Funding the Growth Machine: The Effects of Municipal Campaign Contributions on Housing Policy Outcomes

Money in politics is the subject of great debate at every level of government, yet it has principally been studied at the federal level in the U.S. Where scholars have analyzed local campaign donations, their work has largely focused on understanding who donates and to what kind of candidates. The actual effects of political donations on local policy outcomes remain essentially unstudied. In this paper, we describe and leverage a novel data set of over 3 million municipal election campaign contributions covering thousands of U.S. cities. We focus on real estate industry contributions; using generalized difference-in-differences panel research designs, we examine the causal impact of real estate industry contributions to local political candidates on the permitting of new housing. Our results show that campaign contributions from organized interests influence housing policy outcomes at the local level. Specifically, more contributions from real estate development groups lead to increases in permitting of multi-family housing. Descriptive patterns in these data help explain these results. Real estate industry contributions largely are directed to non-incumbent candidates, and their effects are largest in open seat races, suggesting that this influence is via supporting new candidates who support more housing in their communities rather than via influence on incumbents. Our findings contribute to a broader understanding of the financial influence of interest groups in municipal policy as well as local politics more broadly.