Why is there so little money in politics?

With campaign season approaching, maybe it is time to reprise this public choice classic from Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. (pdf), here is the 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 [in] politics, but rather why organized interests give at all. We conclude by offering potential answers to this question.

For the pointer I thank Matt Mitchell.

Comments

As any good politico can tell you, there is a lot of ways to move money that will never see the FEC.

GIGO.

totally, this blurb of an "article" is a complete farce. money dominates US politics.

simple fact: 94% of the election winners are also the best funded.

That's like pointing out that 99% of the apples people eat have already been picked from the tree. Money goes to those likely to win, that's not the same as the money actually deciding elections.

I think I agree with you - the eminent authors don't seem to have a handle on quantitation of bribes.
Also, a lot of votes are hidden.
Take Dodd-Frank; on the surface, ti looks like a bill that regulates, controls and reduces profits in the financial sector.
But in reality, the complexity of hte legislation works to banks advantage, or at least as much to their advantage as they could have hoped for following the crash of 08

and here's a nice little link that says just how much money truly is in politics and elections....

http://www.huffingtonpost.com/ari-berman/super-pacs-2012_b_1281716.html?ref=fb&src=sp&comm_ref=false#sb=1550788,b=facebook

Note that this research was conducted prior to Citizens United. I hope they do a follow up study to see how much things have changed.

The null hypothesis would be "no change", as Citizens United overturned a law which had not been fully implemented, and restored the status quo ante where individuals combining into groups weren't arbitrarily excluded from the political process.

Individuals combining into groups to engage in free speech is evil and must be stopped.

This ruling strikes at our democracy itself. I can't think of anything more devastating to the public interest.

Your sarcasm belies your (likely willful) ignorance of what democracy means.

Hey, two of those three sentences were quotes from Obama.

Yeah, those aren't the statements that are ignorant.

The other one didn't mention democracy.

Or were you being sarcastic there?

Or maybe you think democracy means something other than people freely electing their leaders, or that democracies shouldn't have free speech, or that Citizen United cancelled the elections or something. It's pretty hard to tell.

"The other one didn’t mention democracy."

Sorry, I presumed your sentences made up a coherent thought. In the future I'll assume that each statement you make is entirely independent of what follows, and that you simply speak in a string of non-sequitors.

"Or maybe you think democracy means something other than people freely electing their leaders, or that democracies shouldn’t have free speech, or that Citizen United cancelled the elections or something. It’s pretty hard to tell."

No, I just think that since at least as early as Aristotle democracy has referred to a form of government explicitly opposed to any sort of political distinction emanating from proportionate differences in wealth. Any attempt to equate speech with money would be essentially oligarchic, on a classical account.

Hey, you were the one who said they were distinct, not me.

You and Aristotle will both be relieved to learn that under Citizens United, the wealthy still only get one vote each.

Any attempt to deny free speech on the basis it sometimes has something to do with money would be essentially tyrannical.

Also, it's worth noting that Socrates was put to death by the classicals for his speech. In modern times, we try to do a little better. Well, most of us, anyway.

"Hey, you were the one who said they were distinct, not me."

Um, no: "Hey, two of those three sentences were quotes from Obama." "The other one didn’t mention democracy."

As to your latest string of non-sequitors, the negation of 'tyrannical' is not democratic, and the equal right to vote is not a sufficient condition for democratic government. (It may not even be a necessary one).

I only said two were quotes, not that they were distinct from the other. You made the distinction with "Yeah, those aren’t the statements that are ignorant." And either way, the distinction was already made, so your confusion is incoherent regardless.

The negation of tyrannical is not democratic? This is your justification for trampling on people's rights? Pathetic.

In any case, you're clearly the one who is ignorant here. Democracy has never, ever meant that everyone gets exactly the same voice in gov't, regardless of their ability to influence the polity through speech.

I'm not confused at all. You don't seem to be doing so well though.

Your comment as a whole implied that the quoted statements somehow applied to the first statement - i.e. you implied that corporate campaign donations are essential to democracy.

Your ignorance (I suppose one should expect the ignorant to be incapable of identifying their own ignorance) lies in the belief that your opinion on campaign donations has anything essential to do with democracy.

