The Effect of the Economic Crisis on the Communication of Irish Budget Policy

Contribution Text analysis has not traditionally been a widely used method of analysis in economic policy research. The importance of the communication of economic policy has, however, received greater recognition in recent... [ view full abstract ]

Contribution
Text analysis has not traditionally been a widely used method of analysis in economic policy research. The importance of the communication of economic policy has, however, received greater recognition in recent years leading to increased analysis of economic communications in both economics and political science literature. The existing research in relation to the communication of economic policy (both economics and political science based literature together) specifically focuses on three aspects of communication style known as “rhetorical devices”: 1) volume, 2) clarity, and 3) sentiment. Volume concerns the degree of rhetorical emphasis placed on certain issues or themes in communicating a message. Clarity concerns the degree to which a message is communicated in such a manner as to be understood with ease by the intended audience. Sentiment concerns the tone – positive, negative, or neutral – with which a message is communicated.

The economics based literature focuses primarily on the clarity of central bank communication on monetary policy (Blinder et al, 2008; Bulir et al, 2013; Jansen, 2011). This research investigates the relationship between the clarity of the monetary policy statements of various central banks and market volatility. Little research has been conducted, however, into the communication of budgetary policy by Ministers for Finance to the public. Some research into volume and sentiment in budget rhetoric exists in the political science literature (Burden and Sanberg, 2003). This is limited to the volume and sentiment employed US presidential candidate hopefuls in election debates.

The contribution of this study is that is seeks to build on the text analytical methods applied to other policy statements and to apply them to Irish budget speeches delivered over the last twenty years. The abrupt change in economic circumstances which occurred in 2008/09 facilitates an interesting analysis of the rhetorical strategies employed in the budget speeches the period.


Theoretical Base

Because the budget speech is invariably delivered by a politician who depends on the continued support of the electorate, this study assumes that the political aim of the budget speech is to persuade the electorate of the benefits of the budget. In order to persuade, the Minister must employ rhetorical strategies in the course of the budget speech. In his work entitled Rhetoric, the Greek philosopher, Aristotle defined rhetoric as “the power of observing the means of persuasion” (2004:7).

Hugh Rank’s (1976) model of persuasion assists in formulating the theoretic propositions and subsequent hypotheses of this paper. Rank’s model asserts that persuaders will invariably seek to communicate a message in a manner that “intensifies their own good” and “downplays their own bad”. A persuader can intensify his/her own “good” via three means: 1) repeated references to crowd-pleasing issues (intensification by repetition); 2) linking the message to something loved/desired by the audience (intensification by association); and 3) communicating in a manner that ensures the audience easily understands the message (intensification by composition). Conversely, a persuader can downplay his/her own “bad” via three means: 1) failure to address unpopular or difficult issues (downplaying by omission); 2) diverting the audience’s attention away from a negative reality (downplaying by diversion); and 3) deliberate obfuscation of the message (downplaying by confusion).

Relating the rhetorical device of volume to Rank’s rhetorical strategies of intensification by repetition and downplaying by omission, it is proposed that the Minister for Finance will “intensify his/her own good” by placing a greater emphasis on “good news” in budget speeches and “downplay his/her own bad” by placing less emphasis on (or entirely omit) the “bad news”.

Rank’s rhetorical strategies of intensification by association and downplaying by diversion are related, in this paper, to the rhetorical device of sentiment. When delivering good news, it is proposed that the Minister for Finance “intensifies his/her own good” by using positive language that enhances the positivity of the message in the collective mind of the electorate. It is proposed that the Minister for Finance, when delivering bad news, “downplays his/her own bad” by avoiding use of negative language that would serve to put off the electorate. Instead, the Minister for Finance seeks to “soften the blow” of bad news by using neutral language such as, for example, the use of euphemism.

Finally, Rank’s rhetorical strategies of intensification by composition and downplaying by confusion are related, in this paper, to the rhetorical device of clarity. It is proposed that the Minister for Finance “intensifies his/her own good” by delivering good news in as clear a manner as possible. This ensures that the electorate can easily understand the Minister’s message. It is also proposed that the Minister for Finance “downplays his/her own bad” by obfuscating a bad news message thus deliberately confusing the electorate.


