Good Money and Bad Money: Do Funding Sources Affect Electoral Outcomes?

By Alexander, Brad | Political Research Quarterly, June 2005 | Go to article overview

Good Money and Bad Money: Do Funding Sources Affect Electoral Outcomes?


Alexander, Brad, Political Research Quarterly


There is lively public debate about the normative impact of different kinds of money in elections. However, there is surprisingly little examination of the practical impact that funding sources have on election outcomes. Even if we assume that voters do not care directly about campaign finance, there may still be incentives built into the system to discourage fundraising from some sources and encourage it from others. Therefore, I examine the actual impact of out-of-state donations, PAC donations, and self-financing on election outcomes in open seat House elections in the 1996, 1998, 2000 and 2002 cycles. I find that some kinds of fundraising are correlated with success, while others are correlated with failure, although at a lesser level than district partisanship or total campaign spending. These results offer promise for addressing some measurement issues in the congressional election field, as well as possible directions for future research.

At least among political elites-primarily interest groups, elected officials, and media outlets-there is a widespread sense politics is full of "dirty money" that causes politicians to regularly neglect the public interest and focus instead on the interests of major donors.1 Whether through accounts of widespread PAC donations or stories about candidates who spend tens of millions in personal funds trying to win elections, there is lively public debate about the normative impact of different kinds of money in elections. However, there is surprisingly little examination of the practical impact that funding sources have on election outcomes.

If voters are truly outraged by particular kinds of donations to congressional candidates, one would expect to see their disappointment reflected in election outcomes. If "bad money" corrodes electoral linkages, we should expect candidates who raise "good money" to benefit electorally from doing so. Even if we assume that voters do not care directly about campaign finance, there may still be incentives built into the system to discourage fundraising from some sources and encourage it from others. Therefore, I examine the actual impact of funds from three suspect sources on election outcomes in open seat House elections in the 1996, 1998, 2000 and 2002 cycles. Specifically, I focus on out-ofstate donations, PAC donations, and self-financing. I find that some kinds of fundraising are correlated with success, while others are correlated with failure, although at a lesser level than district partisanship or total campaign spending.

THEORY AND BACKGROUND

The most theoretically pleasing model candidate for those who worry about the impact of money on Congress is relatively simple to describe. This candidate would raise the vast majority of funding from numerous individuals living within the state where they are running. PAC donations would be almost absent from the mix, and self-financing would be limited to a relatively small share of total spending. The House would-in this campaign finance Utopiabe populated not by a large number of millionaires acting primarily on behalf of interest groups, corporations, and wealthy pals, but by a more representative sample of the American public with financial support flowing primarily from the citizens they represent.

Although public concern over campaign finance is not particularly high, there may be ways in which the presence or absence of funding from sources mentioned above alters electoral outcomes beyond direct influence on public opinion. If candidates who raise money in particular ways are more or less likely to win, it may be because particular types of fundraising are proxies for other factors (e.g., candidate quality) or because fundraising has direct political impacts (e.g., grassroots organizational benefits). Candidates who raise money within their home state may enlist supporters who can actually vote for them in the process. Self-financing candidates are not forced to fundraise, and may decide not to do so, foregoing the electoral benefits fundraising might bring. …

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Good Money and Bad Money: Do Funding Sources Affect Electoral Outcomes?
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