As to my 'justification,' I wasn't 'justifying' anything. Whether or not something is 'tyrannical' tells us nothing about whether it is 'democratic.' Free use of money for politics may be essential to freedom, that doesn't mean it's essential to democracy.

Now on to your latest stupidity.

"Democracy has never, ever meant that everyone gets exactly the same voice in gov’t, regardless of their ability to influence the polity through speech."

This is just simply false. One of the central institutions of ancient democracy was isegoria - equal right to speak, not in general, but in the assembly specifically (goria, from gourein - to berate/to speak in the assembly, from agora - the assembly).

Isegoria was the equal right of all citizens to speak in the assembly. Having 'the same voice regardless of ability to influence' has nothing to do with it. Democratic speech relies upon some being more influential than others. But it relies upon them being influential because of their rhetoric and reason, not because of their access to the public sphere, which was... equal, ideally (iso-/ise-). But as a matter of practice, the poor were during some periods paid for their participation, while in other instances the rich were made to pay punitive taxes to discourage their attendance, precisely because of the rhetorical power cultivated by their wealth. And then, of course, there's the practice of ostracism, by which those most powerful, most capable of exerting influence and winning power in the assembly, were kicked out of the city and barred from participation - the exact opposite of your silly position, by which great rhetorical power, or financial power, is supposed to confer greater access and privilege in democratic life.

And even further, one of the principles of election to office in Athens was selection by lot, which, if we include your strawman rider about having 'the same' voice and influence, provides specifically for equal access to power and influence regardless of competence (other than the competences of a citizen).

So let's just go back to the beginning.

Your sarcasm belies your ignorance. So much for 'classical values.' What a joke.

it's not when individuals join together, it's when money joins together to form "free speech" where the problem is. Money is a lot of things, including power, influence and access. One thing money is not, and never has been, nor ever will be, is speech.

Of course money is speech, it's ludicrous to claim otherwise. It is virtually impossible to engage in speech without some sort of monetary transaction.

Yes, but rich people engaging in free speech is evil and must be stopped.

Which is a subset of "Rich people are evil."

Which they are.

Hater.

I thought Hate led to the Dark Side

it's when 2 people spend $100 million dollars to influence politics that it becomes evil. that is when it is bought out.

"Influencing politics" is free speech.

I recall a stat on this that always strikes me: Americans spend more on potato chips than on presidential elections.

Judging from the waistlines of most Americans, they care more about potato chips than they do politics.

I believe George Will uses a similar (and in my opinion, better) stat for this: Americans spend less on presidential elections than they do on Easter candy. Which I would assume to be less than what is spent annually on potato chips.

do you have a better source?

More Americans believe in absurd comparisons than believe in God. I find that shocking.

Gee, a 2002 study on the influence of campaign contributions since Citizens United.

How relevant.

totally, this blog post to complete bull. I could not disagree with this blurb of a contention any less. what a total farce. money dominates not only who gets on stage, but who finally gets elected.

simple fact: 94% of the election winners are also the best funded.

Don't share this news with Paul Krugman. That would deprive him of the opportunity for a lot of fine rants.

Let him go on. He's entertaining in an unhinged sort of way, and he keeps the progs cooing. BTW, I wanted to see who was right when Bill O'Reilly had his TV dustup with little Paul, so I took "The Great Unraveling" out of my local library. Bill told Paul that he had made certain statements about the Bush tax cuts in his book (The GU, which Bill had in his hand) that were lies and PK denied it. My overall impressions from reading some of his work is that it is difficult to pin him down and that his favorite debate technique is condescension.

Well you can't pin him down because he's almost always correct despite what his critics wish.

I also want to re-iterate that with this constant slamming of Paul Krugman here it is only fair he's given some guest-blogging time to defend himself.

Doesn't mean he's going to accept.

Yes, because Paul Krugman lacks an adequate outlet with which to express his opinion and defend himself against criticism. *blank stare*

Scott Sumner had an interesting post about this once...

If you can't pin someone down, you don't know if he's correct.

From what I recall, Bill O'Reilly claimed PK said in his book that the Bush tax cuts would lead to a recession. PK denied he ever said this and instead insisted what he had said was that the Bush tax cuts would not do anything for job growth. O'Reilly absurdly countered that this was "semantics."

