Working Paper: NBER ID: w14468
Authors: Atif Mian; Amir Sufi; Francesco Trebbi
Abstract: We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Emergency Economic Stabilization Act of 2008. We find evidence that constituent interests and special interests influence voting patterns during the crisis. Representatives from districts experiencing an increase in mortgage default rates are significantly more likely to vote in favor of the AHRFPA. They are precise in responding only to mortgage related constituent defaults, and are significantly more sensitive to defaults of their own-party constituents. Increased campaign contributions from the financial services industry is associated with a higher likelihood of voting in favor of the EESA, a bill which transfers wealth from tax payers to the financial services industry. We also examine the trade-off between politician ideology and constituent and special interests, and find that conservative politicians are less responsive to constituent and special interest pressure. This latter finding suggests that politicians, through ideology, can commit against intervention even during severe crises.
Keywords: mortgage default; congressional voting; political economy; financial crisis
JEL Codes: D72; G21; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Mortgage default rates (G21) | Voting in favor of the American Housing Rescue and Foreclosure Prevention Act (AHRFPA) (R28) |
| Campaign contributions from financial services industry (G28) | Voting in favor of the Emergency Economic Stabilization Act (EESA) (G28) |
| Change in mortgage default rates (2005 to 2007) (G21) | Voting behavior (D72) |
| Ideology (P16) | Responsiveness to constituent and special interests (D72) |