Do campaign contributions buy favorable policies? Evidence from the insurance industry

To learn about the effects of corporate campaign contributions, we study the potential influence of the insurance industry in US state politics. The insurance industry is one of the biggest players in state politics, and we have collected new data on objective measures of the industry's performance in each state over time. We exploit within-state changes in campaign finance regulations which can significantly restrict the ability of corporate contributors to give money and potentially influence elected officials. Across a range of outcomes and campaign finance reforms, we find little evidence that the ability to make corporate campaign contributions benefits the insurance industry in a state. Some results suggest that the ability to make campaign contributions may benefit the insurance industry in states with elected insurance commissioners, but overall, campaign contributions appear to have a little distortionary effect even in a setting where we would most expect to find it.