The Monkey Cage: Conservative Members of Parliament (MPs) almost doubled their wealth as a result of being elected to office but office had no discernable financial benefits for Labour MPs. That is the conclusion of a study by Andrew Eggers and Jens Hainmueller published as the lead article in the most recent American Political Science Review. Conservative MPs acquired their wealth largely through lucrative outside employment they acquired after their retirement, much like U.S. Congressmen tend to become well-paid lobbyists after their congressional careers come to an end. In the UK, gaining a seat in parliament more than tripled the probability that a Tory politician would later serve as a director of a publicly traded company. The authors speculate that Labour MPs were less successful in selling their services due to the control exercised by trade unions.
Methodologically, the article applies a regression discontinuity design to effectively deal with the obvious selection problem: people may select well-qualified MPs that are better rewarded than their counterparts because of their abilities rather than the political office that they held. The analysis essentially compares MPs who were elected by a narrow margin to politicians who were just defeated in their quest for office. There are a couple of other working papers out there that apply a similar methodology to this question in other settings, including Antonio Merlo’s work on Italian politicians (you guess what the outcome is there) and James Snyder’s work on Congress in the 19th century (I can’t find an electronic version of that paper). Very interesting stuff.