Natural Disasters, Moral Hazard, and Special Interests in Congress

77 Pages Posted: 26 Dec 2018 Last revised: 4 Sep 2019

Date Written: September 2019

Abstract

We exploit the precise timing of domestic natural disasters to study the connection between public attention to politics and legislator support for special interests. Our findings show that when a disaster strikes, the news media reduce both their coverage of politics in general as well as that of individual congresspeople in particular. In addition, citizens are less likely to search for Congress-related keywords online. At the very same time, members of the U.S. House of Representatives become substantially more likely to adopt the positions of special-interest donors as they vote on bills. Taken together, the evidence we present suggests that politicians are more inclined to take actions that benefit special interests when the public is temporarily distracted. More broadly, our findings imply that contemporaneous attention improves electoral accountability, even in an environment with stringent transparency and disclosure requirements.

Keywords: natural disasters, moral hazard, special interests, Congress

JEL Classification: D72

Suggested Citation

Kaplan, Ethan Daniel and Spenkuch, Jörg L. and Yuan, Haishan, Natural Disasters, Moral Hazard, and Special Interests in Congress (September 2019). Available at SSRN: https://ssrn.com/abstract=3296403 or http://dx.doi.org/10.2139/ssrn.3296403

Ethan Daniel Kaplan

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Jörg L. Spenkuch (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://jspenkuch.github.io

Haishan Yuan

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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