IDEAS home Printed from https://ideas.repec.org/p/hhs/sunrpe/2018_0005.html
   My bibliography  Save this paper

Is It Worth It? On the Returns to Holding Political Office

Author

Listed:
  • Berg, Heléne

    (Dept. of Economics, Stockholm University)

Abstract

Despite the key role played by political payoffs in theory, very little is known empirically about the types of payoffs that motivate politicians. The purpose of this paper is to bring light into this. I estimate causal effects of being elected in a local election on monetary returns. The claim for causality, I argue, can be made thanks to a research design where the income of some candidate who just barely won a seat is compared to that of some other candidate who was close to winning a seat for the same party, but ultimately did not. This research design is made possible thanks to a comprehensive, detailed data set covering all Swedish politicians who have run for office in the period 1991–2006. I establish that monetary returns are absent both in the short and long run. Instead, politicians seem to be motivated by non-monetary returns, and I show that being elected locally once (for exogenous reasons) can be an effective starting point for enjoying such payoffs.

Suggested Citation

  • Berg, Heléne, 2018. "Is It Worth It? On the Returns to Holding Political Office," Research Papers in Economics 2018:5, Stockholm University, Department of Economics.
  • Handle: RePEc:hhs:sunrpe:2018_0005
    as

    Download full text from publisher

    File URL: http://www2.ne.su.se/paper/wp18_05.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mattozzi, Andrea & Merlo, Antonio, 2008. "Political careers or career politicians?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 597-608, April.
    2. Fiva, Jon H. & Smith, Daniel M., 2018. "Political Dynasties and the Incumbency Advantage in Party-Centered Environments," American Political Science Review, Cambridge University Press, vol. 112(3), pages 706-712, August.
    3. Olle Folke & Johanna Rickne, 2020. "All the Single Ladies: Job Promotions and the Durability of Marriage," American Economic Journal: Applied Economics, American Economic Association, vol. 12(1), pages 260-287, January.
    4. Timothy Besley, 2004. "Joseph Schumpeter Lecture: Paying Politicians: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 193-215, 04/05.
    5. Daniel Diermeier & Michael Keane & Antonio Merlo, 2005. "A Political Economy Model of Congressional Careers," American Economic Review, American Economic Association, vol. 95(1), pages 347-373, March.
    6. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
      • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    7. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    8. Ari Hyytinen & Jaakko Meriläinen & Tuukka Saarimaa & Otto Toivanen & Janne Tukiainen, 2018. "When does regression discontinuity design work? Evidence from random election outcomes," Quantitative Economics, Econometric Society, vol. 9(2), pages 1019-1051, July.
    9. Ferraz, Claudio & Finan, Frederico S., 2008. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," IZA Discussion Papers 3411, Institute of Labor Economics (IZA).
    10. Kotakorpi, Kaisa & Poutvaara, Panu, 2011. "Pay for politicians and candidate selection: An empirical analysis," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 877-885, August.
    11. Berg, Helene, 2018. "Politicians’ Payments in a Proportional Party System," Research Papers in Economics 2018:3, Stockholm University, Department of Economics.
    12. Olle Folke, 2014. "Shades Of Brown And Green: Party Effects In Proportional Election Systems," Journal of the European Economic Association, European Economic Association, vol. 12(5), pages 1361-1395, October.
    13. Kaisa Kotakorpi & Panu Poutvaara & Marko Terviö, 2017. "Returns to Office in National and Local Politics: A Bootstrap Method and Evidence from Finland," Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(3), pages 413-442.
    14. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 65-96.
    15. Ernesto Dal Bó & Frederico Finan & Olle Folke & Torsten Persson & Johanna Rickne, 2017. "Who Becomes A Politician?," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1877-1914.
    16. Heléne Berg, 2018. "Politicians' Payments in a Proportional Party System," CESifo Working Paper Series 7278, CESifo.
    17. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 85-114.
    18. Lee, David S. & Card, David, 2008. "Regression discontinuity inference with specification error," Journal of Econometrics, Elsevier, vol. 142(2), pages 655-674, February.
    19. Timothy Besley & Olle Folke & Torsten Persson & Johanna Rickne, 2017. "Gender Quotas and the Crisis of the Mediocre Man: Theory and Evidence from Sweden," American Economic Review, American Economic Association, vol. 107(8), pages 2204-2242, August.
