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Votes or Money? Theory and Evidence from the US Congress

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  • Matilde Bombardini
  • Francesco Trebbi

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 between 100 and 400 dollars depending on the district.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13672.

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Date of creation: Dec 2007
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Handle: RePEc:nbr:nberwo:13672

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  24. 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.
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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. Emily Blanchard & Xenia Matschke, 2012. "U.S. Multinationals and Preferential Market Access," CESifo Working Paper Series 3847, CESifo Group Munich.
  2. 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.
  3. Hummel, Patrick & Holden, Richard, 2014. "Optimal primaries," Journal of Public Economics, Elsevier, vol. 109(C), pages 64-75.
  4. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
  5. Ovtchinnikov, Alexei V. & Pantaleoni, Eva, 2012. "Individual political contributions and firm performance," Journal of Financial Economics, Elsevier, vol. 105(2), pages 367-392.
  6. 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.
  7. 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.
  8. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.

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