This article discusses the value of campaign spending and extends our recent class discussion on the subject. The author claims that the value of campaign spending is often largely overstated, and he gives data from the 2012 elections to back up his claims. He shows that the relationship between an incumbent’s margin of victory and the amount by which he outspent his opponent is statistically insignificant. The relationship between the incumbent vote share and the amount of money spent by the challenger, however, is negative and highly statistically significant. This relationship shows as a logarithmic curve, where returns to challenger campaign spending are initially very high but decrease after $200,000 has been raised. This data seems to further back up the s-curve relationship between campaign spending and votes documented by Mueller: Challengers begin at the bottom portion of the s-curve, where they initially experience increasing returns to their campaign expenditures. These increasing returns are experienced up until the $200,000 mark is reached, at which point diminishing returns begin to set in Incumbents, however, begin at or above the inflection point in the curve and therefore receive diminishing returns or no returns at all to their additional dollars spent.
As noted by the author of the article, an important extension of the fact that campaign spending matters more for challengers than incumbents is that U.S. campaign contribution limits serve to protect incumbents. The fact that individuals may not contribute more than $2,600 to any given campaign means that it is very difficult for challengers to raise enough money to threaten the incumbent’s position. Challengers are often less well-connected than incumbents and furthermore start at a point further down on the s-curve. While this means that each additional dollar they raise has a higher impact, it also means they must raise more money than the incumbent in order to be able to effectively compete - something that is not easily done without connections.
1 comment:
Great post Chaney! I agree that the value of campaign spending is greatly exaggerated and have found a few wrinkles in Mueller’s theory that support this hypothesis. Mueller assumes there is an s-curve relationship between campaign spending and votes received, which creates an incentive for the candidate to “spend all of the money contributed to his campaign.” However, this system is wasteful if candidates reach a point of 0 marginal return to further spending before they have expired all their accumulated contributions, as candidates are prone to spending on the campaign even when the marginal increase in vote share is 0. This potential for wasteful spending is exacerbated by imperfect market signals, which may not be able to communicate that a candidate has already reached an optimal expenditure level.
Furthermore, if we relax Mueller’s assumption and introduce the possibility of negative diminishing marginal utility for campaign advertising expenditure, candidates may actually suffer from an overexposure effect, where additional campaign spending may actually lead to a decreased amount of votes. This possibility would be especially true if both candidates run too many negative, “attack” ads on their opponents, which serve as a form of persuasive advertising.
The United States might benefit from stricter policies towards campaign financing, as in the UK, where there is a cap on campaign advertising expenditure, and political parties pay the cost of campaign expenditures for the candidates, as opposed to the individual candidates themselves. If the campaign finance regulatory body was able to determine the optimal (maximum) level of campaign spending towards advertising, then they could set the level as the expenditure cap and reduce wasteful spending.
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