There is a long-standing scholarly literature on the electoral effects of campaign spending. Nevertheless, the academic research offers only limited guidance for policy makers interested in campaign finance reform. In part, this is because existing studies have focused narrowly on some vexing statistical issues. But it is also because political scientists have not devoted enough effort to conducting evaluation studies of how regulatory policies impact the intermediate goal of competition, let alone the ultimate policy goals of reduced corruption, increased citizen participation, and improved public policy. Consequently, there is a great need for updated and improved analyses of the treatment effect of campaign spending on political competition in a variety of electoral contexts, but an even greater need for the application of modern evaluation methods to the more basic question of whether campaign finance reforms “work” as advertised.
About the author
Jeff Milyo is a Professor of Economics at the University of Missouri and a Senior Fellow at the Cato Institute. His recent research examines the causes and consequences of political corruption and the efficacy of state regulations on campaign financing, grass roots issue advocacy, and voter identification.
An earlier version of this draft was presented to the CFI-BPC Money in Politics Research Advisory Group meeting in Washington, DC (February 22, 2013) with financial support from the Omidyar Network. I also gratefully acknowledge helpful comments from all of the working group participants and, in particular, Don Green and Michael Malbin.
E.g., for evaluations of the effects of state campaign finance reforms on corruption, perceptions of corruption and trust in government, see: Primo and Milyo (2006), Milyo (2012) and Cordis and Milyo (2013). For evalutions of the effects of state reforms on electoral competitiveness, see: Primo, Milyo and Groseclose (2006), Stratmann (2010) and Stratmann and Aparicio-Castillo (2006).
Data on spending and vote margins are from the Campaign Finance Institute: http://www.cfinst.org/Press/PReleases/12-11-09/Early_Post-Election_Look_at_Money_in_the_House_and_Senate_Elections_ of_2012.aspx
For ease of exposition, I have compressed the representation of equations (2) and (3) using the general functional notation.
An extreme example is Erickson and Palfrey (1998); the authors identification strategy explicitly assumes that there are no unobserved underlying determinants of spending and vote shares.
Data from financial disclosure reports are readily available from the Center for Responsive Politics at their “Open Secrets” website: http://www.opensecrets.org/. For a reduced-form analysis of the electoral effects of candidate wealth, see: Milyo and Groseclose (1999).
For example, Bonneau (2007) investigates campaign spending in judicial elections using lagged spending as an instrument; however, lagged spending is expected to be with unobserved district and/or candidate attributes.
For a recent discussion, see Patty (2002); for an application to the effectiveness of campaign spending, see Gerber (2004).
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