Personal Finance and Election Predictions

For a bit of election year fun, Credit Karma has done an analysis of credit behavior (credit scores and debt levels) on a red vs. blue state basis and then used the results to attempt to predict what will happen in the so-called swing states.

In their analysis, they found that individuals from blue states have marginally higher credit scores (662 vs. 638) as well as credit card debt levels ($5,830 vs. $5,253) and student loan debts ($30,418 vs. $27.478*).

For those that are unaware, red states are those that are expected to vote Republican whereas blue states are expected to vote Democrat. All state definitions came from CNN and NY Times election maps.

They then ran the numbers for the eight swing states (below).

From this, they concluded that if — and this is a HUGE if — credit data can be used to predict voter behavior, then Colorado, Virginia, New Hampshire, and Iowa are likely to vote Democrat this year.

In fact, according to the excellent election polling site FiveThirtyEight, all four of these states are currently leaning to the blue side. That being said, so are Florida, Nevada, Ohio, and Wisconin…

What does this mean? Probably very little, but I thought it was a unique way to slice and dice the data. And it does get at a bigger question: to what extent does your personal financial situation influence your decisions in that voting booth?

I did find the apparent correlation between credit scores and debt levels intriguing, with blue states having both higher credit scores and higher debt levels. Looking at the swing state data, there’s likewise a slight positive association between credit scores and credit card debt levels (but no such pattern emerges for student loans).

The two main possibilities here are that credit score calculations favor those who are carrying higher debt levels or that those with higher credit scores are given higher credit limits. Either way, it’s disappointing to see so much being carried by so many people.

*Note: It wasn’t entirely clear to me how they calculated the student loan debt. These numbers are so high that they must have looked at average loan balance for those with loans, or something along those lines.