October 30, 2004

Is the Future Tense for Losers?

Economists Rosa Karapandza and Milos Bozovic of the Universitat Pompeu Fabra in Barcelona have written a paper [pdf] in which they report that there is a statistically significant negative correlation between the use of the future tense in companies' annual reports (10-K filings with the US Securities and Exchange Commission) and their performance. They report a similar relationship between the use of the future tense by US presidential candidates in debates and the results of the election: in every election since 1960, the candidate who used the future tense more frequently lost the election. On this basis, they predict a victory for Bush.

In the case of the company reports, one can imagine that companies that are doing well focus on their accomplishments, which they describe in the past tense, while weaker companies talk about what they are going to do, in the future tense. What might account for this effect in presidential elections, if it isn't just a fluke, is not obvious to me. It doesn't seem to reflect the advantage of the incumbent: In 1960, Nixon, who was Vice-President, used the future far more than Kennedy and lost; so did incumbent President Ford, who lost to Carter in 1976. Bush Senior was the incumbent in 1992 when he used the future more than Clinton and lost. On Tuesday we'll see how this holds up.

Update 2004/10/31: The Greenbay Packers beat the Washington Redskins today. This is supposed to predict that Kerry will win the election. We'll see if football is a more accurate predictor than use of the future tense.

Posted by Bill Poser at October 30, 2004 01:34 AM