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  3. American Economic Journal: Economic Policy
  4. August 2012
  5. Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures

American Economic Journal:
Economic Policy

ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)

Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures

  • Toke S. Aidt
  • Julia Shvets
American Economic Journal: Economic Policy
vol. 4, no. 3, August 2012
(pp. 1–29)
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Abstract

We study the effect of electoral incentives on the allocation of public services across legislative districts. We develop a model in which elections encourage legislators to cater to parochial interests and thus aggravate the common pool problem. Using unique data from seven US states, we study how the amount of funding that a legislator channels to his district changes when he faces a term limit. We find that legislators bring less pork to their district when they cannot seek re-election. Consistent with the Law of 1/N, this last term reduction in funding is smaller in states with many legislative districts. (JEL D72, H70)

Citation

Aidt, Toke S., and Julia Shvets. 2012. "Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures." American Economic Journal: Economic Policy, 4 (3): 1–29. DOI: 10.1257/pol.4.3.1

Additional Materials

JEL Classification

  • D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • H70 State and Local Government; Intergovernmental Relations: General
  • Posted by PER PETTERSSON-LIDBOM
  • Posted on 2/11/2014 5:12:58 AM
In this comment (originally written in February 2012), I show that the results of Aidt and Shvets do not hold up when the panel properties of their data are properly taken into account.
  • Posted by JULIA SHVETS
  • Posted on 3/17/2014 11:22:42 AM
We are pleased to see this interest in our study.

However, Per Pettersson-Lidbom's arguments are invalid because they ignore redistricting. The author's 'panel' estimates implicitly assume that a district is a fixed unit and that the (state-assigned) district number refers to the same district over time. Sadly, this is not even approximately true. Further details are available on page 5 of our online data appendix or from us directly.
  • Posted by PER PETTERSSON-LIDBOM
  • Posted on 5/9/2014 6:40:41 PM
My comment concerned three issues in the differences-in-differences specification of Aidt and Shvets (2012): (i) the sensitivity of the functional form of the dependent variable (ii) that the standard errors were not clustered robust and (iii) omitting fixed effects at the district level. Although I might have not correctly specified all district fixed effects due to re-districting, as noted by Shvets, the two others problems still apply. Moreover, I strongly doubt that that if the district fixed effects were correctly specified, that that would change the results in Panel C of Table 1 in my comment. I suggest that the authors should take my critique seriously rather than just saying that it is misguided.
  • Posted by PER PETTERSSON-LIDBOM
  • Posted on 5/10/2014 6:44:17 AM
I my last comment, I forgot to mention that the editor Alan Auerbach said that "I think your criticisms have merit, and would strongly urge you to post them online in the comments section of the paper when it is published (which will be in the August issue)."
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