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

Economic Inquiry, Vol. 46, Issue 3, pp. 454-479, July 2008

26 Pages Posted: 8 Sep 2008

See all articles by John V. Duca

John V. Duca

Federal Reserve Banks - Federal Reserve Bank of Dallas; Oberlin College

Jason L. Saving

Federal Reserve Banks - Federal Reserve Bank of Dallas

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.

Keywords: D72, G11

Suggested Citation

Duca, John V. and Saving, Jason L., Stock Ownership and Congressional Elections: The Political Economy of the Mutual Fund Revolution. Economic Inquiry, Vol. 46, Issue 3, pp. 454-479, July 2008, Available at SSRN: https://ssrn.com/abstract=1263074 or http://dx.doi.org/10.1111/j.1465-7295.2007.00083.x

John V. Duca (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Oberlin College

Oberlin, OH 44074
United States

Jason L. Saving

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

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