    20. Raymond Fisman & Florian Schulz & Vikrant Vig, 2014. "The Private Returns to Public Office," Journal of Political Economy, University of Chicago Press, vol. 122(4), pages 806-862.
    21. Eggers, Andrew C. & Hainmueller, Jens, 2009. "MPs for Sale? Returns to Office in Postwar British Politics," American Political Science Review, Cambridge University Press, vol. 103(4), pages 513-533, November.
    22. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    23. Folke, Olle & Persson, Torsten & Rickne, Johanna, 2016. "The Primary Effect: Preference Votes and Political Promotions," American Political Science Review, Cambridge University Press, vol. 110(3), pages 559-578, August.
    24. David S. Lee & Enrico Moretti & Matthew J. Butler, 2004. "Do Voters Affect or Elect Policies? Evidence from the U. S. House," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 807-859.
    25. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
    26. Stefano Gagliarducci & Tommaso Nannicini, 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives From Selection," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 369-398, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heléne Berg, 2018. "Is It Worth It? On the Returns to Holding Political Office," CESifo Working Paper Series 7406, CESifo.
    2. Berg, Heléne, 2020. "On the returns to holding political office (Is it worth it?)," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 840-865.
    3. Heléne Berg, 2018. "Politicians' Payments in a Proportional Party System," CESifo Working Paper Series 7278, CESifo.
    4. Berg, Helene, 2018. "Politicians’ Payments in a Proportional Party System," Research Papers in Economics 2018:3, Stockholm University, Department of Economics.
    5. Heléne Lundqvist, 2013. "Is it worth it? On the returns to holding political office," Working Papers 2013/14, Institut d'Economia de Barcelona (IEB).
    6. Berg, Heléne, 2020. "Politicians’ payments in a proportional party system," European Economic Review, Elsevier, vol. 128(C).
    7. Kaisa Kotakorpi & Panu Poutvaara & Marko Tervio, 2013. "Returns to office in national and local politics," Discussion Papers 86, Aboa Centre for Economics.
    8. Heléne Lundqvist, 2013. "Is it worth it? On the returns to holding political office," Working Papers 2013/14, Institut d'Economia de Barcelona (IEB).
    9. Thomas Braendle & Alois Stutzer, 2017. "Voters and Representatives: How Should Representatives Be Selected?," CREMA Working Paper Series 2017-05, Center for Research in Economics, Management and the Arts (CREMA).
    10. Andreas Peichl & Nico Pestel & Sebastian Siegloch, 2013. "The politicians’ wage gap: insights from German members of parliament," Public Choice, Springer, vol. 156(3), pages 653-676, September.
    11. Gavoille, Nicolas & Verschelde, Marijn, 2017. "Electoral competition and political selection: An analysis of the activity of French deputies, 1958–2012," European Economic Review, Elsevier, vol. 92(C), pages 180-195.
    12. Jan Auerbach, 2018. "Office-Holding Premia and Representative Democracy," Discussion Papers 1802, University of Exeter, Department of Economics.
    13. Braendle, Thomas, 2013. "Do Institutions Affect Citizens' Selection into Politics?," Working papers 2013/04, Faculty of Business and Economics - University of Basel.
    14. Ferraz, Claudio & Finan, Frederico S., 2008. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," IZA Discussion Papers 3411, Institute of Labor Economics (IZA).
    15. Galasso, Vincenzo & Nannicini, Tommaso, 2011. "Competing on Good Politicians," American Political Science Review, Cambridge University Press, vol. 105(1), pages 79-99, February.
    16. Kotakorpi, Kaisa & Poutvaara, Panu, 2011. "Pay for politicians and candidate selection: An empirical analysis," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 877-885, August.
    17. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Electoral cycles in MPs’ salaries: evidence from the German states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 981-1000, August.
    18. Braendle, Thomas & Stutzer, Alois, 2016. "Selection of public servants into politics," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 696-719.
    19. Mattozzi, Andrea & Snowberg, Erik, 2018. "The right type of legislator: A theory of taxation and representation," Journal of Public Economics, Elsevier, vol. 159(C), pages 54-65.
    20. Cavalcanti, Francisco & Daniele, Gianmarco & Galletta, Sergio, 2018. "Popularity shocks and political selection," Journal of Public Economics, Elsevier, vol. 165(C), pages 201-216.

    More about this item

    Keywords

    Returns to politics; incumbency effects; regression discontinuity design;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:sunrpe:2018_0005. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/neisuse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anne Jensen (email available below). General contact details of provider: https://edirc.repec.org/data/neisuse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.