SMUG MONEY: Let your heart – not just policies – play a part in how you vote

Written by Rebecca O'Connor on 6th Jun 2017

“Smug Money” is a weekly personal comment blog. You can read an overview of how the main parties’ policies are likely to affect your personal finances here.

I know how I am going to vote. But on that, I think I’m in a certain minority among my peer group.

I didn’t choose my party based on policies alone, although clearly they do play a part. I didn’t choose my party based on a personal preference for a leader, although that’s undeniably important. I chose the way I always do, in the end, and that’s by letting my heart choose for me.

Before you dismiss this as way too flim flam at a time when so much of critical national importance is at stake, consider that perhaps, all of us do this anyway, one way or another.

Much of this website is rooted in the idea that choosing what to do with your money – where to invest and save it – should be a decision based on what your heart thinks is good, ie. what’s best for the world we love (renewable energy, access to education for all, etc) as well as your head, ie. what’s best financially.

It’s a pretty good recipe to apply to any decision in life actually, including how to vote. (We also argue that a vote with your money – moving it to a sustainable bank rather than a morally neutral one, can be as powerful as a vote at the ballot box – which is something to bear in mind whenever you feel a bit too jaded by politics.)

It might sound counter-productive, a bit post-truth and a bit, well, stupid, to advocate a vote based on feeling as much as understanding. But when you strip away the rhetoric, the spin, the soundbites, the figures that people do and don’t know; the speculation over who will be best at getting Britain through Brexit and who is best to stem the threat of terrorism that has suddenly and unfortunately leaped to the top of the agenda, our votes are either motivated by fear of what’s to come – either through change or no change, or by hope. They are governed, at root, by our emotions.

Our psychologies and subconsciouses dominate most of what we do or think. Behavioural psychology teaches us this and behavioural economics teaches us how our emotional lives affect our financial decisions.

We can dupe ourselves into thinking we are behaving logically and rationally, we can create whole systems and theories of analysis, but often this is just a layer of cleverness used to justify our concealed, emotionally-driven behaviour. And these are clearly emotional times.

Given the current state of British politics, after all the u-turns, backflips, lies and half truths, is there anything left except our emotions to govern how to vote?

British political leaders and parties have given us little choice but to follow our hearts. Policies have been shown up as nothing but bits of paper. And in fact, on many policies, the crossover between the parties is significant – they roughly seem to want to do the same things.

Then there’s the problem of not believing, with perfectly good reason, that anyone will do or not do anything they say they will do or not do. Even if you choose one or two policies, such as the NHS or Brexit, which you care deeply about, there’s still a nagging feeling that policy alone won’t solve the problem.

Voting based on your perceptions of left versus right-wing ideologies is equally complex, at a time when any kind of dogma seems divisive in what is already a fractious world. Lofty principles of past political enlightenment are rarely cited. Even Jeremy Corbyn doesn’t go around quoting Bentham (you know, “the greatest good for the greatest number”) when he meets the public.

Without any certainty on policy or rousing, uniting sense of ideals, how exactly do we choose?

Hair styles? How kind someone’s eyes look? Why not? A friend and I discussed how we will vote on Sunday – it ended on: “and Theresa May seems so cold and lacking in empathy”. At first, I thought, “you can’t vote based on how someone’s character appears”. Then after a while, I thought, actually, maybe you can. Maybe that’s the best way – to go with your feeling about someone, about a party.

Rationality, logic and intellectualism, they get you so far in a post-truth world. Trying to engage your brain on these issues is clearly an important part of the mix. But we’re too quick to dismiss emotion and instinct – the importance of what we truly care about. We often behave according to what we think is clever, or makes the most common sense, or what experts do and say, rather than what we feel. This is true for where we choose to put our money, too. But doing so is as foolish as only going with our emotions.

A subconscious influence to be aware of

One thing that often subconsciously influences the way we vote is how well-off we feel. If we aren’t enjoying our living standards, we may be more inclined to vote for change. If we are fairly happy with our lot, we are less likely to vote for change. We might cite policies, but it’s often how we are affected personally that rises up, rightly or wrongly.

Economic conditions, such as the cost of housing and interest rates, as well as how we are taxed, have a big influence on how well off we feel, even if we cannot isolate which policy it is exactly that is affecting us (personally I do know the answer to this, and it is the heinous cost of childcare relative to income for people with children under 3 years old.)

