Economics of Elections: Reflecting on the World's Costliest Election
Despite the fervour typically associated with elections in India, a significant number of India's Gen Z and millennials showed a notable disinterest in casting their vote. Various factors contributed to this apathy, ranging from the extreme heat to a general reluctance to leave the comfort of their homes. Moreover, there is this new wave of declaring yourself as apolitical as the new cool thing to do. We look at all of this and an interesting metric called the ‘Cost per Vote’ in the first edition of Deja Brew.
The Stock Market Story
The 2024 Lok Sabha elections certainly shook India's stock markets. On the very day the results were announced, the Sensex tumbled by over 4,000 points, mirroring the anxieties of investors like you and me.
These elections have again shown how deeply intertwined political events and economic conditions can be. The uncertainty and volatility extend beyond the stock market, touching everything from foreign direct investments to real estate values. This time around, we've seen sweeping policy shifts that impact key sectors such as infrastructure and technology, pivotal for economic momentum.
Despite the turmoil on the day of results, the market recovered to reach soaring heights once again. The broader economic outlook for India remains highly positive, and is well-positioned to maintain its status as one of the fastest-growing major economies. This optimistic view suggests that while the electoral winds may stir up storms in the short term, the long-term prospects are bright and promising.
The Instagram Strategy
More of India is online now than ever before, meaning how we get information and stay in touch with current events has changed dramatically. I, Abhishek Banerjee, for one don’t recall the last time I picked up a newspaper to go through the news instead of using it to squash the annoying fly in my room. My devices are how I stay ‘updated’ with the world around me. Ever since COVID, all of our screen time has been absurdly high, turning smartphones into our gateway to the world.
Political Parties have caught onto this and have adapted to it. Now when I mindlessly scroll through Instagram, I see political parties posting slickly edited reels with latest the trending music tracks perfectly waiting to go viral. All of these parties have their own social media teams, who are always on standby to drop the latest hard-hitting edit when the latest meme catches fire.
I have these friends (and I’m sure you do too) who love sharing what they see on their feed on their stories and statuses. These snippets of catchy but politically charged content are playing a pivotal role in shaping our political thoughts.
I’d love to be a fly on the wall (as long as there is no newspaper) of one of the offices of these social media teams.
Gen Z’s Wayward Political Compass
Every human adheres to a set of virtues, deeply ingrained and often non-negotiable. These virtues fundamentally shape our political identities. However, it's debatable whether the current generation thoroughly evaluates the virtues of political parties. In recent times, elections seem driven by agendas that primarily cater to and amplify religious identities.
Amidst this, what about a significant segment of Indian Gen Z and millennial voters who remain disinterested in voting? Many cite their reason of not leaving their homes to a deliberate choice of remaining apolitical, wearing their detachment like a badge of honour.
Here is a video of Naman Srivastava, founder of Global Governance Initiative, on what it means to be apolitical in India. Increasing apolitical sentiment means fewer people are holding the government accountable, which can lead to a complacent government that can afford to be less vigilant and responsive.
NOTA is Not It
The option of "None of the Above" (NOTA) in elections might seem like a powerful statement for voters disenchanted with the available candidates. However, its effectiveness is questionable at best. In practice, if NOTA garners the majority of votes, the candidate with the next highest tally— possibly a minority in terms of overall preference—still claims the victory. This system is particularly frustrating in scenarios where, say, local strongmen discourage opposition, leaving voters compelled to cast their vote for NOTA. Yet, this doesn't prevent the less desirable candidates from winning.
The Rising Cost per Vote
Linear reasoning suggests that as the population grows, political parties will need to increase their spending proportionally to reach a larger number of voters.
But can anything, let alone influencing India’s electorate, ever be that simple?
As per the Centre for Media Studies, a well-known think-tank, the polling expenditure for the 2024 elections is estimated to be around $16 Billion, more than the 2020 US presidential election. The cost per vote is an interesting metric, calculated by dividing the total polling expenditure by the number of voters. This figure reveals how much parties are spending per vote every election.
The initial assumption for many might be that the sheer number of individuals with voter cards directly corresponds to a humongous total voter population. However, a common counterargument is that reaching a larger number of voters should actually cost less per person when considering economies of scale.
When we look at the cost per vote over the years for the Indian General Elections, we see an increasing trend. The cost per vote has ballooned from ₹359.71 in the 2014 elections to a staggering ₹1394.63 in 2024 as per reports by the Centre for Media Studies (CMS), a renowned think tank, that analyses polling expenditure every election year. Cost per vote increased by 131% from the last election while the number of eligible voters increased by a mere 6.15%.
So Where Does this Money Go?
A significant portion of election spending is now directed towards digital marketing for reasons we touched upon. Data from Google reveals that spending on advertisements on its platform in the months leading up to this year’s election was six times greater than during the equivalent period in 2019. In 2019, around 40 per cent of voters acknowledged receiving poll-related messages on their mobile phones just before polling day.
Additionally, substantial amounts were spent on ‘chai-kharcha,’ with everything from television sets to alcohol being distributed as part of these marketing efforts. The practice of distributing cash to entice voters has become so common that most people no longer bat an eye at it.
The issue of extravagant election expenditures relates to the concept of the "total problem", as highlighted by Christopher J. Coyne, where the system incentivises this supposed ‘inefficient allocation’ of resources. Coyne argues that government actions, including election spending, often lead to unintended and inefficient outcomes due to systemic incentives. Instead of channelling funds into tangible and productive sectors like infrastructure, education, and healthcare, substantial amounts of money are spent on short-term election campaigns and voter incentives. This misallocation results in missed opportunities for long-term development and societal benefits.
We, the team at Deja Brew, want to improve your experience and your vote helps us do that.