The Sawford formula
The Sawford formula states that if two or more of the unemployment, inflation and interest rates rise over a full, three-year electoral cycle, the government will lose. Conversely, if two or more fall the government will be returned.
The formula has picked every applicable Federal election since 1961, with the exception of 1980. While the Sawford conditions did not hold in 1974, that election did not follow a full, three year electoral cycle. If you looked at the headline inflation rate in 2007, it is arguable that the 2007 election did not satisfy the Sawford formula. However, in 2007, the Reserve Bank’s preferred measures of underlying inflation were up on the rate at the time of the 2004 election.
In my view, the Sawford formula is a shorthand way of saying that governments tend to be returned to power if they are seen to manage the economy well. This understanding underpins a number of economic models for predicting election outcomes. Of course, the Sawford formula is not a hard and fast rule; it is just a guide.
