[{"id":266417,"date":"2026-05-19T14:23:36","date_gmt":"2026-05-19T11:23:36","guid":{"rendered":"https:\/\/www.unic.ac.cy\/new-study-shows-markets-reward-policy-competence-more-than-personal-popularity-in-u-s-presidents\/"},"modified":"2026-05-19T14:25:23","modified_gmt":"2026-05-19T11:25:23","slug":"new-study-shows-markets-reward-policy-competence-more-than-personal-popularity-in-u-s-presidents","status":"publish","type":"post","link":"https:\/\/www.unic.ac.cy\/el\/new-study-shows-markets-reward-policy-competence-more-than-personal-popularity-in-u-s-presidents\/","title":{"rendered":"New Study Shows Markets Reward Policy Competence More Than Personal Popularity in U.S. Presidents"},"content":{"rendered":"

New Study Shows Markets Reward Policy Competence More Than Personal Popularity in U.S. Presidents<\/strong><\/h2>\n

Research co-authored by Prof. Dr Nikolaos Antonakakis of the University of Nicosia, UNIC Athens<\/strong>,<\/strong> introduces a new Approval-Favorability Gap Index and finds that U.S. equity markets perform substantially better when presidents are perceived as more competent than personally popular<\/strong><\/h3>\n

A new study published in Economics Letters<\/em> introduces a novel high-frequency measure of political sentiment that separates what voters think about a president\u2019s job performance from how they feel about the president personally. Co-authored by Prof. Dr Nikolaos Antonakakis of the University of Nicosia, UNIC Athens, and Prof. Dr Menbere Workie Tiruneh of the Webster Vienna Private University and the Slovak Academy of Sciences, the study shows that this distinction carries important information for financial markets.<\/p>\n

Using 892 weekly observations across four U.S. presidencies from 2006 to 2026, the authors construct the Approval-Favorability Gap Index, or AFGI, which captures the difference between presidential favorability and job approval. The study finds that periods in which presidents are approved of more than they are liked are associated with markedly stronger stock market performance than periods in which presidents are personally liked more than they are approved of.<\/p>\n

Why Approval and Favorability Are Not the Same Thing<\/strong><\/h3>\n

Traditional presidential approval ratings combine two different public judgments: whether citizens believe a president is doing a good job and whether they personally like the individual. The study argues that these are psychologically and economically distinct. A president may be personally appealing but viewed as ineffective, or personally less popular but regarded as competent in policy terms.<\/p>\n

The AFGI is designed to capture precisely this gap. A positive AFGI indicates that favorability exceeds job approval, meaning the president is liked more than approved of. A negative AFGI indicates the opposite: the president is approved of more than liked. The authors then classify political environments into regimes such as \u201cHigh Policy\u201d and \u201cHigh Personal\u201d and examine how equity markets behave under each.<\/p>\n

Markets Appear to Value Policy Credibility<\/strong><\/h3>\n

The findings are striking. During \u201cHigh Policy\u201d regimes, when presidential job approval exceeds personal favorability, the S&P 500 recorded annualized excess returns of 19.3%. During \u201cHigh Personal\u201d regimes, when personal appeal exceeded perceived policy performance, annualized excess returns were -15.0%. This implies a 34.3 percentage point return differential between the two regimes.<\/p>\n

The pattern remains significant after controlling for broader economic and financial conditions, including economic policy uncertainty, market volatility, recession indicators, and the CBOE Skewness Index. Across the full specification, the \u201cHigh Policy\u201d versus \u201cHigh Personal\u201d return differential remains statistically significant.<\/p>\n

A \u201cPopularity Discount\u201d in Equity Markets<\/strong><\/h3>\n

The study identifies what may be described as a \u201cpopularity discount\u201d: periods when presidents are personally liked more than they are approved of are associated with weaker market performance and higher uncertainty. In contrast, periods in which presidents are perceived as more competent in policy terms are associated with stronger returns, lower volatility, and lower perceived tail risk.<\/p>\n

