The Wealth Elasticity of Political Contributions by the Forbes 400 Adam Bonica * Howard Rosenthal** Stanford University New York University Abstract: Inequality in campaign contributions in the American plutocracy has grown hand in hand with the growth in economic inequality. We report on the campaign contributions of the Forbes 400 wealthiest individuals from 1983 to 2012. We find that the wealth elasticity of individual contributions is around 1.0 without statistical controls but remains around 0.6 even with fixed effects for individuals and election cycles. The results suggest that the inequality in campaign contributions is largely driven by the increase in economic inequality. The sensitivity of contributions to individual wealth mainly benefits Republicans. In contrast, turnover in membership in the 400 has favored the Democrats. * Department of Political Science, Stanford University, 307 Encina Hall West, Stanford, CA 94305,
[email protected]. ** Wilf Family Department of Politics, New York University, 2nd Floor, 19 W. 4th Street, New York, NY 10012,
[email protected] 0 The Forbes 400 series of the wealth of the 400 wealthiest Americans, published annually since 1982, allows us to match wealth with individual campaign contributions in federal elections. The direct empirical motivation of the paper is to examine whether the contributions of the super wealthy correlate with variations in their individual wealth. We have constructed a (unbalanced) panel of wealth and contributions data for 1982- 2012. In a larger context, however, it is important to ask how political inequality, as measured by inequality in campaign contributions, relates to inequality in wealth. Individual contributions are important and have been larger, when aggregated, then contributions by PACs (political action committees) and other organizations (Bonica et al., 2013).