Garett Jones  

Money Has Little Influence on U.S. Politics

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Yesterday I tweeted:

Will the reality-based community vocally embrace the repeated finding that money has little influence in U.S. politics? 

The link is to Tyler's discussion of a great lit review on money in politics.  Levitt has another good lit review with more focus on money in elections per se. 

Here's my idiosyncratic lit review: In recent studies using a variety of methodologies, it's rare to find evidence that money buys elections (my GMU colleague Thomas Stratmann finds an interesting exception here; the paper won the Duncan Black prize at Public Choice).  

In the olden days, scientists knew that money didn't noticeably matter for incumbents: If incumbents won or lost it wasn't because of differences in campaign spending.  But in crude regressions, it looked like money mattered for challengers. Now, with fancier regressions, it appears money matters little for challengers as well, especially in well-studied, data-heavy House elections. 

The old results were driven by omitted variables: Weak incumbents drew in stronger challengers, and hence more challenger cash.  The challenger cash was a sign of the challenger's relative strength, not much of a cause of her relative strength.  

Yale's Alan Gerber reports some field experiments on campaign finance here; he finds evidence that extra money mattered for challengers but not for incumbents.  However, one might want to read the results cautiously: after all, the campaigns involved in the field experiments apparently had a Yale political science professor as an unpaid consultant.  I suspect that's worth quite a bit.  

Short version: Too many multi-millionaires lose. 

But conventional wisdom, especially among progressives, is that money can buy elections. The Citizens United case was supposed to be the end of democracy since it meant unlimited corporate spending on elections.  If money really did buy office, 2012 should have been great evidence for the hypothesis.  

Instead 2012 looks like a case study in the powerlessness of money, in the triumph of the autonomous voter.  For instance, the Sunlight Foundation reports that 2/3 of outside cash was spent on losers.  Seems to fit the conclusion of Levitt's 1995 lit review: 

It seems unlikely that campaign finance reform, at least in its current guise, will have much impact on the functioning of the American political system...In the light of that conclusion, the substantial amount of energy devoted to the topic by the public, the media, and politicians might be more productively channeled towards other issues.

In a better world, we'd have spent the last week celebrating the newfound evidence that money does little to buy elections. 

Coda: Levitt's review is a good, low-tech read. You really just want to read pages 188-192 of this PDF; and here's Freaknomics coverage of campaign finance from earlier this year.

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CATEGORIES: Public Choice Theory

COMMENTS (23 to date)
david writes:

But does a belief that money buys elections, win elections?

Brent writes:

Here's my question, though: What if both parties are getting money from largely the same interest groups? This would be at least in part due to hedging their bets on the winner, which would probably explain why challengers who are seen as 'strong' attract more money.

Greg G writes:

Of course there is still the problem that, even if money doesn't buy election, it might buy the votes of candidates that happen to be elected.

On the other hand, unlimited political contributions may be our most effective form of income redistribution.

Jim Rose writes:

Your ideal election would have been the Tasmanian House of Assembly election in, as I recall, 1982

No party campaigns, no TV or newspaper ads, no how to vote cards. all candidates could only solicited votes for themselves, not for others in their party or anyone else.

a late legal opinion was any form of expenditure on co-ordinated campaigning and joint solicitation of votes would be added to each individual candidate limits of $1000.

With no party campaigns, no TV or newspaper ads, no how to vote cars and all candidates could only solicited votes for themselves, the date of the election slipped my mind. I forget to get a postal vote before going on holiday.

The liberal party won in a landslide.

The campaigning ban seemed to give an advantage to the party already leading because the other party could not dig itself out of a hole in the campaign by pointing out that they may be bad, but, on closer inspection, the other side is worse.

I do not know of any studies of this unusual election.

sourcreamus writes:

Why is this something to be celebrated? Since income is correlated with intelligence it would seem that giving money would be a way for intelligent people to have a disproportionate effect on elections.

Duncan Earley writes:

The money in US politics is not about winning or ad spend...

It's about signalling. It's about the revolving door.

If Goldman Sachs gives X dollars to a campaign it is a signal to campaign staffers (and lawyers and ex senators) that they may get a plum job once they are out of politics.

