American Economic Association
Why Is There so Little Money in U.S. Politics?
Author(s): Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr.
Source: The Journal of Economic Perspectives, Vol. 17, No. 1 (Winter, 2003), pp. 105-130
Published by: American Economic Association
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Journal of Economic Perspectives?Volume 17, Number 1?Winter 2003?Pages 105-130
Why is There so Little Money
in U.S. Politics?
Stephen Ansolabehere, John M. de Figueiredo
and James M. Snyder Jr.
Two extreme views bracket the range of thinking about the amount of
money in U.S. political campaigns. At one extreme is the theory that
contributors wield considerable influence over legislators. Even modest
contributions may be cause for concern and regulation, given the extremely large
costs and benefits that are levied and granted by government. An alternative view
holds that contributors gain relatively little political leverage from their donations,
since the links from an individual campaign contribution to the election prospects
of candidates and to the decisions of an individual legislators are not very firm.1
Although these theories have different implications, they share a common perspec?
tive that campaign contributions should be considered as investments in a political
marketplace, where a return on that investment is expected.
In this paper, we begin by offering an overview of the sources and amounts of
campaign contributions in the U.S. In the light of these facts, we explore the
assumption that the amount of money in U.S. campaigns mainly reflects political
investment. We then offer our perspective that campaign contributions should be
viewed primarily as a type of consumption good, rather than as a market for buying
political benefits. Although this perspective helps to explain the levels of campaign
contributions by individuals and organizations, it opens up new research questions
of its own.
1 Grossman and Helpman (2002) survey the variety of theoretical arguments along these lines.
? Stephen Ansolabehere is Professor of Political Science, John M. de Figueiredo is Assistant
Professor of Strategic Management at the Sloan School of Management, and James M. Snyder
Jr. is Arthur and Ruth Sloan Professor of Political Science and Professor of Economics, all at
the Massachusetts Institute of Technology, Cambridge, Massachusetts.
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106 Journal of Economic Perspectives
Sources and Sums of Campaign Contributions
For most of the last century, campaign contributions have been regulated in
the United States. In 1911, Congress banned corporate contributions to parties and
candidates and provided for disclosure of expenditures and contributions. Over the
subsequent 60 years, that ban was extended to other organizations, including
unions and trade associations. But these rules lacked enforcement and were far
from comprehensive. Individuals, for instance, could give unlimited amounts.
The Federal Election Campaign Act of 1974 (FECA) created a comprehensiv
system of disclosure and contribution limits. Under FECA, there are two main type
of campaign organizations: candidate campaign committees and party committ
FECA also specifies two sources of funds: individuals and interest groups, which
turn may include firms, unions, trade associations and other interest groups
(Parties and candidates may also give to each other, but such transfers account
a trivial percentage of total funds.) It is also permissible for individuals and gro
to raise their own money and to run their own advocacy or independent campa
on behalf of or against individual candidates, but in practice, such campa
expenditures pale in comparison with the activities of candidates and politica
parties. Candidates, party committees and any individuals and groups must rep
all contributions, receipts and expenditures to the Federal Elections Commiss
(FEC).
FECA constrains how money can be raised and how much can be given. Sor
(1988, 1992) provides an excellent overview of the FECA system and its rules
Briefly, the rules are as follows.
First, to ensure transparency in accounting, organizations wishing to contr
ute to federal candidates and parties must create "separate and segregated fund
commonly known as political action committees (PACs). Organizations may co
the start-up, administrative and fundraising expenses of their PACs, but they
not give money directly from the organization's treasury to the PAC for the purpo
of contributing to a federal campaign. Instead, PACs must raise voluntary donations
from individuals. Thus, corporate PAC contributions come almost entirely fro
corporation's managers, while union PAC contributions come almost entirely fr
their members, including dues. Corporations and unions may indirectly subsid
their PACs by paying for overhead. But individuals are the ultimate source of
PAC contributions.
Second, individuals, PACs and party committees can give only limited amount
directly to federal candidates and committees. PACs may give $10,000 in a two-ye
election cycle to a candidate ($5,000 each calendar year). Party committees may
give no more than $17,500 to a candidate in a two-year election cycle. Individual
may give no more than $2,000 to a candidate in an election cycle ($1,000 eac
calendar year), no more than $5,000 to a PAC in a calendar year and no more tha
$20,000 to a party committee in a calendar year. An individual may give no mor
than $25,000 total in a calendar year. The 2002 Bi-Partisan Campaign Reform Act
altered the limits and tied them to inflation, although at the time of this writing, th
BCRA is subject to numerous court challenges.
