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How Much Would It Take to Buy Out a Congressional Seat?

Research By

Timothy J. Groseclose

Associate Professor of Political Economy
Stanford Graduate School of Business

After the AFL-CIO spent $35 million in the 1996 congressional elections to defeat only 18 Republicans, American Federation of Government Employees president John Sturdivant facetiously asked if it wouldn't have been cheaper to just pay each Republican $1 million to go away. After all, many politicians are lured out of public office by lucrative lobbying or consulting jobs anyway. Put simply, is it cheaper to throw the bums out or buy them out? It is a question Timothy Groseclose, an associate professor of political economy, recently addressed when some unusual data became available. 

The year 1992 was the last year that retiring members of the House could keep for their personal use whatever money was left in their campaign war chests. Back in 1979, Congress had made it illegal for representatives to convert leftover campaign money, and at the same time, of course, it grandfathered in the current members. But Congress changed that law in 1989, making 1992 the last year that any member could keep the cash and retire.

The situation provided the means of a natural experiment, says Groseclose. It presented an opportunity to measure how much money it would take to get a member of Congress to leave. In 1992, there were 159 grandfathered members, or about a third of Congress, who were eligible to take funds. A sixth of the Congress had more than $100,000 in such unused funds. "Like an earthquake is to geologists or an eclipse is to astronomers, this was a once-in-a-lifetime event for political economists," says Groseclose.

The statistical research, which Groseclose conducted with Tufts University economist Jeff Milyo, included variables such as a member's net worth, age, and whether he or she might have lost reelection anyway. The study showed that you would have to pay a representative with median wealth (net worth: $365,000) $3 million to leave office. However, the estimates are very sensitive to age and wealth. For instance, an older, very rich member, age 53 with a net worth of $2 million, would require $12 million to leave office. Meanwhile, a relatively young member, age 41 with a net worth of $50,000, would require $1.6 million.

So why do we never hear about cases of paying politicians to retire? First, it takes a lot of money. Labor chief Sturdivant was off by a factor of three when he floated the $1 million figure. And Groseclose and Milyo say even their estimates probably understate the true price. If an interest group really did try to buy out a politician, the member would face some embarrassment, which would drive up the price. The researchers also noted that interest groups might find a bought-out incumbent's replacement even more distasteful. They conclude it is probably better for an interest group to fund the campaigns of friends than to try to buy out opponents.

The study highlights some other areas of practical concern. The fact that it would take such large amounts of money to induce politicians to leave suggests they may value their jobs very highly. Notwithstanding their claims of being poorly paid, the findings imply that the power and prestige of office more than compensate for any burdens. As a result, if the monetary benefits of office, such as salary or pensions, decreased, it would not significantly increase departures. However, the benefits of office do not suggest an encouraging environment for reforms such as term limits or campaign spending limits. Given that members value their jobs so highly, it is unlikely they will pass policies that jeopardize their ability to keep these jobs.

March 2000

Buying the Bums Out: What's the Dollar Value of a Seat in Congress? Timothy Groseclose and Jeff Milyo, GSB Research Paper #1601, July 1999

For more information, contact Barbara Buell, 650-723-3157

To order a paper in the GSB Research Paper Series (numbered papers only), email research_papers@gsb.stanford.edu.

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