Cash for Votes: Evidence from India
This paper investigates the prevalence of vote-buying in democratic elections where stringentrestrictions on corporate donations to political parties exist. We combine data from state as-sembly elections in India with household-level consumer expenditure surveys (conducted byNSSO) over the period 2004-11. Exploiting a difference-in-differences methodology, we esti-mate the effects elections have on the consumption of various household items: food, clothes,education-related, etc. Moreover, there is heterogeneity in such consumption adjustmentsacross households. Our estimates suggest that legal sources of funds are not sufficient forgenerating such “spikes” in consumption and indicate the role of the hidden economy inpolitics.