Why economic and tax policies can be particularly unreliable

Even if we try to factor in these concerns when considering how to vote, we may be blindsided by a back door change to a lower profile policy that undoes much of the gain from a more high profile tweak.

Politicians know better than to mess around with the headline grabbing taxes too much. That’s why no party is planning to increase VAT (a tax on spending that hits everyone) and both the Conservatives and Labour say that they are against tax rises for “ordinary, working people” (No, I don’t believe they will stick to that either).

Keeping VAT, income tax and national insurance the same may sound like a way to keep disposable income on an even keel, but then what if they do something else to slightly more niche taxes and benefits that leaves some groups a lot worse off than a slight increase to a headline tax would have?

Making more obscure, irrelevant-seeming changes can actually make huge differences to the living standards of those most affected – means-testing winter fuel payments, increasing insurance premium tax and removing the triple lock on the state pension are three such examples – and it can end up being a bit of a lottery whether you are worse or better off – another reason not to vote according to unreliable policies alone.

Some obscure policies you probably don’t care about that could make a big difference to you

To give some examples of how some fairly obscure policies can affect some people very significantly, we should first turn – no matter how much you may not want to – to that triple lock on state pensions.

It’s unlikely anyone would describe it as their top priority as they head to the polls on Thursday. And yet if it is lost, it could seriously impact upon the pension income of today’s 20 and 30-year olds, who it’s fair to say probably haven’t given the matter even a first thought.

If you do happen to have heard this term wafting about and thought “that sounds complicated”, it is. The purpose of this “lock” is to ensure that the value of someone’s state pension isn’t eroded by rising prices. If pension contributions rise alongside inflation and earnings, then pensions retain their value. So the triple lock guarantees to increase the state pension every year by the higher of inflation, average earnings or a minimum of 2.5 per cent.

The Conservatives want to end the triple lock. Labour wants to maintain it. The Lib Dems introduced the policy and want to keep it. The Greens propose general pension reform but have no commitment on the triple lock.

This research from Aegon shows the potential impact on pension pots over the next few years if the lock is lost:

State Pension forecasts: official estimate vs. inflation-linked *

Price inflation (CPI) Earnings growth Uprating under triple lock

Annual state pension following official estimate

Annual state pension if based on predicted price inflation
2011/12 3.1 2 3.1    
2012/13 5.2 2.8 5.2
2013/14 2.2 1.6 2.5
2014/15 2.7 1.2 2.7
2015/16 1.2 0.6 2.5
2016/17 -0.1 2.9 2.9 £8,296.60 £8,296.60
2017/18 1 2.4 2.5 £8,504.02 £8,379.57
2018/19 2.6 2.4 2.6 £8,725.12 £8,597.44
2019/20 2.2 2.7 2.7 £8,960.70 £8,786.58
2020/21 2 2.9 2.9 £9,220.56 £8,962.31
2021/22 2 3.4 3.4 £9,534.06 £9,141.56
2022/23 2 3.6 3.6 £9,877.29 £9,324.39

In other words, you will potentially get a lot less income when you retire if the lock is lost. You may still not care about this even after it has been explained as your retirement seems so far away right now. That’s fair enough – but it could also be the beauty of this policy from the Conservatives’ point of view – those who it will most affect don’t really get it. Bingo.

Another fairly niche concern is the cost of childcare. Labour wants to make it free for all 2 to 4-year olds. Currently, most parents are only entitled to help with costs after their child turns 3. Given most mothers have to return to work when a child is 1, if not earlier, there is a huge deficit in help with childcare costs for two years for working mothers. Full time childcare can cost anything from £500 to £1,500 a month, depending on where you are – quite a chunk of income by any standard.

The Conservatives have just introduced some reforms which make it cheaper for couples where both partners work, but nothing as show-stopping as Labour’s proposed reform. The policy could make a difference to the tune of £10,000 plus to parents of children aged 2 to 3 for this year of their life (x2 for two children, etc), – a huge boost to these families (just don’t ask Jeremy Corbyn how much the policy will cost). Is it too good to be true? Perhaps. So not worth a vote on this alone.

These are just two examples of policies that will almost certainly not pop into your brain as you head, pencil in hand, to the ballot box. They are good examples of why voting on headline policies might not lead to the outcome you expect.

Our brains cannot possibly be expected to compute all of the potential outcomes of this or that policy for ourselves or other people. The matrix is too mind-bending. But don’t let that put you off voting altogether – because what you feel about a party or a leader may be just as important – and just as valid.

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