Is my recollection wrong? If not, it seems to me you can simply look at what Krugman said about the Bush tax cuts and assess as an objective matter who had the facts straight. As it stands, I think PK had the better of the argument: the job growth that we saw between 2004 and 2007 we now know was due mostly to the housing bubble and wage gains and labor force participation were very unimpressive during the Bush years.

Here's one element of an answer--- legislative politicians compete with each other:

"Cheap Bribes and the Corruption Ban: A Coordination Game among Rational Legislators," Public Choice (1994) 78: 305-327 (with J. Mark Ramseyer ). Reprinted, The Economics of Corruption and Illegal Markets (Gianluca Fiorentini & Stefano Zamagni, eds.: Edward Elgar, 1999). Legislators in modern democracies (a) accept bribes that are small compared to value of the statutes they pass and (b) allow bans against bribery to be enforced. In our model of bribery, rational legislators accept bribes smaller not only than the benefit the briber receives but than the costs the legislators incur in accepting the bribes. Rather than risk this outcome, the legislators may be willing to suppress bribery altogether. The size of legislatures, the quality of voter information, the nature of party organization, and the structure of committees will all influence the frequency and size of bribes. In Ascii- Latex (73K) or pdf ( http://rasmusen.org/published/Rasmusen_94PUBCHO.bribes.pdf).

That contributions as a percentage of GDP have not risen proves ONLY what cheap whores the politicians are.

Or that bribes are so prohibitively expensive that no one bothers to buy them. This is probably the case on the issues that lots of people care about and around which our political discourse is structured. This is less true on small issues that special interests care intensely about but that affect the average person very little. The best ROI for campaign contributions is in the under-the-radar issues that affect a handful of people greatly.

Like subsidized funding for uncompetitive solar power schemes.

+1

More on the level of giving presents to a local city councilman to make sure that the lot you own gets zoned the way you want it to be. Nobody really cares about the individual case, but in the aggregate?

WRONG

The relevant measure is contributions per politician. Why do we care about GDP here?

The Abstract refers to contributions as a share of GDP. The reason they use that is because it allows the people who wrote the study to draw the conclusion that they want.

Looking at the current affair with SOPA/PIPA, people like Lamar Smith and Patrick Leahy seem to be bought and paid very solidly.

I'm nonplussed. What relevance or interest does contributions-over-GDP have? The effective money goes to buying the goodwill of Hill staff via lobbying firms. The next layer of effectiveness comes from helping a candidate organize her success, which involves active fundraising (more than actual giving) and lining up media and other positive visibility opportunities (which doesn't show up on the books).

More evidence for Bryan Caplan's rationally irrational voter.

Because there are:
1) No property rights in politics, so you can't be sure that your expense will be successful.
2) Everyone realizes its an all-pay auction and thus tries to limit the expense.

The media loves to make a big deal about donors because donors compete with the press for political influence. For example, the NYT splashed a big story on the Big Money behind Santorum last week: A rich guy who had donated in 2011 $331,000 and was hinting he'd since then given more than one MILLION dollars! (Cue Dr. Evil.)

http://isteve.blogspot.com/2012/02/big-money-behind-rick-santorum.html

Campaign expenditures in Mexico appear to be much higher as a percentage of GDP.

Sounds like a great model for the US.

There are multiple flaws with the assumptions in this study. It's slightly disingenuous, if not irresponsible, to claim individuals can be separated from special interests. If Jamie Diamond contributes many thousands to my campaign, it's more or less a vehicle of influence for the financial sector. Ditto for Sheldon Adelson and the Israel lobby. Furthermore, the promise of well-paid and lucrative jobs for congressman and their senior staffers is more than an adequate substitute for money as a method of political rent-seeking--something I doubt would be detected by these authors' methodology. Case in point: Every senator that has retired over the past decade.

I'll blink when people can point to some case of politicians acting in such a way that if it weren't for the money it is clear they would have voted the other way given an interest in getting re-elected. If you are in Iowa, you will get religion on corn, and corn dollars will flow your way as a result. You can't donate enough to an Iowa politician to make you love sugar (or market prices, ha!) more than corn subsidies and ethanol mandates. In Detroit, it's auto bailouts. Defense spending in VA. And so on. Mostly it's about doing stuff to "create jobs" back home, and that usually means supporting the job producers back home.

