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Votes or money? Theory and evidence from the US Congress

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  • Bombardini, Matilde
  • Trebbi, Francesco

Abstract

This paper investigates the relationship between the size of interest groups in terms of voter representation and the interest group's campaign contributions to politicians. We uncover a robust hump-shaped relationship between the voting share of an interest group and its contributions to a legislator. This pattern is rationalized in a simultaneous bilateral bargaining model where the larger size of an interest group affects the amount of surplus to be split with the politician (thereby increasing contributions), but is also correlated with the strength of direct voter support the group can offer instead of monetary funds (thereby decreasing contributions). The model yields simple structural equations that we estimate at the district level employing data on individual and PAC donations and local employment by sector. This procedure yields estimates of electoral uncertainty and politicians' effectiveness as perceived by the interest groups. Our approach also implicitly delivers a novel method for estimating the impact of campaign spending on election outcomes: we find that an additional vote costs a politician on average $145.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 7-8 (August)
Pages: 587-611

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:587-611

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Lobbying Special interest politics Campaign financing;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How much does a vote really cost?
    by Ariel Goldring in Free Market Mojo on 2010-12-20 14:00:56
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Thomas Bassetti & Filippo Pavesi, 2012. "Deep Pockets, Extreme Preferences: Interest Groups and Campaign Finance Contributions," Working Papers 222, University of Milano-Bicocca, Department of Economics, revised Apr 2012.
  2. Emily Blanchard & Xenia Matschke, 2010. "U.S. Multinationals and Preferential Market Access," Research Papers in Economics 2010-08, University of Trier, Department of Economics.
  3. Mian, Atif & Sufi, Amir & Trebbi, Francesco, 2013. "The Political Economy of the Subprime Mortgage Credit Expansion," International Quarterly Journal of Political Science, now publishers, vol. 8(4), pages 373-408, October.
  4. Atif Mian & Amir Sufi & Francesco Trebbi, 2008. "The Political Economy of the U.S. Mortgage Default Crisis," NBER Working Papers 14468, National Bureau of Economic Research, Inc.
  5. Hummel, Patrick & Holden, Richard, 2014. "Optimal primaries," Journal of Public Economics, Elsevier, vol. 109(C), pages 64-75.
  6. Ovtchinnikov, Alexei V. & Pantaleoni, Eva, 2012. "Individual political contributions and firm performance," Journal of Financial Economics, Elsevier, vol. 105(2), pages 367-392.

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