Indeed, thetop part of the chart is dominated by “soft-er” goals and the bottom by harder, fiscalgoals. It is not that people do not want moremoney — they clearly do — but that they donot want to define themselves or the societythey pass on to the next generation in purelypecuniary terms. It is also worth noting thatCanadians are resistant to a purely idealistic-humanistic societal goal. The bridging ofsocial and economic concerns can transcendthese false dichotomies.

Canadians do not equate quality of lifewith standard of living. Quality of life islinked to human investment priorities; forexample, there is a strong link between ahealthy population and quality of life. Itshould also be noted that there is a strongpositive association between perceived qual-ity of life and income (Chart 13). It isremarkable that in research carried out byEKOS this strong linear relationship seemsto disappear and even reverses itself afterannual income exceeds $150,000.14 Thisimplies profound questions about the idealdistribution of wealth in society.

There is also an expressed desire toexplicitly link social and economic policies,which are now broadly seen to have com-plementary rather than competing agendas.In evaluating the current emphasis of

76

Frank L. Graves


government, most Canadians see its pre-vailing focus as economic. However,Canadians register substantial support for amore balanced or social learning agenda.

DO RISING ECONOMIC TIDESBOOST COMPASSIONATE ETHIC?THE IMPACT OF ECONOMIC PERFORMANCE ON ATTITUDES TOWARD REDISTRIBUTION

How does the performance of theeconomy (both official and perceived) affectattitudes toward redistribution? In narrowterms, this could refer to the emphasisplaced on tax burden versus spendingpriorities, particularly social assistance,

regional transfers and unemploymentinsurance.

We can consider relationships at boththe micro (individual survey respondents)and macro (aggregate) level. The formerrefers to the relationship between an indi-vidual’s sense of personal economic securityand his or her attitude toward redistribution,the latter to how aggregate societal attitudesvary according to official and perceived upsand downs in the economy. This would beroughly analogous to the distinction betweenan individual’s income and GDP.

In addition to considering the relation-ship between economic performance and atti-tudes toward redistribution in the narrowersense, we have argued that it is essential this

77


CHART 12

Preferred Goals for Federal Government“If you were Prime Minister for a day, and had to

pick an overall national goal for Canada to achieve

by the year 2010, which of the following would you

choose?”

Best health care system in the world

Lowest incidence of childpoverty in the world

Best quality of life in the world

Best educated populationin the world

Highest labour market participationrate in the world

Lowest overall tax burden ofmajor industrialized countries

Highest productivity level ofmajor industrialized countries

Eliminate public debt

Most innovative/ high-techcountry in the world

Highest standard of living ofindustrialized nations

0 20 40 60 80 100

62%

45%

64%

45%

57%

35%

52%

30%

66%

50%

Note: Presented in series of random, paired choices.Percentages indicate average number of times eachoption was selected over all others.

Source: Productivity Study, June 1999, EKOS ResearchAssociates Inc.

CHART 13

Quality of Life“Thinking about your personal quality of life, do

you think it has gotten better or worse in the past

10 years?”

<$ 25,000 (n= 175)

$50,000-$74,999 (n= 242)

$125,000-$149,999 (n= 20)

=/>$250,000 (n= 12)

$25,000-$49,999 (n= 271)

$100,000-$124,999 (n= 93)

$200,000-$249,999 (n= 12)

$75,000-$99,999 (n= 131)

$150,000-$174,999 (n= 12)1

No response (n= 288)

0

Percentage saying better

20 40 60 80 100

51%

47%

46%

43%

64%

50%

54%

57%

68%

37%

1 Four persons in the sample had household incomes ofbetween $175,000 and $199,999. All of them said that theirpersonal quality of life had gotten better over the past 10years. When these responses are added to the previoushousehold income level, 68 percent of respondents(n = 16) with incomes of $150,000 to $199,999 say better.

Source: Productivity Study, 1999, EKOS ResearchAssociates Inc.


problem be cast in a broader historical field.We believe, as do many others, that broaderhistorical shifts are occurring in terms of basicvalues and orientations to the role of the State,economy and society. These contextual factorsare crucial to an understanding of the simplerissue of how economic performance influencesattitudes toward redistribution. These revolvearound shifts in expectations and value of theState and the marketplace.

