Congressional Stock Trading Severely Undermines Public Trust and Compliance with the Law
When the voting public is exposed to reports of lawmakers' stock trades, it erodes the perceived legitimacy of Congress across party lines
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A new study from the Rady School of Management reveals that public exposure to reports of Congressional stock trading significantly reduces Americans’ trust in Congress and their willingness to comply with the law — regardless of political affiliation.
The research, published in the Proceedings of the National Academy of Sciences, which was conducted in January 2025, used an online sample of more than 1,000 U.S. citizens.
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 received neutral information on the colleges that congress members attended, those exposed to the report 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.
“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 of Management.
What was even more striking was that the effect wasn’t about profit.
In a follow-up study, the team showed different participants fictional scenarios involving a “Congressman Brown,” who engaged in questionable stock trades. In one version, he made a million dollars. In another, he lost that same amount. Regardless of the outcome, trust plummeted.
“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.”
Cracks in American Exceptionalism
Gallup reported in 2024 that trust in Congress had dipped to just 22% and the authors of the paper believe it may be falling even further — especially after recent revelations of trading that occurred on April 9, which raised questions about insider access. For example, Rep. Marjorie Taylor Greene made a $300,000 stock trade a mere 90 minutes before Trump announced he was pausing tariffs on most of the U.S.’ trading partners, after which the stock markets soared.
“For years, political scientists have asked why some countries function well and others don’t,” said Rai. “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.”
A Bipartisan Problem with a Bipartisan Solution
The researchers emphasize that the findings have important policy implications.
“More than 86% of Democrats and Republicans alike support banning stock trading in Congress,” said Alam. “This is a rare issue where both the public and bipartisan lawmakers are aligned.”
Current proposals, such as the Trust in Congress Act, include mandating assets to be placed in blind trusts. The bill earned support from current and former representatives, Katie Porter (D-CA) Matt Gaetz (R-FL), Brian Fitzpatrick (R-PA) and Ro Khanna (D-CA).
The researchers suggest such reforms could serve as powerful “credibility-enhancing displays” — costly signals that lawmakers are committed to acting in the public interest.
Implications for Democracy
The broader message of the research is a warning: declining trust in Congress could translate into declining compliance with the law — a foundational element of democratic governance.
“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.”
Read the full study, “Knowledge of Politician Stock Trading Reduces Congressional Legitimacy and Compliance with the Law.”
For years, political scientists have asked why some countries function well and others don’t. 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.
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