Institutional Quality Causes Generalized Trust: Experimental Evidence on Trusting under the Shadow of Doubt
Andrea Martinangeli et al.
American Journal of Political Science, forthcoming
Generalized trust is essential for collective action, which is at the heart of many societal problems. Institutional quality has been proposed as a driver of generalized trust, but while the correlation between the two is strong and robust, the evidence on the causal link is scant. We show that this relationship is causal. We first experimentally expose individuals to institutions of different quality, operationalized as their ability to prevent corrupt behavior. We then measure generalized trust using a trust game. The results show that institutional quality drives generalized trust and that this effect is generated by the mere doubt that corrupt behaviors might succeed, even without knowledge of occurrence or success of such behaviors. Cross-country comparisons with novel data support our results. Our contributions are the first causal experimental evidence on the link between institutional quality and trust and a novel experimental design for modeling institutional quality in laboratory settings.
Testing Political Antitrust
Sepehr Shahshahani & Nolan McCarty
NYU Law Review, forthcoming
Observers fear that large corporations have amassed too much political power. The central fact that animates this concern is growing economic concentration-the rise in the market share of a small number of top firms. These firms are thought to use their enhanced economic power to capture the government and undermine democracy by lobbying. Many scholars and activists have urged the use of antitrust law to combat this threat, leading a "political antitrust" movement that advocates explicit incorporation of political considerations into antitrust enforcement. Political antitrust has sparked great debate not only in academic circles but also among policymakers. But the debate has been largely data-free; there is little systematic evidence on whether increased economic concentration leads to democratic harms in established democracies. In this Article, we fill that gap, bringing systematic data analysis to bear on the issue for the first time. We make three contributions. First, we create a comprehensive dataset on lobbying of the U.S. federal government, capturing nearly one million records over the past two decades. Second, we use our dataset to map lobbying patterns, focusing on the connection between economics and politics. Third, we empirically test some postulates of political antitrust. Our findings do not support the political antitrust movement's central hypothesis that there is an association between economic concentration and the concentration of lobbying power. We do not find a strong relationship between economic concentration and the concentration of lobbying expenditure at the industry level. Nor do we find a significant difference between top firms' and other firms' allocation of additional revenues to lobbying. And we find no evidence that increasing economic concentration has appreciably restricted the ability of smaller players to seek political influence through lobbying. Ultimately, our findings show that the political antitrust movement's claims do not rest on a solid empirical foundation in the lobbying context. Our findings do not allay all concerns about transformation of economic power into political power, but they show that such transformation is not straightforward, and they counsel caution about reshaping antitrust law in the name of protecting democracy.
Brian Feinstein & David Zaring
Iowa Law Review, forthcoming
Independent regulatory commissions are, in the face of a judicial campaign against their independence, suffering from an internal ailment that is just as serious. These mainstays of the administrative state, including the Federal Trade Commission, National Labor Relations Board, and other important regulators, are becoming one-person bands, dominated by their chairs, which in turn is leading to a rash of associate commissioner resignations. The phenomenon of the disappearing associate commissioner threatens the very purpose of independent commissions. The trend has degraded commissioners' ability to marshal expertise, resist the political branches' influence, and deliberate as multi-member bodies. This Article shows how chairs and chair-supervised staff have wrested control from other commissioners; how the White House, executive agencies, and Congress have encroached on commissions' turf; and how an increasingly partisan climate has turned deliberative discussions among commissioners into party-line votes. Leveraging data on 684 current and former commissioners on eleven key commissions, the Article then identifies, for the first time, associate commissioners' growing propensity to exit their positions early in their terms. These developments suggest that many of the perceived benefits of the independent-commission form fail to be fully realized. Shorter tenures erode commissions' political insulation and collective experience and may degrade the quality of their deliberations and the signal value of dissents from commission daises. Whereas proponents of independent commissions vigorously defend the form against judicial challenges, they have failed to confront these developments that, as a functional matter, chip away at the purposes that independence is designed to serve. To address this oversight, we offer several key prescriptions to reinvigorate commissions. Most notably, Congress should encourage associate commissioners to serve their full terms by granting them greater programmatic authority, agenda-setting power, and tiered or deferred compensation that rewards lengthy service. Through these and other changes, officials can restore commissions to their previously exalted place in the administrative state.
