Stock Ownership and Congressional Elections: The Political Economy of the Mutual Fund Revolution

Abstract

"We find that higher stock ownership rates are linked to an upward shift in the Republican share of the House popular vote since the late 1980s, consistent with theories that property interests affect voting. To proxy for discontinuous stock ownership rates, we use equity mutual fund costs, which have fallen, are negatively correlated with stock ownership rates and the Republican vote share in the long run, and help explain short-run changes along with midterm elections, economic conditions, and presidential popularity. Findings suggest that the major parties' shares of the House popular vote will fluctuate around 50% until other factors trigger a political realignment. "("JEL "D72, G11) Copyright (c) 2007 Western Economic Association International.

Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s

“…Our analysis also contributes to a much larger literature on the relationship between the composition of households' wealth and their political beliefs and voting behavior (Guiso et al 2003;Schreiner and Sherraden 2006;Ansell 2014;Lewis-Beck, Nadeau, and Foucault 2013;Rahn and Dancy 2009). Some of these works have argued that the broadening of stock ownership in the late twentieth century led to increases in the Republican vote share (Cotton and Davis 2012; Duca and Saving 2008;Lewis-Beck and Nadeau 2011;Rahn and Dancy 2009), although the literature generally cannot convincingly address the problem that financial asset ownership may itself be influenced by party identification (Huberty 2011). 2 We advance this literature by studying a historical context with plausibly exogenous variation in financial asset ownership and also by incorporating the performance of financial assets into the analysis.…”

Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s

“…This paper contributes to the literature on the relationship between the composition of households' wealth and their political beliefs and voting behavior (Guiso et al, 2003;Schreiner and Sherraden, 2006;Ansell, 2014;Lewis-Beck, Nadeau, and Foucault 2013;Rahn and Dancy 2009). Some have argued that the broadening of stock ownership in recent years has led to greater identification with the Republican Party and increases in the Republican vote share (Cotton and Davis, 2012;Duca andSaving, 2008, Lewis-Beck andNadeau 2011;Rahn and Dancy 2009). However, this literature generally cannot convincingly address the problem that financial asset ownership may itself be influenced by party identification, or by other factors related to party identification (Huberty 2011).…”