In the Shadows of Sunlight: The Effects of Transparency on State Political Campaigns

Abstract:     
In this paper we investigate whether strict transparency laws influence the behavior of political donors at the state level. We ask: to what degree does sunlight "disinfect" the political process? and to what degree does disclosure "chill" political speech? We utilize data sources on state campaign finance to measure the effect of campaign finance disclosure laws. Specifically, we measure the effect of strict disclosure on the behavior of donors. We find evidence that strengthening disclosure laws may mitigate the effects of other laws that make it easier to spend in elections. We further observe a decrease in the amount of per-capita contributions after states strengthen their disclosure laws. Finally, we observe that the effects of disclosure laws are not felt evenly among all types of contributors. Contributions by those who spend relatively large amounts are inelastic to increased costs in the form of exposure brought by disclosure requirements; those in the middle of the distribution spend less after disclosure laws are passed; and those who spend relatively small amounts actually increase their spending in response to stricter disclosure laws and practices. These findings have important implications for future jurisprudence about the chilling effects of transparency laws and the evolving regulation of campaign finance.

Number of Pages in PDF File: 38

Keywords: Campaign finance, disclosure, transparency, state politics

working papers series