Follow the Money
Review of Economic Studies, forthcoming
I study, both empirically and theoretically, the economic and financial consequences of corporate lobbying. Firms lobby politicians to increase their share of government contracts, but political competition creates firm-level risk, inflating their cost of capital and reducing their incentive to invest in research and development (R&D). I document an annual 6%-8% return premium for stocks of high-lobbying firms, which compensates investors for political risk. An estimated model in which firms can lobby and innovate and investors are risk averse replicates key features of corporate lobbying in the US, including the well-established paradox that lobbying contributions are small relative to the policies at stake. The model predicts that if investors ceased seeking compensation for political risk, R&D investment would increase by 6% and the innovation rate by 0.4 percentage points. The risk-premium costs of lobbying are quantitatively and economically important even if the resources "wasted" on lobbying are objectively small.
The Political Economy of Subsidy Giving
University of California Working Paper, February 2023
While subsidy-giving can help correct for market failures -- allowing a firm to internalize the positive externality it has in a location -- there are concerns that is also used by politicians for electoral gain. I estimate the political benefit of subsidy-giving by combining hand-collected subsidy data, county level election returns, and an original survey of voters in states with recent subsidy deals. I find that the incumbent governor's vote share increases by 2 to 3 percentage points in subsidy-winning counties. Surprisingly, the vote share effect is not correlated with the number of jobs promised at the subsidized establishment. In fact, the effect is only present for deals with news coverage and the effect is largest when the subsidy is announced during the election year: the governor accrues political benefit before any jobs are created. I provide suggestive evidence that career concerned governors prefer subsidy-giving to other job creation policies because of the positive media coverage of these subsidy deals.
Logrolling in Congress
Marco Battaglini, Valerio Leone Sciabolazza & Eleonora Patacchini
NBER Working Paper, April 2023
We study vote trading among U.S. Congress members. By tracking roll-call votes within bills across five legislatures and politicians' personal connections made during the school years, we document a propensity of connected legislators to vote together that depends on how salient the bill is to the politicians' legislative agenda. Although this activity does not seem to enhance U.S. Congress members' legislative effectiveness, vote trading is a strong predictor of future promotions to position of leadership.
Military Experience and Political Cronyism
Dhruv Aggarwal & Lubomir Litov
University of Oklahoma Working Paper, April 2023
Using a hand-coded dataset tracking the backgrounds of U.S. governors between 1993 and 2021, we argue that officeholders with military experience are less likely to engage in political cronyism. Military governors are less likely to increase subsidies to corporations when they become "lame ducks" (i.e., ineligible to run for another term). They are also less likely to favor companies with the same political affiliation during their lame duck phase. Given the exogenous constitutional variation in term limits between states and governors, these effects are credibly causal. Electoral incentives and the personal characteristics of officeholders thus influence firm-state relations.
The Quality of District Representation in U.S. House Committees
Journal of Political Institutions and Political Economy, February 2023, Pages 81-110
How well do members of the House adhere to the preferences of their constituents within standing committees? Roll call voting behavior on the floor largely reflects district preferences, but voting in committees is not easily monitored by constituents. This may allow legislators to disregard constituent preferences without suffering electoral consequences. I use a dataset of individual committee votes to create Optimal Classification scores for legislators within committee-congresses. Two-way fixed effects estimates and a redistricting natural experiment show that members of the House are largely responsive to district preferences, but the quality of representation declines over time as the district changes. Representation quality is also conditioned by committee heterogeneity and electoral security. In committees where jurisdictional complexity is high and party preferences are outlying, legislators' voting records diverge from the preferences of their district, though low incumbent vote share strengthens the relationship between district preferences and committee voting.
