ARE POLITICAL CONTRIBUTIONS IN THE US PURE CONSUMPTION GOODS?

Purpose–we checked the validity of the “political campaign contributions as consumption goods argu-ment.” Methodology–we examined the changes in political contributions of 59-groups in the 2006 and 2008 election cycles and conducted statistical analyses. Findings- our t-tests and regression analysis indi-cated that while there was no significant change in Ame -ricans’ income, political views, or party affiliation between these two election cycles, there was a statisti-cally significant change in the way 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. Fur-thermore, the “most sensitive 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 findings refute the va-lidity of “contributions as consumption goods” argument and accordingly we recommend that in the future studies, modeling political contribution as a function of both con-sumption and investment motives, and taking into ac-count the intervening effects during each election cycle might be a better strategy. Originality – we constructed a sensitivity index (based on experts’ opinion) and used it to empirically check the validity of the “political contributions as con-sumption goods argument.”