CC writes:

Duncan and david make good points. Contributors are contributing for *some* reason; it's unlikely that they're stupidly spending all this money on nothing. Since the money doesn't influence who wins, what does it influence?

(I think I'm more worried than back when I just assumed that the purpose of contributions was to influence the result of the election.)

Matt H writes:

[Comment removed for crude language. Please see your email. --Econlib Ed.]

egd writes:

I think the "reality-based community" will argue that the voters cast their ballots [i]in spite[/i] of the attempts by outside groups to influence the election.

Here in Ohio we heard a lot of early chatter about the Republican party trying to "disenfranchise voters" (Democrat voters) by limiting early voting. Yet the results showed that turnout was about as expected. Rather than accept that the Republican actions did not have the effect of disenfranchising, the local Democrats asserted that through their actions they were able to counter the Republican suppression.

The "reality-based community" is less reality-based than they assert.

David R. Henderson writes:

Excellent post, but I have the same question as "sourcreamus." Why should we celebrate?

Ryan V writes:

Maybe campaign donations don't have much impact on who wins the election. But what if it has an impact on the policies favoured by the politician, after winning the election?

Carl writes:

Okay, so rich people buying the votes of politicians is not a serious problem. What about politicians buying the votes of various groups (single women, minorities, elderly, etc.)? One look at our spending and vote totals disaggregated by interest group and it is clear that money has a tremendous influence on politics.

Effem writes:

The notion that extraordinarily shrewd organizations like Goldman Sachs enjoy throwing money down a black hole just doesn't sit well with me.

(Not That) Bill O'Reilly writes:

I concur with the concerns raised above, that so long as politicians believe the money matters, then they are likely to modify their policy decisions accordingly.

But I've always had an additional, related concern. If politicians operate under the presumption that they need the money (and you would be hard-pressed to convince me otherwise), the ample time they devote to raising it subtracts from the amount of time they can devote to actually doing their ostensible jobs, i.e. studying and judging policy.

Floccina writes:

If a candidate floods the airwaves with promises to do X when elected, you would expect him to get the votes of people who are for x BUT to loose the votes of people who are against x.

Floccina writes:

The Obama ads made me want to vote for Romney and the Romney ads made me want to vote Obama.

davevanv writes:

Why do these papers focus on vote share instead of win probability? It seems like there should be a model for voting behavior that would allow a calculation of win probability as a function of vote shares? The freakonomics link reported a one percent increase in vote share for a doubling in spending. Given the number of voters in an election I'd be surprised if that didn't result in an increase in win probability much greater than one percent.

gwern writes:

> In a better world, we'd have spent the last week celebrating the newfound evidence that money does little to buy elections.

I saw plenty of chortling about how Rove and the billionaires wasted all their money (a big article in the WashPo, eg.), and some did point out that this meant that Citizens United was not a dangerous watershed moment (so far).

Metatone writes:

Glad to see you're on top of this particular market failure...

Paul writes:

Will this continue to be true in the future? I've gotten the impression that Obama won in no small part because he spent his campaign's money on analytics and by putting boots on the ground where an effort to raise the base's turnout would matter. In the future, if both candidates have enough money to have very good data analysis and very good social scientists, why wouldn't more money equal more campaign employees doing things like going door to door, and that leading to a higher chance of winning?

MingoV writes:

The title of this post is incorrect. Money may not influence elections, but it surely influences politics. The thousands of D.C. lobbyists exist because federal politics is mostly about money or influence (that usually derives from money).

This is quite rich, considering who funds the Mercatus Center.

Since money has forced neoliberal economics on the rest us for around 30 years now, I find your assertion a bit at odds with 'reality'.

Timothy James writes:

"But conventional wisdom, especially among progressives, is that money can buy elections."

It's my impression that most (what I call true) progressives—those in the line of Debs and Zinn, like Chomsky, Kolko, Said, Hahnel, and other remnants of the if-they-only-understood-basic-principles-of-economics New Left—wouldn't deem the 2012 election result as evidence that money doesn't buy elections.

"It's rare to find evidence that money buys elections."

Has one of their preferred candidates ever won? Or any third party candidate for that matter? That would be there evidence (and probably many libertarians' too), I think. But then again, I referred to them as a remnant for a reason. Although they, like everyone else, claim to speak for "the people", I don't think the median voter position has shifted *that* much to the left.

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