Yup, that's the interesting endogeneity problem. to what extent does money /cause/ politicians to change their votes or policy platforms and to what extent does it just reflect what district they're from? If contributions are consumption (which is what Ansolabehere, de Figuerido and Snyder propose in the end), is it a big deal? 30-some odd people account for some large majority of all superPAC donations. These people are already wealthy-- the millions they spend on politics is play money, "just for fun". The superPACs that receive it run surpluses, don't they. Sarah Palin's PAC spent tons of money on clothes and cosmetics, and she didn't even end up running for office. That's all consumption.

"to what extent does money /cause/ politicians to change their votes or policy platforms and to what extent does it just reflect what district they’re from? "

As I understand, this is the reason no one has been able to adequately tie campaign contributions to voting patterns. There's a serious chicken and the egg problem -- do pols change their votes to reflect what their donors want, or do donors give money to pols who are likely to vote their way

I wonder. What was Abscam about? They were bribing the politicians, but were they asking them to vote on specific legislation? What about BCCI?

It's the issues on the margins. Drug company contributions, for example. There are only a few districts and states with large PhRMA concentrations, but the industry's campaign contributions are pervasive. Those are the kind of votes that can be influenced by a non-local interest.

Do the elite have any less influence on politicians in systems with public campaign financing? Are business interests less powerful in France than in the US? If politicians are bought and sold, are there other ways to do it besides through campaign donations? And how much did Citizens United really change?

Most of the outrage over Citizens United is over what it represents, not what it does. Billionaires could always spend as much as they wanted on independent campaign expenditures. Citizens United only changed two things: first, unaffiliated groups can now use the term "vote against/for so-and-so." Given how effective The Swift Boat Veterans for Truth were without every saying the "vote" word, I'm not sure if that changes much. Second, corporations and unions (rather than just individuals) can now make unlimited independent expenditures. So far, not too many corporations have thrown their hat into the Super PAC ring. The big donors are individuals, who could have done this before anyway. Furthermore, it might even be the case that Citizens United helps the left since corporations have a profit incentive to avoid too many campaign donations (does Wal-Mart want to be tied with polarized campaign giving and negative campaign ads?); whereas unions don't have this same restraint.

Why would the left be up in arms about a decision that "overturned a century of law" if it was only symbolic?

The law declared unconstitutional (I forget if facially or as-applied) was passed in 2002. The oldest decision Wikipedia lists as being overturned is from 1990. So, not really a "century".

Because the left, like the right, likes wedge issues, even when they are only symbolic. Moreover, it didn't overturn "a century" of law... to the extent anything was overturned, it was Austin v. Michigan, a 1990 case.

As has been noted by others, CU has had very little impact on campaign finance this season (and is unlikely to have an effect in future seasons in federal elections, though its implication for state laws that ban corporate spending are somewhat more questionable). Nonetheless, the media almost universally gloms the rise of the Super PAC onto CU, even though one has nothing to do with the other.

The same reason the religious right gets upset when gays marry.

what bs. read up on the investment theory of politics.

I have an 1890s study on the effect of money on politics.

Just as good as a 2002 pre Citizens United study.

An 1890's study would be awesome if it existed and had good data. Were there any campaign finance laws back then?

And yes, I realize the study he's referencing doesn't exist, but it would be awesome if it did.

Dave, I think this is an interesting question--what happened in the 1890s.

Historians have a lot to offer.

It's just that we choose to ignore what preceded us and what led to anticorruption laws.

Hat Tip to Tamanny and Boss Tweed and What Was That Guy's Name from Ohio

Once again: Citizens United has had a negligible impact on independent expenditures in this election cycle. Super PAC spending has nothing to do with the law Citizens United overturned. Yes, there are contributions to Super PACs made by corporations, but they are minimal and the corporations that are donating are usually just vehicles for private individuals. See http://www.usatoday.com/news/politics/story/2012-02-01/super-pacs-individuals-corporations/52924336/1

Usually around the 17th time you explain something he'll get it. Keep at it!