The Individual Linkage BetweenEconomic Performance andAttitudes Toward RedistributionBefore considering macro or societal

linkages, it is helpful to consider the micro orindividual-level linkage between economicperformance and attitudes toward redistribu-tion. As noted earlier, we extend the analysisto the broader issue of support for active gov-ernment. Economic performance is typicallythought of as an aggregate attribute of theoverall (or regional) economy. Individuals canalso demonstrate (and reflect broader) eco-nomic “performance” (e.g., their personalincome, wealth, productivity, standard of liv-ing), but this is an unusual usage of the term.There is, however, a danger in correlating onlythe aggregate attributes of a society (as, forexample, in Chart 12). Although these macroindicators are interesting and useful to exam-ine in the aggregate, this level of analysis candisguise the way these relationships functionat the individual level.15

In fact, the micro or individual-levelrelationships between economic performanceand attitudes towards redistribution functionvery differently from relationships at themacro or aggregate societal level. For indi-viduals, there is a striking and predictablelinkage between social class and attitudes

towards government spending. Economicallysecure citizens are much less supportive ofredistributive functions and more supportiveof accelerated tax relief than citizens drawnfrom economically vulnerable locations with-in society. This is a reflection of both classvalues and interests and corresponds rough-ly to J.K. Galbraith’s “culture of content-ment” thesis. The economically secure aremuch less likely to need government supportand much more likely to pay more taxes thanthe economically vulnerable.

If the macro level followed the samelogic as the micro level, we would expect thatas aggregate perceptions of economic per-formance (and security) strengthen there willbe more secure people and hence less supportfor active State redistribution. In fact this isnot the case. As economic performance hasimproved, producing more affluent people,the appetite for active government has risen,not declined. Potentially, the discrepancy canbe explained by the notion of “relative dep-rivation.” More citizens may be affluent, butthe gap between the truly wealthy, who makeup a small percentage of the population, andthe rest of the population may remain thesame or become perceptually even wider.This provides a vivid illustration of aggrega-tion bias and a useful segue to the more rele-vant topic of the aggregate linkage amongsocietal attitudes toward redistribution, theState and economic performance.

The Macro LinkagesCanadian society has not become more

resistant to an active role for the State insocial well-being. In fact support for activegovernment investment has risen impres-sively over the past five years. This conclu-sion is clearer when scrutinized against the

78

Frank L. Graves


yardstick of an “active” State investing insocial well-being than against the narrowercriterion of attitudes toward redistribution.

As Table 4 clearly shows, the percent-age of respondents who say that the federalgovernment should “increase” its involve-ment (summed across a broad range of gov-ernment activities) has risen progressively(from 39 to 50) since 1995, while the per-

centage who say that government should“reduce or eliminate” its involvement hasdeclined from 25 to 10. These clear (monot-onic) patterns correspond fairly directly torising confidence in personal and nationaleconomic performance.

Redistribution, in the narrower formof passive income supports and regionalwealth transfers, has suffered stagnant ordeclining support over the past 20 years.This decline in support is associated withbroad post-material shifts (e.g., from col-lectivism to individualism), declining trustin and expectations of government, and agrowing belief that the parental welfarestate had the irony of perpetuating the veryproblems it sought to solve. The shiftingmetaphor of the social safety net as a ham-mock, encouraging indolence and abuse, isevident in current political (and popular)beliefs.

Less obviously, this decline in sup-port for the progressive redistributive Statehas not been replaced by the neo-conserva-tive ethic of radical self-reliance, minimalgovernment and trickle-down economics.These approaches have, if anything, beeneven more decisively eschewed by citizenswho seek a more pragmatic and effectivestrategy for achieving social well-being.This points to the centrality of human cap-ital investment, in concert with explicitattention to fiscal prudence and sound eco-nomic management, as the key to securingstable quality of life. When it is cast inthese terms, we can see rising support fora “conditionally active” State as the econ-omy strengthens.

To empirically illustrate these argu-ments, we will conclude by reviewingshifting public values and attitudes

79


TABLE 3

Allocation of Budget Surplus“As you may know, the government in Ottawa

has said it will have a budget surplus over the

next several years. How would you prefer the

federal government make use of this budget

surplus?”

