MPs for Sale? Estimating Returns to Office in Post-War British Politics

Eggers, Andy and Hainmueller, Jens (2008): MPs for Sale? Estimating Returns to Office in Post-War British Politics.

Abstract

While the role of money in policymaking is a central question in political economy research, surprisingly little attention has been given to the rents politicians actually derive from politics. We use both matching and a regression discontinuity design to analyze an original dataset on the estates of recently deceased British politicians. We find that serving in Parliament roughly doubled the wealth at death of Conservative MPs but had no discernible effect on the wealth of Labour MPs. We argue that Conservative MPs profited from office in a lax regulatory environment by using their political positions to obtain outside work as directors, consultants, and lobbyists, both while in office and after retirement. Our results are consistent with anecdotal evidence on MPs' outside financial dealings but suggest that the magnitude of Conservatives' financial gains from office was larger than has been appreciated.

• Item Type: MPRA Paper
• Language: English
• Keywords: British Politics, returns to office, rents from office, political economy, money and politics, regression discontinuity
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy

References

Abadie, A. & Imbens, G. (2002), `Simple and Bias-Corrected Matching Estimators for Average Treatment Eects', NBER Technical Working Paper 283 . Abadie, A. & Imbens, G. (2006), `Large Sample Properties of Matching Estimators for Average Treatment Eects', Econometrica 74(1), 235{267. Angrist, J., Imbens, G. & Rubin, D. (1996), `Identication of Causal Eects Using Instru- mental Variables.', Journal of the American Statistical Association 91(434). Besley, T. (2005), `Political Selection', Journal of Economic Perspectives 19(3), 43{60. Besley, T. & Coate, S. (1997), `An Economic Model of Representative Democracy', Quar- terly Journal of Economics 112(1). Butt, R. (1969), The Power of Parliament, Constable & Company Limited. Caselli, F. & Morelli, M. (2004), `Bad politicians', Journal of Public Economics 88(3- 4), 759{782. Courtney, A. (1968), Sailor in a Russian frame, London: Johnson. Dal Bo, E., Dal Bo, P. & Di Tella, R. (2006), `Plata o Plomo?: Bribe and Punishment in a Theory of Political In uence', American Political Science Review 100(01), 41{53. Davies, M. (1985), Politics of Pressure: The Art of Lobbying, British Broadcasting Corpo- ration. Diamond, A. & Sekhon, J. (2006), `Genetic Matching for Estimating Causal Eects: A General Multivariate Matching Method for Achieving Balance in Observational Studies', See http://sekhon. berkeley. edu/papers/GenMatch. pdf . Diermeier, D., Keane, M. & Merlo, A. (2005), `A Political Economy Model of Congressional Careers', American Economic Review 95(1), 347{373. Dixit, A. & Londregan, J. (1996), `The Determinants of Success of Special Interests in Redistributive Politics', The Journal of Politics 58(4), 1132{1155. Doig, A. (1984), Corruption and Misconduct in Contemporary British politics, Penguin Books. Finer, S. (1962), Anonymous Empire: A Study of the Lobby in Great Britain, Pall Mall Press. Fiorina, M. (1994), `Divided Government in the American States: A Byproduct of Legisla- tive Professionalism?', The American Political Science Review 88(2), 304{316. 31 Gagliarducci, S., Nannicini, T. & Naticchioni, P. (2008), `Outside Income and Moral Haz- ard: The Elusive Quest for Good Politicians'. Gorodnichenko, Y. & Sabrianova, K. (2007), `Public Sector Pay and Corruption: Measuring Bribery from Micro-Data', IPC Working Paper Series No. 47 . Groseclose, T. & Krehbiel, K. (1994), `Golden Parachutes, Rubber Checks, and Strategic Retirements from the 102d House', American Journal of Political Science 38(1), 75{99. Hall, R. & van Houweling, R. (1995), `Avarice and Ambition in Congress: Representatives' Decisions to Run or Retire from the US House', The American Political Science Review 89(1), 121{136. HMRC (2007), Quality Review of Personal Wealth National Statistics, Technical report, HM Revenue & Customs. URL: http://www.hmrc.gov.uk/stats/personal wealth/qual-personal-wealth.pdf Hollingsworth, M. (1991), MPs for Hire: The Secret World of Political Lobbying, Blooms- bury. Imbens, G. (2004), `Nonparametric Estimation of Average Treatment Eects under Exo- geneity: A Review', Review of Economics and Statistics 86(1), 4{29. Imbens, G. & Lemieux, T. (2007), `Regression