The Perks of Being a Lawmaker: Returns to Office as a Legislative Goal

• DOI: http://doi.org/10.1111/lsq.12181
• Date: 01 February 2018
• Author: Kevin Fahey
• Published date: 01 February 2018

KEVIN FAHEY

Florida State University

The Perks of Being a Lawmaker:

Returns to Office as a

Legislative Goal

Extant literature demonstrates that holding public office is financially lucrative.

Yet little is known about which sitting legislators profit from office. Relying on original

data of members of the Florida legislature, I estimate predictors of income growth

among sitting legislators. I find that legislators whose vote share increases by 10 per-

centage points between elections report income growth of nearly $20,000. This finding

is robust to estimation technique and model specification, indicating that electoral safety

is tied to income growth. Lawmakers appointed to legislative posts with agenda-setting

power do not obtain additional income. These data demonstrate the market values of

electorally dominant legislators.

In January 2003, State Representative Marco Rubio (R-Miami) was

appointed to the Florida House Appropriations Committee. At the time,

Rubio reported $122,718 in income. By December 2004, Rubio’s income

increased to $298,825 by obtaining raises at his existing jobs and accept-

ing job offers from two prestigious law f‌irms. His work at these new

f‌irms included lobbying state and local governments (Hamburger and

Sullivan 2015). In 2007, Rubio ascended to the Speakership of the Florida

House, at which time his income increased by another $90,000 as his sal-

ary doubled at one law f‌irm, Broad & Cassel, and he began teaching a

part-time political science course at Florida International University,

drawing a $69,000 salary.

1

Perhaps Rubio’s productivity quadrupled

between 2003 and 2008. Far more likely, his prestigious legislative career

provided Rubio with new economic opportunities. How widespread is

the phenomenon of legislators using off‌ice for f‌inancial gains?

A growing literature argues that legislators obtain f‌inancial returns

while in off‌ice (Fedele and Naticchioni 2015; Fisman, Schulz, and Vig

2014; Geys and Mause 2013; Parker 1996) and after leaving off‌ice

(Diermeier, Keane, and Merlo 2005; Eggers and Hainmueller 2009;

Palmer and Schneer 2016; Querubin and Snyder 2013). Yet much of this

literature assumes that holding off‌ice benef‌its all off‌iceholders equally. I

LEGISLATIVE STUDIES QUARTERLY, 43, 1, February 2018 37

DOI: 10.1111/lsq.12181

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C2017 Washington University in St. Louis

present an argument of conditional f‌inancial gain. Legislators with inf‌lu-

ence over the legislative agenda, and those with safe electoral districts,

stand the best chance to use public off‌ice for f‌inancial gain. First-term

lawmakers with no power in the chamber should not be highly prized by

the private sector. Nor should lawmakers from vulnerable seats, who

must dedicate their energies to winning re-election.

To test my argument, I collect annual f‌inancial disclosure forms for

532 members of the Florida state legislature—the only US legislature that

requires its members to report precise income values—and create a data

set of annual changes in sitting legislators’ income from 1995 to 2014.

Alongside lawmakers’ f‌inancial disclosures, I build a rich quantitative his-

tory of each lawmaker’s biographical, electoral, and institutional

characteristics. I identify the conditional relationship between holding

public off‌ice and f‌inancial gain. Precise annual data permit me to identify

even miniscule changes in income. Florida’s strict ethics institutions make

the state a conservative test of this theory, despite strong incentives by

lawmakers to pursue private-sector income. The conditions are ripe to

f‌ind evidence of mass patterns of income accumulation.

I f‌ind that only a select few sitting legislators obtain f‌inancial gains.

I estimate the predictors of lawmakers’ annual income growth, f‌inding

that the value of holding off‌ice is contingent on holding a “safe seat” in

the general election. Specif‌ically, a legislator whose vote share increases

between elections sees her personal income rise by $18,500. No agenda-

setting institutional variable—majority-party status, committee assign-

ment, holding committee chairs—shows systematic evidence for

f‌inancial gains. Most lawmakers do not f‌inancially gain from off‌ice, but

a select few do prof‌it.

Scholars should benef‌it from this approach by recalibrating

notions of legislative “value.” The literature on legislative effective-

ness outlines the added value that some legislators provide to the

policymaking process (Battista and Richman 2011; Frantzich 1979;

Pablo i-Miquel and Snyder 2006; Volden and Wiseman 2014).

Another voluminous literature starts from the assumption that legisla-

tors provide tremendous representative value (Arceneaux 2001; Lax

and Phillips 2012; Maestas 2000; Rigby and Wright 2013). My f‌ind-

ings indicate that the market assigns legislators a value independent of

their qualities in representation or effectiveness and demonstrate little

evidence that lawmakers use the machinations of the legislature to

become wealthy. Only when legislators have achieved purposive goals

are they able to obtain f‌inancial gains.

I structure the article as follows. First, I outline purposive legisla-

tive goals and their connection to f‌inancial gains. I hypothesize that

38 Kevin Fahey

sitting legislators who have “fulf‌illed” purposive goals have higher

value. Then I describe my data set of members of the Florida House of

Representatives and estimate changes in income, reporting estimates

from ordinary least squares models, error-correction models, and

difference-in-differences matching. Finally, I discuss the implications of

the results for the literature on legislative f‌inancial gains.

How Legislative Goals Enable Financial Gain

The prioritization of legislative goals has long been debated.

Richard Fenno (1973, 1) introduces f‌ive legislative goals: re-election,

producing good public policy, inf‌luence within the chamber, progressive

ambition, and private gain. David Mayhew’s Electoral Connection

emphasizes re-election as the primary goal of elected off‌icials, claiming

that “re-election underlies everything else” (Mayhew 1974, 16), while

Fenno (1978) reasserts the role of producing public policy and obtaining

inf‌luential legislative positions in Home Style. The pursuit of re-election,

passing policy, and prestige within the legislature are purposive goals

(Sinclair 1983). Private gain, or f‌inancial gain, as a legislative goal has

only received recent attention. Parker (1996) theorizes that Congress has

replaced civic-minded lawmakers with legislators who prioritize material

benef‌its (see also Caselli and Morelli 2004). Diermeier, Keane, and

Merlo develop a model of legislative career options to quantify the

returns to off‌ice of a career in Congress. They posit that “re-election may

be better understood as an (intermediate) objective to realize other goals,

like monetary income” (2005, 347). Carey (2007) theorizes that rank-

and-f‌ile members face pressures from “competing principals,” including

employers, to deviate from party-line orthodoxy on votes. Indeed, many

scholars f‌ind empirical evidence that lawmakers pursue private gains

while holding public off‌ice (Beniers and Dur 2007; Couch, Atkinson,

and Shughart 1992; Fedele and Naticchioni 2013; Gagliarducci,

Nannicini, and Naticchioni 2010; Geys and Mause 2013; Parker 1992;

Szakonyi 2016).

Some researchers estimate the f‌inancial benef‌its of holding off‌ice

with regression discontinuity designs that compare candidates who

barely win off‌ice to those who barely lose. They f‌ind substantial asset

growth of Indian parliamentarians (Fisman, Schulz, and Vig 2014),

estate wealth of British parliamentarians in the 1950s and 1960s (Eggers

and Hainmueller 2009), wealth of US Members of Congress during the

Civil War (Querubin and Snyder 2013), and post-off‌ice corporate board

seats (Palmer and Schneer 2015). This work, while f‌inding that public

off‌ice is more lucrative than remaining in the private sector, does little to

39The Perks of Being a Lawmaker