Political Office Rent

Kevin Lewis

October 05, 2009

Getting Rich(er) in Office? Corruption and Wealth Accumulation in Congress

Gabriel Lenz & Kevin Lim
MIT Working Paper, August 2009

How corrupt is Congress? We provide an indirect test by comparing wealth accumulation among U.S. House members and the public. Using wealth data from representatives' Personal Financial Disclosure forms and from the Panel Study of Income Dynamics, we examine whether representatives accumulate wealth faster than expected. To do so, we first use difference-in-differences, least squares regression, and median regression estimators, conditioning on variables such as the value of households' stock, cash, business, and land assets, their debts, and demographic variables. These estimators find representatives accumulating wealth about 50 percent faster than expected. Next, we employ matching. Unlike these estimators, matching finds an almost identical rate of wealth accumulation in both groups. Matching may yield such a different finding because it reduces bias from modeling errors. Since the distribution of wealth has a complex shape that is difficult to parameterize, such errors are likely. We thus conclude that representatives report accumulating wealth at a rate consistent with similar non-representatives, potentially suggesting that corruption in Congress is not widespread.


Even if it is not Bribery: The Case for Campaign Finance Reform

Brendan Daley & Erik Snowberg
Journal of Law, Economics, and Organization, forthcoming

We develop a dynamic multidimensional signaling model of campaign finance in which candidates can signal their ability by enacting policy and/or by raising and spending campaign funds, both of which are costly. Our model departs from the existing literature in that candidates do not exchange policy influence for campaign contributions; rather, they must decide how to allocate their efforts between policymaking and fundraising. If high-ability candidates are better policymakers and better fundraisers, then they will raise and spend campaign funds even if voters care only about legislation. Campaign finance reform alleviates this phenomenon and improves voter welfare at the expense of politicians. Thus, we expect successful politicians to oppose true campaign finance reform. We also show that our model is consistent with findings in the empirical and theoretical campaign finance literature.


Privatizing Participation: Civic Change and the Organizational Dynamics of Grassroots Lobbying Firms

Edward Walker
American Sociological Review, February 2009 , Pages 83-105

This article highlights the shifting boundaries between the public and private spheres in advanced capitalist societies through an examination of grassroots lobbying firms. These organizations, which became a fixture in U.S. politics in the 1970s and have grown in number and prominence since, subsidize public participation on behalf of corporations, industry groups, and associations using direct mail, telephoning, and by mobilizing members and stakeholders. I examine the dynamics of this organizational population - whose existence calls attention to broad transformations in civil society - with reference to dramatic growth in the organizational populations of civic and trade associations. Results, derived from a Generalized Estimating Equation panel regression of firm founding events across U.S. regions from 1972 to 2002, suggest that the increasing formal organization of civil society has supported the development of a field of organizations that subsidize participation. These organizations do so, however, in a manner that restricts the development of social capital and civic skills while augmenting the voice of private interests in public and legislative discourse.


Candidate and Media Agenda Setting in the 2005 Virginia Gubernatorial Election

Scott Dunn
Journal of Communication, September 2009, Pages 635-652

This study examines relationships among candidate and media agendas during the 2005 Virginia gubernatorial election. Candidate press releases and newspaper articles about the election were analyzed using the computer program VBPro. High agenda correlations indicated that the 2 major-party candidates, Democrat Tim Kaine and Republican Jerry Kilgore, and the 4 major newspapers serving the state discussed similar issues during the campaign. Cross-lagged correlations indicated both candidates' agendas shared reciprocal relationships with the agendas of 2 papers, whereas the candidates set the agendas of 2 others. Intermedia agenda-setting effects were also observed. The candidates' agendas influenced each other during the campaign's hot phase, although post hoc analysis indicated that Kilgore earlier set Kaine's agenda. Implications for future agenda-setting research are discussed.


The Content of Political Participation: Letters to the Editor and the People Who Write Them

Christopher Cooper, Gibbs Knotts & Moshe Haspel
PS: Political Science & Politics, January 2009, Pages 131-137

"Letters to the editor represent an important yet understudied form of voluntary participation. They provide a venue for citizens to express their ideas and beliefs and they have the intention of influencing both citizens and political leaders. In this paper, we investigated the content of letters, the characteristics of letter writers, and the predictors of letter content. Perhaps our most important finding concerns the scarcity of female, African American, and younger letter writers. The data clearly show that women are underrepresented and, when women do write letters, the content is significantly different than their male counterparts...The numbers of African American letter writers is even smaller. So small, in fact, that we do not have an adequate sample size to determine whether race affects letter content. The lack of younger letter writers reinforces recent concerns about low youth participation in politics...Given that we only have access to printed letters, it is impossible to determine whether this underrepresentation occurs because women, African Americans, and younger people are less likely to write letters, or because newspapers are less likely to print them."


