Do Social Values Trump Economics for Wealthy Voters: An Empirical Analysis of "Trading and Voting"

Yilmaz and Musto (2003) theorized that with access to equity markets and theoretical election-contingent securities, voters could financially hedge against the outcome of an election so that social values and ideology were the only factors determining their vote. Mattozzi (2008) found that creating a portfolio of such election-contingent securities was realistic. This paper examines if this may be happening in practice by creating an index of economic and social variables within congressional districts compared to the district’s vote for Trump in the election. Looking at wealthier districts where voters are more likely to have investments, I find that only variables relating to the social values of a district are significant relative to economic variables, in line with the theory. Poorer districts vote based upon both economic and social factors. The analysis yields a similar result with Mitt Romney as the nominee, showing that the effect is not limited to Trump.