Legacy System
The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC
Pat Akey et al.
NBER Working Paper, July 2023
Abstract:
We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states experience increases in both capital and labor income relative to unaffected states. We find evidence consistent with increased political spending spurring political competition and the adoption of pro-growth policies. These policies benefit a broader set of constituents as we find a broad-based increase in labor income. Affected states see increased political turnover and reduced regulatory burdens. The economic effects are stronger among ex-ante politically inactive and younger firms.
The Personal Vote in a Polarized Era
Logan Dancey, John Henderson & Geoffrey Sheagley
American Journal of Political Science, forthcoming
Abstract:
This study offers experimental tests of the "personal vote" in an era of heightened partisanship and polarization. Using three national surveys, we randomly present information about a hypothetical legislator's voting record, committee assignment, and district-oriented work. After evaluating the legislator, respondents are presented with information about a challenger running on a nationalized message. Respondents, especially out-partisans, report much greater satisfaction with the legislator when told about his district-oriented activities, but increased willingness to vote for the legislator is more limited and mostly reserved for independents. In varying information about the legislator's voting record, we also find scant evidence that bipartisan legislators are better at securing a personal vote. In two experimental extensions, we show that our findings generalize to evaluations of real senators, and that nationalizing elections is one possible way that opponents can thwart incumbent efforts at winning the votes of independents and out-partisans through traditional district-oriented appeals.
News and Public Opinion: Which Comes First?
Christopher Wlezien
Journal of Politics, forthcoming
Abstract:
Much research demonstrates a positive association between news coverage and public opinion, both perceptions and preferences: When the news goes in one direction, opinion does too. While this relationship is clear, what accounts for it is not. The assumption in most previous research is that media causes public opinion; this is true in most observational studies and almost all experimental ones. But there is reason to expect that the causality runs in the other direction as well, where the public drives media coverage. In this paper, I describe the logic of two-way flows and then undertake an analysis of three different cases of US public opinion over time -- economic perceptions, candidate support, and policy preferences -- using measures of the content of news coverage based on automated content analyses. Vector autoregression results indicate that opinion tends to come first; it "causes" coverage in every case and the reverse holds less frequently and always to a lesser degree. Although much research clearly remains, the results underscore the role the public can play in news coverage, one that always should be entertained and assessed empirically, not settled by assumption.
Is Direct Democracy Good or Bad for Corporations and Unions?
John Matsusaka
Journal of Law and Economics, February 2023, Pages 83-110
Abstract:
The initiative and referendum were intended to curtail the power of organized interest groups, yet business groups account for more spending on ballot measures than any other group by far. Does this mean that direct democracy has become a tool for corporations to buy favorable legislation? This paper reports four types of evidence suggesting that the answer is no: analysis of the content of the universe of state-level initiatives in the United States from 1904 to 2021 shows that antibusiness initiatives were more common than probusiness initiatives, analysis of contribution patterns for California ballot measures from 2000 to 2020 shows that business groups more often opposed than supported initiatives, abnormal stock returns on election days show that corporate contributors earned positive abnormal returns when initiatives failed and negative abnormal returns when they passed, and for all three types of evidence business groups fared better with ballot measures proposed by legislatures. I find similar results for unions.
Banks, Political Capital, and Growth
Thomas Lambert, Wolf Wagner & Eden Quxian Zhang
Review of Corporate Finance Studies, August 2023, Pages 613-655
Abstract:
We show that politically connected banks influence economic activity. We exploit shocks to individual banks' political capital following close U.S. congressional elections. We find that regional output growth increases when banks active in the region experience an average positive shock to their political capital. The effect is economically large, but temporary, and is due to lower restructuring in the economy, not increased productivity. We show that eased lending conditions (especially for riskier firms) can account for the growth effect. Our analysis is a first attempt to directly link the politics and finance literature with the finance and growth literature.
Does Government Play Favorites? Evidence from Opportunity Zones
Ofer Eldar & Chelsea Garber
Journal of Law and Economics, February 2023, Pages 111-141
Abstract:
The Opportunity Zone (OZ) program is one of the most comprehensive to promote development in distressed communities. A criticized feature is that state governors designate zones as OZs from many eligible tracts without scrutiny. We find that governors are more likely to select tracts with higher distress levels and tracts on an upward economic trajectory, which indicates that they select OZs in a systematic way on the basis of objective criteria. However, we also provide evidence that favoritism plays a role in governors' decisions. The OZ designation is more likely for tracts in counties that supported the governor in an election and when executives or firms with an economic interest in the tract donated to the governor's campaign. We further explore whether transparency and accountability measures affected states' decisions. Our analysis suggests that while most measures had no discernible impact, publishing draft selections may mitigate favoritism and promote systematic decision-making.
Do Politicians Outside the United States Also Think Voters Are More Conservative than They Really Are?
Jean-Benoit Pilet et al.
American Political Science Review, forthcoming
Abstract:
In an influential recent study, Broockman and Skovron (2018) found that American politicians consistently overestimate the conservativeness of their constituents on a host of issues. Whether this conservative bias in politicians' perceptions of public opinion is a uniquely American phenomenon is an open question with broad implications for the quality and nature of democratic representation. We investigate it in four democracies: Belgium, Canada, Germany, and Switzerland. Despite these countries having political systems that differ greatly, we document a strong and persistent conservative bias held by a majority of the 866 representatives interviewed. Our findings highlight the conservative bias in elites' perception of public opinion as a widespread regularity and point toward a pressing need for further research on its sources and impacts.
The Electric Telegraph, News Coverage and Political Participation
Tianyi Wang
NBER Working Paper, July 2023
Abstract:
Using newly digitized data on the growth of the telegraph network in America during 1840-1852, the paper studies the impacts of the electric telegraph on national elections. I use proximity to daily newspapers with telegraphic connections to Washington to generate plausibly exogenous variation in access to telegraphed news from Washington. I find that access to Washington news with less delay had a robust positive effect on voter turnout in national elections. For mechanisms, I provide evidence that newspapers facilitated the dissemination of national news to local areas. In addition, text analysis on more than a hundred small-town weekly newspapers from the 1840s shows that the improved access to news from Washington led newspapers to cover more national political news, including coverage of Congress, the presidency, and sectional divisions involving slavery. The results suggest that the telegraph made newspapers less parochial, facilitated a national conversation and increased political participation. I find little evidence that access to telegraphed news from Washington affected party vote shares or Congressmen's roll call votes.
How Loud Does the Watchdog Bark? A Reconsideration of Losing Local Journalism, News Nonprofits, and Political Corruption
Nikki Usher & Sanghoon Kim-Leffingwell
International Journal of Press/Politics, forthcoming
Abstract:
Journalism has long been presumed to serve as a check on the powerful, shedding light on wrongdoing; however, as local newspapers reach market failure, extant theory predicts corruption will go unchecked. We operationalize corruption as federal prosecutions for public corruption (PPCs), defined by the US Department of Justice as crimes involving the abuse of public trust by federal, state, and local public officials. We examine changes in the local news media ecosystems: first, whether declines in local newspaper employment and circulation are associated with changes in PPCs; and second, whether efforts to supplement watchdog journalism with nonprofit journalism might mitigate associated declines in federal PPC. Our findings suggest nonprofit interventions in failing local commercial news markets may be an important safeguard for keeping public officials accountable.