I'd be interested in an explanation of your motivation for posting this: do you endorse the conclusions of the article? Do you believe that "organized interests" fail to profit-maximize when they provide campaign contributions? Do you think that legislators, contrary to the assumptions that your discipline was founded on, do not respond to incentives? All of this seems to run counter to your writings, so I'd like to know where you stand.

This reminds me of the foreign aid canard.

Every few years, some pundit makes the point about how ill-informed the American public is because they think "foreign aid" is a huge share of the budget, while you can just look up the line item for the appropriation for "foreign aid" in the State Department budget and its miniscule! But in fact transferring large amounts of money to elites in foreign countries is a huge part of maintaining American hegemony, and its conducted through lots of institutions, for example the various organizations that just got thrown out of Egypt. The American public is right about this.

Its sort of the same with money funneled to American politicians and their patronage network. Its not all in campaign contributions reported to the FEC.

Geez Tyler, why not put on the floppy shoes and grease paint. You really are becoming a clown show.

The article Tyler posted wasn't written by some nobodies. You can't do academic work on parties, elections, or Congress without citing something written by Ansolabehere and/or Snyder. Indeed, Snyder is a pioneer on economic models that examine how politicians' votes might be bought. Needless to say, they're top notch social scientists, and I think they wrote this piece to be provocative and start a more nuanced conversation since the perceived wisdom on this topic is rarely contested.

I'm sympathetic to the argument that money is funneled to candidates in different ways, but even if this is the case, why don't the wealthy max out at the legal limit? Are politicians' votes that cheap?

I can't help wondering how many of the commenters bothered to read the article. And if they did and and still feel this way, would they admit there are such things as empirical questions? It seems like a slam dunk case that contradicts many preferred opinions.

all I can do is pray that this is supposed to be ironic

The paper starts by representing the existing literature as dichotomous, with one extreme asserting large money effects and another minimal ones, and ends up wondering aloud if Interest Groups merely buy access to legislators without expecting to change votes through donations.

Well duh. Final floor votes are not for sale. Core ideological beliefs are not for sale. Votes that alienate a politician's core constituencies are not for sale.
But in the long run, do the interests who are not banked get crowded out of policymaking? Does the money buy access that leads to language changes during markup sessions that create subtle opportunities for rent-seeking down the road? Are some earmarks advanced instead of others? Which bills are prioritized for debate by the party leadership? Good luck building a mathematical model to show causation for those subtle but ultimately meaningful effects.

Establishing that there isn't much evidence for unspoken quid quo pro corruption bats down a big picture strawman but does not come close to proving that money has negligible effects on politics. I had to laugh at the finding cited in the paper to the effect that $100,000 of additional spending has ~ 1% change in election outcomes. Perhaps true. But in a 2 party system with single member districts and plurality elections, just a point or two can swing elections.

Also the study was before BCRA passed -- an era when the big donations went direct to the parties as soft money, and thus had difficult to measure 2nd and 3rd order effects; the perception by pols that they needed to be responsive to the general concerns of monied interests is rather more important than the question of whether donations taken in by candidates moved specific votes.

Deregulation and gradually perverting the tax code to the benefit of the rich were not one-off lobbying events, but the result of a long, consistent effort and a long, gradual shift in legislative priorities based not only on the influence of donors but on coalition politics and other factors. Long, gradual paradigm shifts in the political narrative are not well captured by economic analysis, sorry. Quantatative analysis is a tool that too often leads social scientists -- economists mostly -- to squint at the causation and miss the history.

You said what I meant by my whine of desperation.

Deregulation and gradually perverting the tax code to the benefit of the rich

The rich who pay 90% of income taxes? Really?

The proof of the corruption of the government is in their legislation. It's not only a matter of campaign contributions but also a matter members of Congress securing well paying jobs after their time as public servants. How is anyone supposed to compete with Goldman Sachs interests when they can offer cushy, extremely well paid jobs to MCs and their staff? It's a broken system any way you look at it, because of the extreme amounts of money involved.

The real winners are always the lobbyists, which is why so many ex-Congressmen become lobbyists.

Agreed, the solution is to prohibitively tax income derived from such rents, not to outlaw speech.

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