Citizen Investors: The Democratization of the Stock Market and the Transformation of American Politics

The muted political response to rising inequality has remained an enormous puzzle for more than a quarter century. A number of theories have been set forth to explain why those in the lower tiers of the income distribution have not challenged this trend through increased political mobilization or overwhelming support for redistributive policies. With an award from the Foundation, political scientist Wendy Rahn will write a book on how broadened stock ownership may contribute to disparities in political participation and the polarization of America’s policy preferences.

Rahn’s book will explore how the rapid expansion of the “investor class” between 1989 and 2001 has affected American politics. She argues that increased stock market participation has unique and politically significant implications: even small stock holdings may have the potential to transform people’s beliefs about their fundamental political interests. She expects that politically significant differences will emerge when stock investors are compared to demographically similar non-investors. Controlling for education, income, and race, Rahn will test whether stock market participants have different political preferences and, in particular, whether stock ownership affects individuals’ preferences on issues of redistribution and public finance. Her analysis will draw primarily from the American National Election Studies (ANES), a source of data that will allow Rahn to link individual-level information on stock participation to political preferences and participation. The second half of the book will use newspaper content analysis and survey data to explore how broadened stock market participation has affected American popular culture, media, and attitudes about the economy.