Invest insocial pro-grams like health care

and education

Reducethe

nationaldebt

Reducethe levelof taxa-

tionacross the

board

RegionAtlantic 63 17 18Quebec 57 18 23Ontario 52 28 20Man./Sask. 47 24 27Alberta 44 34 21British Columbia 45 29 26

Household Income<$20,000 64 18 17$20,000-$39,999 56 22 21$40,000-$59,999 48 28 23$60,000-$79,999 45 32 22$80,000-$99,999 47 28 24=>$100,000 41 29 27

“I Feel I Have Lost All Control Over My Economic Future.”Economically

secure 51 28 20Economically

insecure 55 20 24


toward the State and redistribution overthe past decade. We will review four keyindicators:

> changes, over the past several years, inthe call for increase/maintenance ordecrease/elimination of federal govern-ment activities (Table 4; Chart 14);

> public ratings of fiscal and social pri-orities for the federal governmentduring the 1990s (Chart 15);

> specific reactions to a trickle-downstrategy versus increased investmentconcerning child poverty in light ofincreased prosperity (Chart 16);

> shifts, over the past several years, inpreferred broad role orientations forgovernment (Chart 17).

Conditional Receptivity to NewActivism: An Increased orDecreased Role forGovernment?Despite deep scepticism about the

effectiveness, efficiency and fairness of gov-ernment, Canadians are now clearly looking

for a return to an active agenda. Reducedfears over public finances, growing concernsabout the social costs of retrenchment andglobalization, and a desire to preserve aunique Canadian identity are all fuellingguarded acceptance of a greater role for gov-ernments in general and the federal govern-ment in particular. Most recently, risinglevels of economic optimism have reinforcedthis “active shift.”

One of the crucial questions here is whatis the relative role of the economy in this risein support for government involvement? Is itreduced fears over public finances, a sense thatsocial needs have worsened or that publiclargesse is less constrained by economic fears?Our research suggests that all of these factorsare at play, and our multivariate models indi-cate separate effects for each. In the aggregate,however, it appears that economic confidencemay be the most crucial factor.

In the past few years we have seenCanadian public opinion stabilize at a con-sensus that both senior levels of governmentshould increase or maintain their level ofinvolvement across all policy areas (Table4).16 In fact, as economic confidence has risenthe emphasis on “increase” involvement hascontinued while that on “eliminate orreduce” involvement has lessened dramati-cally. In the past when we randomly used theword “spending” instead of “involvement”we achieved the same result.

Chart 14 breaks down the increase/decrease test for health care, education andunemployment. These specific tests focus onboth redistribution (unemployment) andbroader active investment measures (e.g.,health care and education). They also includeareas that are seen as worsening (health care)and improving (unemployment). Hence we

80

Frank L. Graves

TABLE 4

Future Federal Government InvolvementAcross All Priorities“Overall what would you like to see the federal

government do in the future?”

1995 1996 1997 1998 2001

Increase 39% 39% 48% 46% 50%involvement

Maintain 34% 42% 40% 42% 38%involvement

Decrease 18% 13% 9% 9% 8%involvement

Eliminate 7% 7% 2% 2% 2%involvement



can roughly test the impact of needs/condi-tions versus economic performance.

In the case of unemployment (an areaof declining need), the incidence of “increase”dropped by 10 percentage points between1997 and 2001. It must be noted, however,that the increase figure is still significantlyhigher in 2001 (at 51 percent) than it was in1995 (at 40 percent). This suggests that bothsocial conditions and economic performanceinfluence attitudes towards redistribution. Inthe case of health care, our measures of per-ceived need show that Canadians do believeneeds have risen rapidly since 1995 due toperceived deterioration in the system.However, the incidence of perceived deterio-ration, while still high, has actually beendropping significantly over the past year.Meanwhile, support for increased involve-ment continues to rise. Once again, this sug-gests that both need and economicperformance are important but that the econ-omy may be a more significant factor.

Fiscal Versus Active PrioritiesWhen we asked an identically phrased

question about what priority the federal gov-ernment should assign to “level of taxation”against other issues such as unemploymentand debt, we found it registered low as apublic concern (Chart 15). These patternshave continued into 2001 and are reinforcedby other evidence and numerous other tests.

