Trading stocks while in office may be beneficial to Congress’ pocketbooks, but it severely erodes the trust of the American people, regardless of political affiliation, said a study published Tuesday by UC San Diego researchers.
The study, published in Tuesday’s Proceedings of the National Academy of Sciences journal, was conducted by researchers at UCSD’s Rady School of Management. It used an online sample of more than 1,000 people to come to its conclusions.
In the study, participants were shown a nonpartisan report with real-world data from watchdog organization Unusual Whales, detailing how certain members of Congress consistently outperformed the stock market.
Compared to a control group that did not see the report, those who saw it were “significantly more likely to view Congress as corrupt, self- serving, and less legitimate — and were less willing to follow laws passed by Congress as a result,” a statement from the university said.
“We found that simply learning about this kind of trading was enough to erode trust,” said first author Raihan Alam, a doctoral student in management at the Rady School.
In a follow-up study, researchers found that whether members of Congress won or lost money on the stock market, the fact that they may have insider information and are using it to their advantage caused trust to plummet.
“This told us something important,” said coauthor Tage Rai, an assistant professor of management at the Rady School of Management. “It’s not just the money. It’s the perception that lawmakers are using their power for personal gain. Even if they fail at it — just the attempt is enough to undermine legitimacy.”
According to a Gallup poll in 2024, trust in Congress had dropped to 22%, with the researchers believing it is even lower now. High profile cases of members of Congress trading stocks to their benefit didn’t help perceptions.
While President Donald Trump put in place and removed tariffs on many countries around the world, some elected leaders played the market.
Georgia Republican Marjorie Taylor Greene purchased up to $300,000 in stocks 90 minutes before Trump announced he was pausing tariffs on most of the U.S.’s trading partners, after which the stock markets soared.
Actions such as these could have a devastating blow on the trust Americans place in their institutions, the authors say.
“For years, political scientists have asked why some countries function well and others don’t,” Rai said. “One key difference is public trust in institutions. America used to be the poster child for that — people believed if they played by the rules, the system would work.”
Interestingly, both the majority of the American public and elected officials appear to agree on the issue.
“More than 86% of Democrats and Republicans alike support banning stock trading in Congress,” Alam said. “This is a rare issue where both the public and bipartisan lawmakers are aligned.”
The TRUST in Congress Act, a proposed bill introduced into the House of Representatives in January, received wide bipartisan support.
It would require “a member of Congress, as well as any spouse or dependent child of a member, to place specified investments into a qualified blind trust (i.e., an arrangement in which certain financial holdings are placed in someone else’s control to avoid a possible conflict of interest) until 180 days after the end of their tenure as a member of Congress,” according to the bill summary.
The UCSD researchers said reforms such as the TRUST Act could serve as powerful “credibility-enhancing displays,” signals that lawmakers are committed to acting in the public interest.
The paper ends with a warning: People less likely to trust lawmakers could become people less likely to follow the law.
“When people no longer believe their leaders are acting fairly, it becomes harder for them to justify following the rules,” said Rai. “That’s not just a political problem. It’s a democratic crisis.”