Discontinuity Designs: A Guide to Practice', NBER Working Paper 13039. Johnson, C. (1986), `Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan', Journal of Japanese Studies 12(1), 1{28. Jordan, G. (1998), `Towards Regulation in the UK: From `General Good Sense' to `For- malised Rules'', Parliamentary Aairs 51(4), 524{537. Judge, D. (1984), `The Politics of MPs' Pay', Parliamentary Aairs 37(1), 59{75. Judge, D. (1993), The Parliamentary State, Sage. King, A. (1984), Sex, Money and Power: Political Scandals in Great Britain and the United States, Department of Government, University of Essex. Lee, D., Moretti, E. & Butler, M. (2004), `Do Voters Aect or Elect Policies? Evidence from the US House', Quarterly Journal of Economics 119(3), 807{860. Lee, D. S. (2008), `Randomized Experiments from Non-Random Selection in U.S. House Elections', Journal of Econometrics Forthcoming. Previously: NBER Working Paper No. 8441 (2001). Marsh, I. (2004), `Interest Groups and Policy Making: A New Role for Select Committees?', Parliamentary Aairs 41(4), 469{489. 32 Mattozzi, A., Merlo, A. & of Economic Research, N. B. (2007), Political Careers Or Career Politicians?, National Bureau of Economic Research Cambridge, Mass., USA. Menchik, P. & David, M. (1983), `Income Distribution, Lifetime Savings, and Bequests', The American Economic Review 73(4), 672{690. Merlo, A. (2006), `Whither Political Economy? Theories, Facts and Issues', Advances in Economics and Econometrics, Theory and Applications: Ninth World Congress of the Econometric Society, Cambridge: Cambridge University Press, forthcoming . Messner, M. & Polborn, M. (2004), `Paying Politicians', Journal of Public Economics 88(12), 2423{2445. Moloney, K. (1996), Lobbyists for Hire, Dartmouth. Noel-Baker, P. (1961), `The Grey Zone: The Problems of Business Aliations of Members of Parliament'', Parliamentary Aairs, v15 . Norris, P. & Lovenduski, J. (1995), Political Recruitment: Gender, Race and Class in the British Parliament, Cambridge University Press. Norton, P. (2003), `The United Kingdom: Restoring Condence?', Parliamentary Aairs 50(3), 357{372. Osborne, M. & Slivinski, A. (1996), `A Model of Political Competition with Citizen- Candidates', The Quarterly Journal of Economics 111(1), 65{96. Owens, A., Green, D., Bailey, C. & Kay, A. (2006), `A measure of worth: probate valuations, personal wealth and indebtedness in England, 1810-40', Historical Research 79(205), 382{ 403. Querubin, P. & Snyder, J. M. (2008), The Rents to Political Oce in the U.S., 1840-1870. Manuscript, Massachusetts Institute of Technology. Rohde, D. (1979), `Risk-Bearing and Progressive Ambition: The Case of Members of the United States House of Representatives', American Journal of Political Science 23(1), 1{ 26. Rosenbaum, P. R. & Rubin, Donald, B. R. (1983), `The central role of the propensity score in observational studies for causal eects', Biometrika 70(1), 41{55. Roth, A. (1957), The Business Background of MPs, Parliamentary Prole Services. Roth, A. (1965), The Business Background of MPs, Parliamentary Prole Services. Rubin, D. (2006), Matched Sampling for Causal Eects, Cambridge University Press. Rush, M. (1969), The Selection of Parliamentary Candidates, Nelson. 33 Rush, M. (1990), `Parliament and Pressure Groups'. Rush, M. et al. (2001), The Role of the Member of Parliament Since 1868: From Gentlemen to Players, Oxford University Press. Schlesinger, J. (1966), Ambition and Politics: Political Careers in the United States, Rand McNally. Searing, D. (1994), Westminster's World: Understanding Political Roles, Harvard Univer- sity Press. Sekhon, J. (2007), `Multivariate and propensity score matching software with automated balance optimization: The matching package for r', Journal of Statistical Software . Stewart, J. (1958), British Pressure Groups: Their Role in Relation to the House of Com- mons, The Clarendon Press. Strudwick, K. & Cole, B. (2005), Policing Corruption: International Perspectives, Lexing- ton Books, chapter Policing Corruption Inside the British Parliament, pp. 353{367. Tanzi, V. (1998), `Corruption Around the World', IMF Sta Papers 45(4), 559{594. Thistlethwaite, D. & Campbell, D. (1960), `Regression-discontinuity analysis: An alterna- tive to the ex post facto experiment', Journal of Educational Psychology 51, 309{317. Thompson, D. (1987), Political Ethics and Public Oce, Harvard University Press. Wiseman, H. (1966), Parliament and the Executive: An Analysis with Readings, Routledge & K. Paul. 34