There has been a consistent and pro-gressive pattern, since the mid-1990s, ofdeclining concern with level of taxation (nowcited as a priority for government by only 62percent of Canadians, versus 92 percent forhealth and 87 percent for child poverty). Atthe same time, we are finding evidence of ris-ing concern in other areas (Chart 16) and

increased receptivity to the need for govern-ment to play a role in addressing problems inour collective life. We are also seeing a fairlystrong rejection of trickle-down economics.

The public’s desire for a return toactive government is, however, highly con-ditional. The public resists a return to old-style government and seeks a new approachthat stresses targets, results measurement, fis-cal discipline and partnerships. The publicdoes not want to reduce the government’srole to that of accountant. They want gov-ernment to help plan, coordinate and protect.Despite their reservations, Canadians stillwant government to deal with the really bigproblems that are too onerous for them tomanage on their own. Children, the nextgeneration and the widening gap betweenrich and poor are some of the issues thatCanadians are deeply concerned about and donot believe will be adequately managedthrough tax cuts or minimal government.

Chart 17 shows the most recent rolehierarchy for government, noting changesfrom five years earlier. Canadians espouse amix of liberal and conservative roles for the

81


CHART 14

Future Federal Government Involvement byPriority

0

25

50

75

100

3442 40

65 65 61 5851

45 43

77 778074

1995 19971996 1998 2001

% indicating “increase involvement”Health Care Education Unemployment



federal government. The continued (andrecently declining) low ranking of minimalgovernment, in contrast to the highranking accorded a government role in pro-moting full employment and tolerance andunderstanding, reflects a desire for activegovernment.

Note that the public’s hierarchy isdominated by active roles. At the bottom ofthe list is minimal government. Equality roles(based on redistribution) are also rated low, asare values linked to wealth and competitive-ness. This indicates the danger of focusing onattitudes towards redistribution as a bell-wether for attitudes towards governmentinvolvement when discussing Canadians’views of their economic and social well-being.

One of our core conclusions is that theeconomy is very important but that the

economy and economic values are seenas instrumental, not terminal, values.Economic values like thrift, productivityand competitiveness are seen as tools for theachievement of higher-order, humanisticgoals (e.g., a healthy population, freedom,a clean environment). We believe that theidea of “humanomics” will help to capturethis rising sentiment.

“Humanomics”Although another neologism to describe

government is probably not an urgent need,we believe that the label humanomics can helpdescribe a growing public desire for an eco-nomic approach that recognizes both the cen-trality of real-world human results (e.g.,improved health, skills and quality of life) andhuman-resource inputs (e.g., improvedhuman-capital investments in health and edu-cation) as a means to achieve these results.Humanomics is a blending of social invest-ment and hard economic priorities, with gov-ernment serving as a strategic broker amongcitizens, the private sector and institutions.The notion of humanomics can help redefine

82

Frank L. Graves

CHART 15

Longer-Term Tracking of Federal Priorities“Thinking not just of today but over the next five

years, what priority should the federal government

place on each of the following areas?”

unemployment level of taxationdebt and deficit child poverty

70

7673

50

80

87

60 62

9092

100

Dec96

Aug95

Feb94

Jan99

Nov97

Jan01

Oct99

Jan00

health care

social fiscal

Note: % indicating high priority (5,6, 7 on a 7-pointscale) “debt and deficit” replaced by “debt and publicfinances” in January, 1998.

Source: Children’s Survey, January 2000, RethinkingGovernment, EKOS Research Associates Inc.

CHART 16

Concern for Others

Now that the economy is getting stronger, we nolonger need to worry as much about child poverty issues

Now that the economy is getting stronger, we can nowafford to pay more attention to child poverty

0 20

10

82

40 60 80 100

disagree agree

Percent n=1572

neither

8

6 11

81

Source: Rethinking Government, Nov. 97 & HRDC ChildPoverty Survey, Oct. 97, EKOS Research Associates Inc.


the relationship between economic policy andsocial policy as components of an overall planto increase opportunity and reduce economicrisks, rather than as competitors for scarcesocietal resources. Citizens believe thathumanism and economics can be synthesizedto transcend some of the excesses and divisionsthat have characterized the traditional left-right focus. We believe the notion of huma-nomics can also help solve the paradox of howit can be “the economy, stupid!” when all ofthe government’s priorities and top-rated val-ues are humanistic concerns.

