Knowledge of Politician Stock Trading Reduces Congressional Legitimacy and Compliance with the Law

Institutional legitimacy is essential for democratic functioning, yet public trust and confidence in the United States Congress is at an all-time low. A significant predictor of attitudes toward Congress is perceptions of corruption, with greater perceptions of corruption in government linked to less trust. This study tests whether knowledge of Congressional stock trading affects trust, legitimacy, and compliance with Congressional authority. In a preregistered survey experiment with U.S. citizens (n = 506), participants who read a nonpartisan report detailing how Congress members made higher than expected profits from stock trading in 2024 reported decreased trust and increased perceptions of corruption in Congress. They also viewed laws passed by Congress as less fair and reported being less willing to comply with such laws. Mediation analyses revealed that reduced perceptions of Congressional legitimacy fully mediated the effect of stock trading knowledge on willingness to comply with congressional laws and perceptions of congressional laws being fair. A pre-registered follow-up experiment (n = 664) shows these effects are not driven by the amount that Congress members profit but by how profits negatively affect broader perceptions of legitimacy. These findings highlight the detrimental effects of Congressional stock trading on public perceptions of legitimacy and respect for the rule of law.