Money in Politics: How Does It Affect Election Outcomes?

Money in Politics: How Does It Affect Election Outcomes?

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We study how campaign funding influences winning chances of candidates using the US House of Representatives elections in all 50 states and Washington D.C.from 2000 to 2018.We find a positive and statistically significant relationship between read more campaign expenditure, campaign contributions and winning probability.However, incumbent spending is less effective than contender spending due to diminishing returns for the former.

We also scrutinize the gap between campaign expenditure and contributions made by special interest groups.The winning probability of incumbent candidates does not necessarily decrease even if they spend less than the funds received for the election campaigns.Obtained results are robust to alternative econometric specifications, estimation methods, the correction of possible endogeneity of campaign funding and sample sizes.Our results, therefore, show the variation in the valhalla axys effectiveness of campaign spending contingent on incumbency status and imply the social welfare diminishing effects of spare funds received by incumbents from special interest groups.JEL Classification : D72, P16.