Political consequences of financial market expansion: Does buying a mutual fund turn you Republican?

This paper investigates the political consequences of the broad spread of stock ownership among US households over the past 25 years. Using four cross-sections of the American National Election Study from 1998 to 2004, and a three-wave panel from 2000-2004, we find a consistent positive relationship between stockownership and identifying as a Republican after controlling for obvious confounds. The size of the estimated cross-sectional relationship increased in the wake of Republican tax cuts favoring shareholders in 2003 and the proposal to partially privatize Social Security in 2004. These effects, however, appear to be based on relatively narrow economic interests, as shareholders were not particularly prone to favoring generic free market policies than were non-shareholders. They were, in short, primarily pocketbook voters, not ideological voters.