Are Campaign Contributions Investment in the Political Marketplace or Individual Consumption? Or 'Why is There so Little Money in Politics?'

59 Pages Posted: 16 Dec 2002

See all articles by Stephen Ansolabehere

Stephen Ansolabehere

Harvard University - Department of Government

John M. de Figueiredo

Duke University School of Law; Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

James M. Snyder

Massachusetts Institute of Technology (MIT) - Department of Political Science & Department of Economics

Date Written: October 2002

Abstract

In this paper, we argue that campaign contributions are not a form of policy-buying, but are rather a form of political participation and consumption. We summarize the data on campaign spending, and show through our descriptive statistics and our econometric analysis that individuals, not special interests, are the main source of campaign contributions. Moreover, we demonstrate that campaign giving is a normal good, dependent upon income, and campaign contributions as a percent of GDP have not risen appreciably in over 100 years - if anything, they have probably fallen. We then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators' votes. Finally, we illustrate that when one controls for unobserved constituent and legislator effects, there is little relationship between money and legislator votes. Thus, the question is not why there is so little money politics, but rather why organized interests give at all. We conclude by offering potential answers to this question.

Keywords: Campaign Finance, Campaign Contributions, Corporate Political Activity, Political Economy

JEL Classification: H4, K0, P1

Suggested Citation

Ansolabehere, Stephen and de Figueiredo, John M. and Snyder, James M., Are Campaign Contributions Investment in the Political Marketplace or Individual Consumption? Or 'Why is There so Little Money in Politics?' (October 2002). MIT Sloan Working Paper No. 4272-02. Available at SSRN: https://ssrn.com/abstract=362520 or http://dx.doi.org/10.2139/ssrn.362520

Stephen Ansolabehere

Harvard University - Department of Government ( email )

1737 Cambridge Street
Cambridge, MA 02138
United States

John M. De Figueiredo (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
United States

James M. Snyder

Massachusetts Institute of Technology (MIT) - Department of Political Science & Department of Economics ( email )

E53-457
Cambridge, MA 02139
United States
617-253-2669 (Phone)

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