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyderjr. 107
Third, presidential candidates may receive public funds if they agree to abide
by spending limits. General election candidates may receive complete federal
funding; primary election candidates may receive public funds to match privately
raised contributions. The Federal Election Campaign Act of 1974 set the general
election spending limit at $20 million for the 1976 election, and this limit increases
with the Consumer Price Index.
A fourth set of constraints created by the Federal Election Campaign Act of
1974 limited candidate and group campaign expenditures. In 1976, the Supreme
Court struck down spending limits as a violation of free speech in Buckley v. Val
(424 US 1 [1976]). Presidential spending limits survived judicial scrutiny becaus
they are voluntary: any candidate who wishes to receive federal funding must abi
by the limits.
Two important loopholes in the constraints have received extensive criticism
The first loophole, created by court decisions, is referred to as "independen
expenditures." The Buckley decision of the U.S. Supreme Court allows individuals
groups and corporations to spend unlimited amounts on behalf of or against a
candidate, as long as such expenditures are not coordinated with candidate or par
campaigns.
The second loophole, created by a series of Federal Elections Commission
rulings in 1978 and 1979, created a distinction between "hard money" and "soft
money." "Hard money" contributions must abide by the spending limits. "Soft
money" is raised through national party organizations for nonfederal accounts and
is to be spent on nonfederal election activities, such as races for governor. Individ?
uals and groups may give unlimited amounts to nonfederal party funds for the
purpose of party building activities. Such funds, it was hoped, would strengthen
party organizations in the individual states. In fact, soft money has become an
accounting convention used by the national party organizations to raise money.
Although independent expenditures and soft party donations are unlimited in
amount, they must still be publicly disclosed. A further loophole allows legislators
to set up "leadership PACs," which allow donors to give up to $10,000 to a
candidate, but such funds cannot be used on that candidate's campaigns.
Congress re-established the Federal Elections Campaign Act in 1976 and
amended it again in 1979 and 2002. The 1979 amendments prohibited personal
use of campaign funds by candidates or their families. The 2002 amendments place
restrictions on soft money, but raise the limits on hard money party contributions.
Although the loopholes of "independent expenditures," "soft money" and
"leadership PACs" receive considerable attention, almost all campaign money
actually comes in the form of "hard" contributions that must abide by the spending
limits, and almost all of these funds come ultimately from individuals. The 2000
elections illustrate this pattern.
Candidate and party committees raised nearly $3 billion during the 1999-2000
election cycle. Congressional candidates raised and spent just over $1 billion in the
2000 election. Presidential candidates raised and spent just over $500 million. The
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108 Journal of Economic Perspectives
hard and soft money accounts of political parties totaled $1.2 billion.2 PACs raised
$600 million, approximately $320 million of which was for fundraising and other
expenses and $20 million of which was devoted to independent expenditures; the
remainder was contributed to congressional candidates.
The majority of this money came from individuals in small amounts. We
estimate that of the $3 billion, individuals contributed nearly $2.4 billion, the
public treasury paid $235 million in matching funds, and about $380 million came
directly from the treasuries of corporations, unions and other associations (in the
form of soft money or independent expenditures).3 Furthermore, campaign
money comes mainly in small amounts. According to survey research, in the 2000
election approximately 10 percent of the Americans over the age of 18?21 million
people?gave to political candidates, party committees or political organizations
(Burns et al., 2001). Thus, the average contribution from an individual to a
candidate, party committee or PAC is approximately $115 ($2.4 billion in individ?
ual contributions divided by 21 million people). Of the estimated $2.4 billion in
individuals' contributions, about $1.1 billion takes the form of direct contributions
to congressional and presidential candidates; $700 million goes to the parties; and
$600 million goes to PACs.
Much of the academic literature and public discussion focuses on interest
groups and their PACs, so they deserve a closer look. Approximately 4,500 PACs are
registered with the Federal Election Commission. In the 2000 election, 3,000 PACs
gave to federal candidates or parties or engaged in some form of independent
expenditure campaign; the remaining one-third were inactive. The number of
active PACs has declined by 12 percent since 1988. Among the active PACs, 1,400
are associated with corporations, 670 are tied to a membership or industry group
(such as the American Medical Association), and 240 are associated with labor
unions. Another 670 are ideological groups.
