ORIGINAL PAPER When do Economic Perceptions Matter for Party Approval? Examining the Endogeneity of Economic Perceptions Before and During the Economic Downturn Kat Chzhen • Geoffrey Evans • Mark Pickup Published online: 6 July 2013 Ó Springer Science+Business Media New York 2013 Abstract Do economic perceptions influence partisan preferences or vice versa? We argue that the direction of influence between government approval and eco- nomic perceptions is conditional on the state of the economy. Under conditions of economic crisis, when economic signals are relatively unambiguous, perceptions of the economy can be expected to exogenously influence government approval but this is not found when the economy is experiencing a more typical pattern of moderate growth and economic signals are more mixed. We test these arguments using British election panel surveys covering electoral cycles of moderate economic growth (1997–2001) and dramatic and negative disruption (2005–2010). We examine the most commonly employed measures of retrospective economic per- ceptions and estimate a range of models using structural equations modelling. We demonstrate that when the economy is performing extremely badly economic per- ceptions have an exogenous effect on government approval and provide a means of electoral accountability, but this is not the case in under more normal circumstances. Keywords Economic perceptions  Government approval  Endogeneity of survey responses  Impact of economic crises Electronic supplementary material The online version of this article (doi: 10.1007/s11109-013-9236-2) contains supplementary material, which is available to authorized users. K. Chzhen Department of Politics and IR, University of Oxford, Oxford, UK e-mail: kat.chzhen@gmail.com G. Evans (&) Nuffield College, University of Oxford, Oxford, UK e-mail: geoffrey.evans@nuffield.ox.ac.uk M. Pickup Simon Fraser University, Burnaby, BC, Canada e-mail: mark.pickup@gmail.com 123 Polit Behav (2014) 36:291–313 DOI 10.1007/s11109-013-9236-2