Do Vacancies Hurt Federal Agency Performance?
Christopher Piper & David Lewis
Journal of Public Administration Research and Theory, April 2023, Pages 313-328
The combination of the high workload associated with keeping top executive branch positions filled and political dysfunction has led to longer and more frequent periods of vacancies in the U.S. executive branch. While scholars commonly claim that such vacancies are harmful for performance, this claim has been difficult to evaluate because of theoretical disagreement, conceptual confusion, and measurement challenges. In this article, we evaluate the relationship between vacancies and performance, describing primary mechanisms by which vacancies (as opposed to turnover) influence performance. We conduct a cross-sectional study using new data on appointee vacancies during the Trump Administration and original performance data from a 2020 survey of federal executives. The Survey on the Future of Government Service includes questions designed to measure comparative self-reported agency performance and questions targeting the mechanisms hypothesized to link vacancies and performance. The article includes efforts to define and validate the measure of performance, assess the directionality of the relationship between vacancies and performance, control for potential confounders that may explain both vacancies and performance, and evaluate the mechanisms by which vacancies negatively affect performance. The results from ordinary least squares (OLS) models suggest that persistent vacancies are correlated with lower performance. In particular, agencies with persistent vacancies (e.g., 3-4 years) have performance ratings of about 1 SD lower than those agencies with consistent confirmed leadership. The most likely mechanisms leading to these results are the effect of vacancies on leader time horizons, agency morale, and investment by key stakeholders. We conclude with implications for appointment politics and administrative politicization.
Journal of Political Marketing, forthcoming
Members of the U.S. Congress have created new, sub-partisan institutions to capture some influence in an increasingly polarized and competitive two-party system. However, scholars have only recently begun to empirically evaluate the impact of groups like the Blue Dog Coalition or the House Freedom Caucus. In this article, I show that faction affiliation alone can shift the way that political donors, activists, and leaders perceive a candidate's ideological position. These experimental results contribute to our understanding of how factions can accumulate valuable political resources and, ultimately, loosen the bonds of two-party government.
The contingent value of connections: Legislative turnover and revolving-door lobbyists
Business and Politics, forthcoming
Former legislators who lobby exacerbate the effects of financial resources on the relative political influence that various organized interests achieve. These lobbyists receive more income and achieve favorable policy outcomes more often than other lobbyists. The value of these revolving-door lobbyists, however, is contingent on the continued presence of former colleagues in legislatures. Former legislators achieve influence because of their insider connections, and membership turnover among incumbents decreases the value of this asset for interest groups. I examine the incomes and clienteles of former legislators who lobbied in the American states over seven decades. Turnover is a consistent, negative predictor of revolver value. This effect is enhanced by the presence of legislative staff support. This study is the first to examine the value of revolving-door lobbyists in the state legislatures. My findings imply that reforms that induce turnover help to level playing fields of political advocacy among interests with different levels of financial resources.
Bicameralism Hinges on Legislative Professionalism
Adam Brown & Alex Garlick
Legislative Studies Quarterly, forthcoming
Bicameralism is a nearly universal feature of American legislatures, yet its functional impact on legislative outcomes is uncertain. Proponents have claimed that bicameralism would produce better outcomes than unicameralism, as adding a deliberative element prevents the passage of faulty legislation. For bicameralism to work in this fashion, we argue lawmakers must have enough time and resources to meaningfully evaluate legislation produced by the other chamber. We find such behavior is most likely to take place in professionalized state legislatures, evidenced by a lower concurrence rate in the second chamber for bills passed by the first chamber. In state legislatures with less policy capacity, by contrast, the chambers act in a more parallel fashion, dividing the agenda and largely endorsing the other chamber's legislation.