William Dinan, 27 November 2008

Estimating Returns to Office in Post-War British Politics

The history of MPs profiting from their closeness to political power has an actuarial addition. Two Harvard econometricians addressed the issue by comparing and contrasting how much money a selection of post-war (1950-1970) MPs were worth when they died. The figures show a very partisan difference between the parties: Conservatives die richer.  According to  the authors of the paper Andy Eggers,  and Jens Hainmueller:

While the role of money in policymaking is a central question in political economy research, surprisingly little attention has been given to the rents politicians actually derive from politics. We use both matching and a regression discontinuity design to analyze an original dataset on the estates of recently deceased British politicians. We find that serving in Parliament roughly doubled the wealth at death of Conservative MPs but had no discernible effect on the wealth of Labour MPs. We argue that Conservative MPs profited from office in a lax regulatory environment by using their political positions to obtain outside work as directors, consultants, and lobbyists, both while in office and after retirement. Our results are consistent with anecdotal evidence on MPs’ outside financial dealings but suggest that the magnitude of Conservatives’ financial gains from office was larger than has been appreciated.

Read the report...