The authors do not claim that the AFGI is a separately priced risk factor or that the relationship is causal. Rather, the index captures political environments in which systematic risk exposures and the equity risk premium differ. This distinction is important because it suggests that markets respond not only to political popularity, but also to the perceived credibility and competence of political leadership.<\/p>\n

Researcher Comment<\/strong><\/h3>\n

\u201cOur results suggest that financial markets do not simply reward political popularity. They appear to place greater value on perceived policy competence. A president who is personally appealing but not regarded as effective may create a very different market environment from one who is less personally popular but viewed as capable of governing. This distinction matters because political sentiment is not one-dimensional. By separating approval from favorability, the AFGI provides a clearer lens through which to understand how markets price political risk.\u201d<\/p>\n

Prof. Dr Nikolaos Antonakakis<\/strong>
\nDepartment of Accounting, Economics and Finance
\nSchool of Business
\nUniversity of Nicosia, UNIC Athens<\/p>\n

Broader Implications<\/strong><\/h3>\n

The study has implications beyond financial markets. By separating evaluative judgments from affective attitudes, the AFGI can be used to study legislative productivity, partisan consumer behavior, corporate political strategy, and the broader economic consequences of political leadership.<\/p>\n

For investors, the findings suggest that headline popularity indicators may be insufficient. For policymakers, the results highlight the economic value of credible leadership. For researchers, the AFGI offers a parsimonious and high-frequency tool for studying political sentiment in a more nuanced way than traditional approval ratings allow.<\/p>\n

About the Study<\/strong><\/h3>\n

Title:<\/strong> The Approval-Favorability Gap Index and the Pricing of Political Risk: Policy Competence versus Personal Appeal in U.S. Equity Markets
\nAuthors:<\/strong> Nikolaos Antonakakis and Menbere Workie Tiruneh
\nJournal:<\/strong> Economics Letters<\/em>, Volume 264, 2026, Article 112953
\nDOI:<\/strong> https:\/\/doi.org\/10.1016\/j.econlet.2026.112953<\/a>
\nData:<\/strong> 892 weekly polling observations and 4,917 trading days covering U.S. presidencies from 2006 to 2026
\nKey Contribution:<\/strong> Introduction of the Approval-Favorability Gap Index, a new measure that distinguishes perceived policy competence from personal appeal in presidential opinion data.<\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

A new study published in Economics Letters introduces a novel high-frequency measure of political sentiment that separates what voters think about a president\u2019s job performance from how they feel about the president personally. <\/p>\n","protected":false},"author":205,"featured_media":266414,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"item_id":"","pf_source_link":"","item_date":"","item_author":"","item_link":"","item_feat_img":"","item_wp_date":"","item_tags":"","source_publication_name":"","source_publication_url":"","nomination_count":"","sortable_item_date":"","item_description":"","pf_word_count":"","pf_forward_to_origin":"no-forward","footnotes":""},"categories":[2976,2974,856],"tags":[],"athens-programmes":[],"class_list":["post-266417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured-research-el","category-ereyna","category-nea"],"acf":[],"aioseo_notices":[],"nominators":[],"archiveOrgStatus":"","_links":{"self":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/users\/205"}],"replies":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/comments?post=266417"}],"version-history":[{"count":1,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266417\/revisions"}],"predecessor-version":[{"id":266418,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266417\/revisions\/266418"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/media\/266414"}],"wp:attachment":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/media?parent=266417"}],"wp:term":[{"attributes":{"taxonomy":"category","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/categories?post=266417"},{"attributes":{"taxonomy":"post_tag","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/tags?post=266417"},{"attributes":{"taxonomy":"athens-programmes","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/athens-programmes?post=266417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}},{"id":266406,"date":"2026-05-19T14:07:46","date_gmt":"2026-05-19T11:07:46","guid":{"rendered":"https:\/\/www.unic.ac.cy\/dr-nicolas-kyriakides-in-the-rule-of-law-conference\/"},"modified":"2026-05-19T14:26:43","modified_gmt":"2026-05-19T11:26:43","slug":"dr-nicolas-kyriakides-in-the-rule-of-law-conference","status":"publish","type":"post","link":"https:\/\/www.unic.ac.cy\/el\/dr-nicolas-kyriakides-in-the-rule-of-law-conference\/","title":{"rendered":"Dr Nicolas Kyriakides in the Rule of Law Conference"},"content":{"rendered":"