Despite the allure of a new humanom-ic State, deep divisions underlie the potentialconsensus for such a model. The rapid social,economic and cultural changes of the late

20th century have fostered the emergence ofan incipient underclass in Canada, along withdeep disagreements amongst the economi-cally comfortable classes.

This analysis suggests that the ongoingfluctuations in the economy will continue tohave a profound impact on the debate,although that impact will be less predictablein future. The recent federal election wasprobably the first campaign in what will bean intense “vision” war to rebalance the rolesof the economy, society and the State.Although the performance of the economywill continue to strongly influence the out-come, there are reasons to believe that a lessdeferential, more sophisticated postmoderncitizenry will ultimately demand that it begiven the final say.

NOTES

The core conclusions in this article are based in

part on the thesis developed in Graves (1999).

Although as the author I am ultimately respon-

sible for any errors, I share any credit with a num-

ber of colleagues. At EKOS, Andrew Sullivan and

Sheila Redmond were especially helpful in assem-

bling the literature and background analysis.

Christian Boucher, Norm Leckie, Manon

DesGroseilliers and Patrick Beauchamp all pro-

vided additional useful input. Alfred MacLeod

bravely presented a rough draft to the initial

authors’ symposium, at which point we received

helpful feedback from other participants and

from the editors. Richard Jenkins provided very

insightful commentary as the discussant, for

which I am grateful. Finally, I thank the hun-

dreds of thousands of Canadians who patiently

endured our surveys and focus-group sessions

during the 1990s.

83


CHART 17

Tracking Future Roles for FederalGovernment“For each of the following, I would like you to rate

how appropriate you think that each would be as a

future role for the federal government.”

Mean score on a 100- point scale where100 indicates “extremely appropriate”

Building a country that canbe a source of pride

Planning for future generations

Protecting Canadiansfrom crime and abuse

Ensuring full employment

Demonstrating accountability

Providing Canadians with skills*

Efficiently delivering services

Promoting tolerance andunderstanding

Providing Canadians with strategicinformation about training*

Redistributing wealth in orderto promote social equality

Providing a bare minimal presence

0 20

July 2000

40

1996

60

1994

80 100

n= 1505; *½ sample

78.1 63.4 84.9

73.9 74.2

79.8 75.9 82.9

75.1 70.4

76.8 78.7

62.7 70.8 67.3

76.0 80.4 77.2

62.6 62.3 69.2

82.3 79.2 84.4

84.9 85.0 86.5

75.9 78.0

Source: Rethinking Government, July 2000, EKOSResearch Associates Inc.


1 Page and Shapiro (1992) argue that public opin-

ion varies in regular, predictable ways. This view

is not without its detractors, who argue that the

fit between objective and subjective economic vari-

ables is less reliable than commonly assumed. See,

for example, the articles in Clark et al. (1992a).

2 This does not necessarily indicate that the more

highly educated members of a society always

respond to economic indicators in an objective

fashion. For example, Krause (1997) questions

the use of aggregated public opinion data to

determine relationships between the economy

and economic expectations — that is, personal

financial and/or sociotropic expectations con-

cerning the economy. When disaggregated, the

data show that those with high school education

or less were uninfluenced by “expectational”

cycles — that is, their personal financial expec-

tations mirrored actual economic conditions —

whereas among those with at least one under-

graduate degree there was a difference between

real economic conditions and personal and

sociotropic financial expectations. This finding is

consistent across virtually all of our indicators of

economic performance, optimism and security,

with more affluent Canadians as well as those

with higher levels of education declaring them-

selves to be more bullish not only about their

own situations but also about the state of the

country, its finances and its future prospects. It

should be noted that Krause looks at disaggrega-

tion by education level only.

3 This is supported by EKOS’s Rethinking

Government series.

4 In the qualitative component of EKOS Research

Associates (1999), focus-group participants were

asked whether they discerned a difference

between “standard of living” and “quality of life.”

Consistent with the quantitative findings, they

saw quality of life as far higher in priority and

encompassing a host of factors including standard

of living, emotional, physical and spiritual well-

being, a clean environment and active govern-

ment supports.