Research Questions and Method
The objective of this paper is to investigate if the economic crisis had an effect on the communication of Irish budgetary policy by Irish Minister’s for Finance. Specifically the following three research questions are asked and answered:

1. Did the economic crisis have an effect on the rhetorical device of volume as employed by Ministers for Finance in delivering their budget speeches?
2. Did the economic crisis have an effect on the sentiment employed by Minister’s for Finance in their budget speeches?
3. Did the economic crisis have an effect on the clarity with which Minister’s for Finance communicated their budget speeches?

In order to answer these questions, it is necessary to compare the employment of each rhetorical device in budget speeches delivered during the period of the economic crisis with that in budget speeches delivered outside that period. Our sample comprises the twenty Irish budget speeches delivered from 1997 to 2016. Seven budget speeches delivered during that period are categorised as “bad news” speeches as they presented the unpopular austerity budgets implemented during the crisis. The remaining thirteen budget speeches are categorised as “good news” speeches as they presented the so-called “giveaway” or expansionary budgets of the period.

Quantifiable measurements of the rhetorical devices employed by the Ministers for Finance in their respective budget speeches are analysed. Volume in each budget speech is measured by the frequency of occurrence of issue-specific words in order to determine rhetorical emphasis, within each speech, on various budgetary-related issues. It is hypothesised that tax-related words are less frequently mentioned in those budget speeches that present the “bad news” of tax increases than in those that present the “good news” of tax cuts. It is also hypothesised that expenditure-related words are less frequently mentioned in those budget speeches that present the “bad news” of spending cuts than in those that present the “good news” of spending increases.

The sentiment with which each budget speech was delivered is measure by the Sentiment per Sentence (SPS) score which is generated with the help of Semantria for Excel software developed by Lexalytics. The SPS score of a text can range from being highly negative (-2) to highly positive (+2). A negative SPS score approaching -2 indicates a highly negative sentiment. A positive SPS score approaching +2 indicates a highly positive sentiment. It is hypothesised that the absolute value of the mean SPS score of “bad news” budget speeches is less than the mean SPS score of “good news” budget speeches. This reflects our expectation that finance ministers will seek to intensify good news with positive language and downplay bad news with neutral language.

Finally, the clarity with which each budget speech was delivered is measured by the Flesch-Kincaid Grade (FKG) score which, as a diagnostic tool, comes as standard with virtually all word processing packages. A high FKG score indicates a low degree of clarity whereas a low FKG score indicates high degree of clarity. It is hypothesised that the mean FKG score of “bad news” budget speeches is greater than the FKG score of “good news” budget speeches. This reflects our expectation that finance ministers will seek to obfuscate bad news and deliver good news is as clear a manner as possible.

A series of independent two-sample, one-tailed t-tests are conducted to determine if the economic crisis had an effect on the rhetorical devices employed by the Ministers for Finance in their respective budget speeches.

References

Aristotle (2010) Rhetoric, Cosimo Classics

Blinder, A. S., M. Ehrmann, M. Fratzscher, J. de Hann and D. Jansen. (2008). Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence, Journal of Economic Literature, 46(4), pp. 910-945

Bulir, A., M. Cihak and D. Jansen. (2013). What Drives Clarity of Central Bank Communication About Inflation?, Open Economies Review, 24(1), pp. 125-145

Burden, B. C. and J. N. R. Sanberg. (2003). Budget Rhetoric in Presidential Campaigns from 1952 to 2000, Political Behaviour, 25 (2), pp. 97-118

Jansen, D. (2011). Has the Clarity of Central Bank Communication Affected Volatility in Financial Markets? Evidence from Humphrey-Hawkins Testimonies, Contemporary Economic Policy, 29 (4), pp. 494-509

Rank, H. (1976). Teaching about Public Persuasion in Dietrich, D. (ed.), Teaching about Doublespeak, Illinois: National Council of Teachers of English

Mikhaylov, S. and A. Herzog. (2010). A new Database of Parliamentary Debates in Ireland, 1922-2008. Institute for International Integration Studies, Discussion Paper, No. 338

Irish Budgets; Text Analysis; Economic Crisis [ view full abstract ]

Irish Budgets; Text Analysis; Economic Crisis