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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

For corrections or technical questions regarding this item, or to correct its listing, contact: (Jeroen Loos).

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Keywords: Lobbying Special interest politics Campaign financing;

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References

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  1. Baldwin, Robert E & Magee, Christopher S, 2000. " Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," Public Choice, Springer, vol. 105(1-2), pages 79-101, October.
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  3. Ron Shachar & Barry Nalebuff, 1999. "Follow the Leader: Theory and Evidence on Political Participation," American Economic Review, American Economic Association, vol. 89(3), pages 525-547, June.
  4. Peltzman, Sam, 1984. "Constituent Interest and Congressional Voting," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 181-210, April.
  5. Peltzman, Sam, 1985. "An Economic Interpretation of the History of Congressional Voting in the Twentieth Century," American Economic Review, American Economic Association, vol. 75(4), pages 656-75, September.
  6. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-98, August.
  7. Alexander Raskovich, 2003. "Pivotal Buyers and Bargaining Position," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 405-426, December.
  8. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
  9. Schram, Arthur J. H. C., 1990. "A dynamic model of voter behavior and the demand for public goods among social groups in Great Britain," Journal of Public Economics, Elsevier, vol. 41(2), pages 147-182, March.
  10. Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
  11. Thomas Stratmann, 2009. "How prices matter in politics: the returns to campaign advertising," Public Choice, Springer, vol. 140(3), pages 357-377, September.
  12. Jeffrey Milyo & David Primo & Timothy Groseclose, 2000. "Corporate PAC Campaign Contributions in Perspective," Business and Politics, Berkeley Electronic Press, vol. 2(1), pages 5.
  13. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-64, June.
  14. Grier, Kevin B & Munger, Michael C, 1991. "Committee Assignments, Constituent Preferences, and Campaign Contributions," Economic Inquiry, Oxford University Press, vol. 29(1), pages 24-43, January.
  15. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
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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.
Cited by:
  1. Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the US Mortgage Default Crisis," American Economic Review, American Economic Association, vol. 100(5), pages 1967-98, December.
  2. 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.
  3. Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the Subprime Mortgage Credit Expansion," NBER Working Papers 16107, National Bureau of Economic Research, Inc.

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