ARE POLITICAL CONTRIBUTIONS IN THE US PURE CONSUMPTION GOODS?

Purpose – we checked the validity of the “political campaign contributions as consumption goods argument.” Methodology – we examined the changesin political contributions of 59-groupsin the 2006 and 2008 election cycles and conducted statistical analyses. Findings - our t-tests and regression analysis indicated thatwhile therewas no significant change inAmericans’ income, political views, or party affiliation between these two election cycles, there was a statistically significant change in theway groups allocated their contributions, shifting more towards the Democratic Party which was expected to gain the majority of seats and, hence the legislative power in the Congress. Furthermore, the “mostsensitive groups” to the legislative process were making bigger adjustments in allocating their contributions between the two parties based on the expected new Congressional configuration. Practical implication – these findingsrefute the validity of “contributions as consumption goods” argument and accordinglywe recommend thatin the future studies, modeling political contribution as a function of both consumption and investment motives, and taking into account the intervening effects during each election cycle might be a betterstrategy. Originality – we constructed a sensitivity index (based on experts’ opinion) and used it to empirically check the validity ofthe “political contributions as consumption goods argument.”