Leaders in Congress outperform rank-and-file lawmakers on stock trades by up to 47% a year, researchers say

Stocks held by members of Congress have been beating the S&P 500 lately, but there’s a subset of lawmakers who crush their peers: leadership.

According to a recent working paper for the National Bureau of Economic Research, congressional leaders outperform back benchers by up to 47% a year.

Shang-Jin Wei from Columbia University and Columbia Business School along with Yifan Zhou from Xi’an Jiaotong-Liverpool University looked at lawmakers who ascended to leadership posts, such as Speaker of the House as well as House and Senate floor leaders, whips, and conference/caucus chairs.

Between 1995 and 2021, there were 20 such leaders who made stock trades before and after rising to their posts. Wei and Zhou observed that lawmakers underperformed benchmarks before becoming leaders, then everything suddenly changed.

“Importantly, whilst we observe a huge improvement in leaders’ trading performance as they ascend to leadership roles, the matched ‘regular’ members’ stock trading performance does not improve much,” they wrote.

Leadership’s stock market edge stems in part from their abil...