Dr Nicolas Kyriakides in the Rule of Law Conference<\/strong><\/h1>\n

Our Procedural Law Director, Dr Nicolas Kyriakides, participated in the Rule of Law Conference held during the Cyprus Presidency of the Council of the European Union 2026, where discussions focused on the growing role of Artificial Intelligence (AI) in democratic institutions and legal systems.<\/p>\n

During his address, Dr Kyriakides argued that debates surrounding AI and justice often begin from a flawed assumption that human decision-making is inherently neutral while technology itself represents the primary risk.<\/p>\n

\u201cThe key comparison, therefore, is not \u2018biased AI\u2019 versus \u2018neutral humans\u2019. That comparison is false. The real comparison is between human bias and algorithmic bias\u201d, he emphasized.<\/p>\n

He noted that judicial and administrative decision-making is inevitably shaped by human factors, including cognitive bias, institutional pressures, inconsistency, and subjective reasoning. In contrast, while algorithmic bias remains a serious concern, AI systems may at least be audited, tested, and subjected to institutional oversight.<\/p>\n

He further examined whether AI-assisted adjudication, when combined with transparency, accountability, and meaningful human supervision, could strengthen core rule of law principles such as consistency, fairness, and access to justice.<\/p>\n

Dr Kyriakides also referred to ongoing comparative research examining public perceptions of AI-assisted legal processes across multiple European jurisdictions, highlighting that citizens increasingly prioritise fairness and transparency over purely traditional models of decision-making.<\/p>\n

The Conference formed part of broader discussions under the Cyprus Presidency on the constitutional challenges and opportunities presented by emerging technologies within democratic governance.<\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

During his address, Dr Kyriakides argued that debates surrounding AI and justice often begin from a flawed assumption that human decision-making is inherently neutral while technology itself represents the primary risk.<\/p>\n","protected":false},"author":205,"featured_media":266402,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"item_id":"","pf_source_link":"","item_date":"","item_author":"","item_link":"","item_feat_img":"","item_wp_date":"","item_tags":"","source_publication_name":"","source_publication_url":"","nomination_count":"","sortable_item_date":"","item_description":"","pf_word_count":"","pf_forward_to_origin":"no-forward","footnotes":""},"categories":[1950,856],"tags":[],"athens-programmes":[],"class_list":["post-266406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-monada-dikonomikoy-dikaioy","category-nea"],"acf":[],"aioseo_notices":[],"nominators":[],"archiveOrgStatus":"","_links":{"self":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266406","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/users\/205"}],"replies":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/comments?post=266406"}],"version-history":[{"count":2,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266406\/revisions"}],"predecessor-version":[{"id":266420,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/posts\/266406\/revisions\/266420"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/media\/266402"}],"wp:attachment":[{"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/media?parent=266406"}],"wp:term":[{"attributes":{"taxonomy":"category","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/categories?post=266406"},{"attributes":{"taxonomy":"post_tag","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/tags?post=266406"},{"attributes":{"taxonomy":"athens-programmes","embeddable":true},"href":"https:\/\/www.unic.ac.cy\/el\/wp-json\/wp\/v2\/athens-programmes?post=266406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}},{"id":266346,"date":"2026-05-19T01:03:33","date_gmt":"2026-05-18T22:03:33","guid":{"rendered":"https:\/\/www.unic.ac.cy\/?p=266346"},"modified":"2026-05-19T01:04:19","modified_gmt":"2026-05-18T22:04:19","slug":"michael-demetra","status":"publish","type":"post","link":"https:\/\/www.unic.ac.cy\/michael-demetra\/","title":{"rendered":"Ms Demetra Michael"},"content":{"rendered":"

<\/span><\/mask><\/g><\/g><\/clipPath><\/filter><\/defs><\/svg><\/div><\/div>
<\/div><\/div><\/div>

Ms Demetra Michael<\/h1><\/div>

Social Media Manager
\nMarketing<\/p>\n<\/div>