In my first published peer-reviewed article, Peter Navarro and I argued that both economic special interests and candidate ideology separately could explain Congressional voting farm subsidies (we also applied the framework to domestic content legislation for automobiles), following Kalt and Zupan (AER 1984).

Freepik

In the ongoing discussions of how many members of the Republican caucus would vote for the (yet to be released) debt ceiling bill, I wondered how one would test the separate effects.

In the 1984 paper, we built a logit index of votes on farm programs, and related them to the importance of ag production (as share of state personal income), food stamp reliance, PAC contributions, and an index of ideological orientation (the Americans for Democratic Action index).

One concern that one could have is that the ideology index is not orthogonal to economic interests (especially as this is constructed based on votes on many issues). So what ideological proxy would one use for the coming debt ceiling vote? Here’s my view: Bitcoin holdings

My (completely unscientific) guess is that bitcoins are held by people that have a view that the current financial system needs to be, or will be, overturned in some disruptive event, given the generally poor risk-return tradeoff associated with cryptocurrencies. In addition the recent demonstration that cryptocurrencies are not hedges against risk events shows that, for holders of bitcoin, it’s the triumph of ideology over rational interest (except for those that need crypto to evade capital controls and/or financial regulation). Furthermore, holders of bitcoin will tend to be anti-governmental or libertarian in their views (as suggested by surveys).

The standard econometrics retort is that holding bitcoin (or say gold) is not exogenous to perceived economic events.  That is, some people might expect a meltdown associated with a debt default, and so stock up on bitcoin. So what we would use, ideally, is bitcoin holdings say a year before the vote.

Don’t know if we can find out what individual representatives’ holdings of bitcoins as a share of total wealth are, but it’s an interesting research project.

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