Political Selection and Persistence of Bad Governments

Daron Acemoglu, Georgy Egorov & Konstantin Sonin
NBER Working Paper, August 2009

We study dynamic selection of governments under different political institutions, with a special focus on institutional "flexibility". A government consists of a subset of the individuals in the society. The competence level of the government in office determines collective utilities (e.g., by determining the amount and quality of public goods), and each individual derives additional utility from being part of the government (e.g., corruption or rents from holding office). We characterize dynamic evolution of governments and determine the structure of stable governments, which arise and persist in equilibrium. Perfect democracy, where current members of the government do not have an incumbency advantage or special powers, always leads to the emergence of the most competent government. However, any deviation from perfect democracy destroys this result. There is always at least one other, less competent government that is also stable and can persist forever, and even the least competent government can persist forever in office. Moreover, a greater degree of democracy may lead to worse governments. In contrast, in the presence of stochastic shocks or changes in the environment, greater democracy corresponds to greater flexibility and increases the probability that high competence governments will come to power. This result suggests that a particular advantage of democratic regimes may be their greater adaptability to changes rather than their performance under given conditions. Finally, we show that, in the presence of stochastic shocks, "royalty-like" dictatorships may be more successful than "junta-like" dictatorships, because they might also be more adaptable to change.


Campaign Spending and Spurious Correlations: Why Self-Financed Gubernatorial Candidates Lose

Adam Brown
BYU Working Paper, August 2009

Critics are quick to accuse wealthy gubernatorial candidates of attempting to "buy" elections. But although self-financed gubernatorial candidates sometimes win, their electoral success does not necessarily imply that voters can be bought. To the contrary, I present evidence that self-financed campaign spending has a far weaker marginal effect on electoral results than externally-financed campaign spending. For every Corzine, there's a DeVos - who spent record amounts in his 2006 attempt to unseat Michigan's incumbent governor, only to lose by an embarrassingly wide margin. Money can't buy the governor's mansion. This empirical finding presents a theoretical puzzle - why would externally financed spending trump self-finance? The solution lies in strategic incentives facing would-be campaign donors. A candidate's ability to raise funds serves as a crucial indicator of her electoral viability. When it comes to influencing voters, a candidate's ability to raise money matters far more than her ability to spend it. As such, the apparent correlation between campaign spending and votes is largely spurious.


One Dollar, One Vote

Igor Barenboim & Loukas Karabarbounis
Harvard Working Paper, June 2009

We revisit the relationship between inequality and redistribution in a panel of advanced OECD countries. Using panel data methods that hold constant a variety of determinants of the public redistributive policy, we find a non-monotonic relationship between distribution of income and redistribution. Relatively to mean income, a more affluent rich and middle class are associated with lower, and a richer poor class with higher public spending for redistribution. These results are consistent with what we define as a one dollar, one vote politico-economic equilibrium: When the income of a group of citizens rises (relative to mean income), aggregate redistributive policies tilt towards this group's most preferred public policy.


How Close is Fundraising in Contested Elections in States with Low Contribution Limits?

Thomas Stratmann
GMU Working Paper, May 2009

This paper investigates the impact of contribution limits in campaign finance systems on the competitiveness of elections. Theoretically, contribution limits can have different and potentially opposite effects in an election: one effect could be that limits curtail the fundraising ability of incumbents, decreasing their campaign power; another could be that they limit challengers' ability to raise money, exacerbating the structural advantages of incumbents. In this paper, I examine the effect of low contribution limits on the gap in fundraising between incumbents and challengers, and between candidates in open seat races, using data from state house elections over a decade between 1996 and 2006. Specifically, I consider individual and PAC contribution limits at three levels: (a) $500 and below, (b) $501-$1,000, (c) $1,001-$2,000, all of them evaluated against contribution limits greater than $2,000. The findings are that contribution limits diminish the relative difference in fundraising levels between incumbents and challengers, and increase the share of challenger spending as a percentage of total race spending. For example, $500 limits reduce the fundraising gap between incumbents and challengers by twenty percent. The data also show that limits narrow the contribution gap in open seat races. Individual and PAC contribution limits of $500 and below diminish fundraising gaps between the major party candidates by between twelve and fourteen percent.


Instability and the Incentives for Corruption

Filipe Campante, Davin Chor & Quoc-Anh Do
Economics & Politics, March 2009, Pages 42-92

We investigate the relationship between corruption and political stability, from both theoretical and empirical perspectives. We propose a model of incumbent behavior that features the interplay of two effects: a horizon effect, whereby greater instability leads the incumbent to embezzle more during his short window of opportunity, and a demand effect, by which the private sector is more willing to bribe stable incumbents. The horizon effect dominates at low levels of stability, because firms are unwilling to pay high bribes and unstable incumbents have strong incentives to embezzle, whereas the demand effect gains salience in more stable regimes. Together, these two effects generate a non-monotonic, U-shaped relationship between total corruption and stability. On the empirical side, we find a robust U-shaped pattern between country indices of corruption perception and various measures of incumbent stability, including historically observed average tenures of chief executives and governing parties: regimes that are very stable or very unstable display higher levels of corruption when compared with those in an intermediate range of stability. These results suggest that minimizing corruption may require an electoral system that features some re-election incentives, but with an eventual term limit.

to your National Affairs subscriber account.

Already a subscriber? Activate your account.


Unlimited access to intelligent essays on the nation’s affairs.

Subscribe to National Affairs.