5 There appears to be a threshold effect in the rela-

tionship between social variables and economic

growth. In underdeveloped countries an increase

in economic growth is matched by a dramatic rise

in social indicators such as birth rate and employ-

ment, whereas in developed countries a similar

increase in economic growth is not matched by a

comparable jump in social indicators. One can

extrapolate that in a functioning democracy the

public takes high growth rates for granted in

assessing quality of life and therefore, after a “bad

economic spell,” sees conditions as merely return-

ing to expected levels. See Krause (1997) and

Fedderke and Klitgaard (1998).

6 Social indicators are broadly understood to include

life expectancy, physician-to-population ratio,

availability of education, suicide and homicide

rates, energy consumption, etc. There are sugges-

tions that a web of associations amongst social

indicators might play a role in economic growth,

but there is little theoretical understanding of this

role. Most social indicators are proxies for difficult-

to-measure attributes. They seem to be more con-

sistently and strongly associated with level of

change than with rate of change in per capita

GDP. It may well be that the rate of change in

GDP and other objective economic indicators have

little bearing on changes in public opinion on

social issues (cultural indicators), as changes in

these areas are caused by other factors not strictly

related to economic indicators. Therefore a lag

between an improved economy and public per-

ception of improving social conditions or social

variables is not all that surprising. See Fedderke

and Klitgaard (1998).

7 The more influential literature in this area includes

Nye, Zelikow and King (1997), Inglehart (1990),

Nevitte (1996) and Giddens (1998).

84

Frank L. Graves


8 While this clear shift in preference towards active

measures is evident across many areas of social pol-

icy, it is particularly marked in the field of labour

markets. After extensively tracking Canadian atti-

tudes towards Employment Insurance (and its

predecessor, Unemployment Insurance) through-

out the 1990s, we now find a 20 percent advan-

tage for those who believe EI should act as a

springboard for the unemployed to return to work

over those who believe it should be used, for

instance, to stabilize the economy during periods

of recession. See EKOS Research Associates

(2000a).

9 One might speculate that the lag is indicative of

a transition period in the learning processes of a

public embarking on a positive relationship with

globalization and the new economy, equivalent

to that in emerging marketplace economies. The

evidence in this article is for the existence of this

lag and the emergence of a new way of looking at

the economy and its interplay with social factors.

Anderson and O’Connor (2000) describe the

learning process concerning economic indicators

that took place during the first five years of East

Germany’s marketplace economy after destruc-

tion of the Berlin Wall and reunification with

West Germany, with East Germans’ perceptions

of the economy gradually becoming aligned with

the objective economy.

10 The February 1994 issue of Rethinking Government

reported that 47 percent of Canadians agreed that

“recent concern about the deficit was manufac-

tured by large businesses and wealthy Canadians”

and just 27 percent disagreed.

11 This finding supports the findings of the

Conference Board’s Consumer Confidence Index

referred to earlier. See Conference Board (2001).

12 While in 1996 some 81 percent of Canadians

were worried Canada was moving “increasingly

to a society of haves and have-nots,” by July 2000

the figure had stabilized at 75 percent. In relat-

ed qualitative research conducted as a component

of the Rethinking Government studies, participants

viewed this phenomenon with a sense of resigna-

tion, with a disenfranchised underclass as the

unfortunate by-product of international compet-

itiveness.

13 These findings are explored in depth in EKOS

Research Associates (2000b). However, it should

be noted that this information was gathered

before news of the current slowdown in the

United States broke.

14 While the number reporting that their quality of

life has improved over a 10-year period rises with

income, this trend levels off and then in fact

reverses at $150,000 per annum. See EKOS

Research Associates (1999).

15 The problem of potential discrepancies between

correlating aggregate and individual-level data is

discussed in the literature under the rubric of

aggregation bias (either “ecological” or “psycho-

logical fallacies”).

16 Respondents were asked to indicate whether the

federal government (and the provincial govern-

ment, separately) should “increase,” “maintain,”

“reduce” or “eliminate” its involvement in a series

of 20 different policy areas. The findings dis-

cussed here are based on the aggregate responses

of respondents across all individual policy areas

explored in the question.

REFERENCES

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Clarke, H.D., E.W. Elliott, W. Mishler, M.C.

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Britain, the United States. Oxford: Westview Press.

85



_____ 1992b. “Regional Political-Economic Contexts and

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86

Frank L. Graves


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The Economy Through a Public Lens: Shifting Canadian Views ... · real per capita personal disposable income (Charts 1, 2, and 3). While the nomenclature of the eco-nomic realm remains