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The Business of American Democracy: Citizens United, Independent Spending, and Elections

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  • Tilman Klumpp
  • Hugo M. Mialon
  • Michael A. Williams

Abstract

In Citizens United v. FEC, the US Supreme Court ruled that restrictions on independent political expenditures by corporations and labor unions are unconstitutional. We analyze the effects of Citizens United on state election outcomes. We find that Citizens United is associated with an increase in Republicans' election probabilities in state house races of approximately 4 percentage points overall and 10 or more percentage points in several states. We link these estimates to on-the-ground evidence of significant spending by corporations through channels enabled by Citizens United. We also explore the effects of Citizens United on reelection rates, candidates' entry, and direct contributions and discuss implications for national elections and economic policy.

Suggested Citation

  • Tilman Klumpp & Hugo M. Mialon & Michael A. Williams, 2016. "The Business of American Democracy: Citizens United, Independent Spending, and Elections," Journal of Law and Economics, University of Chicago Press, vol. 59(1), pages 1-43.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/685691
    DOI: 10.1086/685691
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    References listed on IDEAS

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    Cited by:

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    2. Stergios Skaperdas & Samarth Vaidya, 2021. "Investing in Influence: How Minority Interests Can Prevail in a Democracy," CESifo Working Paper Series 9367, CESifo.
    3. Anna Harvey & Taylor Mattia, 2022. "Does money have a conservative bias? Estimating the causal impact of Citizens United on state legislative preferences," Public Choice, Springer, vol. 191(3), pages 417-441, June.
    4. Cox, Christian, 2022. "Dark Money in Congressional House Elections," Economics Letters, Elsevier, vol. 216(C).
    5. Balles, Patrick, 2022. "Political Advertising by Special Interest Groups and Voter Participation: The Effects of Less Restrictive Campaign Finance Rules Following Citizens United," VfS Annual Conference 2022 (Basel): Big Data in Economics 264075, Verein für Socialpolitik / German Economic Association.
    6. Slattery, Cailin & Tazhitdinova, Alisa & Robinson, Sarah, 2023. "Corporate political spending and state tax policy: Evidence from Citizens United," Journal of Public Economics, Elsevier, vol. 221(C).
    7. Timothy Werner, 2017. "Investor Reaction to Covert Corporate Political Activity," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2424-2443, December.
    8. Julia M. Puaschunder, 2020. "The Future of Artificial Intelligence in International Healthcare: An Index," Proceedings of the 17th International RAIS Conference, June 1-2, 2020 003jp, Research Association for Interdisciplinary Studies.
    9. Paul Calluzzo & G Nathan Dong & David Godsell, 2017. "Sovereign wealth fund investments and the US political process," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(2), pages 222-243, February.
    10. Artés, Joaquín & Richter, Brian Kelleher & Timmons, Jeffrey F., 2019. "The Value of Political Geography: Evidence from the Redistricting of Firms," Working Papers 291, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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