School of Economics

2017 Discussion papers

School of Economics Discussion Paper 17/11

Cash for Votes: Evidence from India

Anirban Mitra, University of Kent
Shabana Mitra and Arnab Mukherji, Indian Institute of Management Bangalore.

June 2017


This paper investigates the prevalence of vote-buying in democratic elections where stringent restrictions on corporate donations to political parties exist. We combine data from state assembly elections in India with household-level consumer expenditure surveys (conducted by NSSO) over the period 2004-11. Exploiting a difference-in-differences methodology, we estimate the effects elections have on the consumption of various household items: food, clothes, education-related, etc. Moreover, there is heterogeneity in such consumption adjustments across households. Our estimates suggest that legal sources of funds are not sufficient for generating such “spikes” in consumption and indicate the role of the hidden economy in politics.

JEL Classification: D12; D72; H40

Keywords: Political economy; election finance; black economy

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Last Updated: 04/07/2017