Working Knowledge
Business Research for Business Leaders
09 Dec 2010Working Paper Summaries

Friends in High Places

by Lauren Cohen and Christopher Malloy
Research supports the old adage that says it's not what you know; it's whom you know--especially when it comes to the voting behavior of US politicians. In a National Bureau of Economic Research working paper, Harvard Business School professors Lauren Cohen and Christopher Malloy study the congressional voting record from 1989 to 2008. They show that personal connections among Congress members reliably affect how they will vote on pending legislation. Key concepts include:
  • US senators are more likely to vote in favor of bills when other senators who graduated from the same university also vote in favor of these bills.
  • Social ties between Congress members and executives of firms in their home states have a direct impact on legislator behavior.
  • Senate voting behavior also is affected by who sits near whom on the Senate chamber floor.

Author Abstract

In this paper we demonstrate that personal connections amongst politicians, and between politicians and firms, have a significant impact on the voting behavior of U.S. politicians. We exploit a unique database linking politicians to other politicians, and linking politicians to firms, and find both channels to be influential. Networks based on alumni connections between politicians, as well as common seat locations on the chamber floor, are consistent predictors of voting behavior. For the former, we estimate sharp measures that control for common characteristics of the network, as well as heterogeneous impacts of a common network characteristic across votes. For common seat locations, we identify a set of plausibly exogenously assigned seats (e.g., freshman senators) and find a strong impact of seat location networks on voting. Further, we show that connections between firms and politicians influence congressional votes on bills that affect these firms. These network effects are stronger for more tightly linked networks and at times when votes are most valuable. (32 pages)

Paper Information

Lauren H. Cohen
Lauren H. Cohen
L.E. Simmons Professor of Business Administration
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