SAN DIEGO—Trading stocks while in office severely erodes the trust of the American people, regardless of political affiliation, a study published May 20 by University of California–San Diego (UCSD) researchers revealed.
The study, published in the Proceedings of the National Academy of Sciences journal, was conducted by researchers at UCSD’s Rady School of Management and used an online sample of more than 1,000 people.
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 idea 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 percent, with the researchers expecting it to fall even lower.
“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 agree on the issue.
“More than 86 percent 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.