While this may seem like a large number of organizations, a large number of
firms and groups avoid campaign giving. Only 60 percent of the Fortune 500
companies even have PACs. To be ranked in the Fortune 500, a company must have
revenues in excess of $3 billion a year, and any company of this size is surely
affected by government policies. Roughly one-third of all industries, coded at the
three-digit-SIC level, have no firms with PACs (Grier, Munger and Roberts, 1994).
Perhaps the most surprising feature of the PAC world is the fact that the
constraints on contributions are not binding. Only 4 percent of all PAC contribu?
tions to House and Senate candidates are at or near the $10,000 limit. The average
2 Party accounts are difficult to analyze, because transfers between party accounts may result in some
money being double counted. Transfers between party accounts amount to approximately 10 percent of
all party money. Thus, the $1.2 billion that flowed through party accounts probably represented about
$1 billion in actual campaign expenditures.
3 The FEC does not provide a direct accounting of this figure, because only the total amount of
contributions under $200 must be reported, not the specific donations. We estimated the total amount
of soft money from firms and organizations (approximately $380 million) using the individual donor
files and on-line reports from the Federal Election Commission at (http://www.fec.gov).
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Why is There so Little Money in U.S. Politics? 109
PAC contribution is $1,700. Corporate PACs give an average contribution of
approximately $1,400 to legislators; trade associations and membership PACs give
average contributions of approximately $1,700; and labor union PACs give average
contributions of $2,200. If donors reached the maximum allowed amount, PACs
would have given six times as much as they did, or nearly $2 billion. This calculation
assumes that PACs give the maximum to candidates to whom they already give
money, but the modal contribution is, in fact, zero. If all 2,300 active corporate,
labor and trade PACs gave the maximum amount to all incumbents running for
re-election to the House or Senate (about 420 candidates), then total PAC contri?
butions would be roughly $10 billion?40 times more than what these PACs
actually gave in the 2000 election.
Further evidence of the slack in interest group donations to politics is seen
upon comparing PACs' contributions and their total disbursements. In 2000, PACs
spent $579.4 million on all operations. Of that, $280.8 million was contributed
directly or spent on behalf of candidates. The remaining $300 million went for
overhead, operations and other political activities (such as communications with
members), which could have been paid for from the organizations' treasuries
directly. Were they to cover the overhead of their PACs, corporations, trade
associations and unions could almost double the amount that they contribute to
political campaigns without raising an additional dollar from their managers or
members.
It is evident that individuals, rather than organizations, are by far the most
important source of campaign funds. In congressional elections, where PACs are
most active, candidates raised over three times more from individuals directly than
they did from PACs. PACs themselves receive their funds primarily from individuals.
Campaign Contributions as a Political Investment
Campaign fundraising is widely viewed as a market for public policy. Donations
come from firms, associations and individuals that seek private benefits in the form
of subsidies, favorable regulations and other policies set by the government. With
thousands of interests bidding for private benefits and thousands of candidates
vying for funds, something like a market for legislation emerges. As with any
competitive market, the rate of return on the investment in politics should resemble
that of other investments. Relatively recent research that posits that campaign
finance reflects a competitive market for private benefits from public laws or for
services and effort from politicians includes Denzau and Munger (1986), Baron
(1989), Snyder (1990), Baron and Mo (1991) and Grier and Munger (1991).
A related strain in the theoretical literature on campaign contributions posits
that a market failure in politics gives legislators more of the bargaining power.
Grossman and Helpman (1994) examine a range of cases, including this one. In
particular, legislators are often posited to hold key "gatekeeping" positions and can
threaten regulation or harassing oversight unless interest groups contribute. In
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110 Journal of Economic Perspectives
such a world, legislators can receive very large political donations without changing
public policy much.
There is ample research documenting behavior consistent with this view.
Legislators who are committee chairs or who serve on powerful committees raise
substantially more than other members, and legislators who are party leaders raise
significantly more than backbenchers (Grier and Munger, 1991; Romer and Snyder,
1994; Ansolabehere and Snyder, 1999). Also, economic PACs give donations in
ways that fit with a simple arbitrage pricing model: economic PAC contributions are
pegged to the odds that a politician will win a seat, while donations from individuals
and ideological PACs are not (Snyder, 1990).
However, a critical weakness with the view that campaign contributions are
investments appears once we look at the broad patterns of political giving and
government spending.
Tullock's Puzzle
Considering the value of public policies at stake and the reputed influe
campaign contributors in policymaking, Gordon Tullock (1972) asked, why
so little money in U.S. politics? In 1972, when Tullock raised this que
campaign spending was about $200 million. Assuming a reasonable rate of r
such an investment could have yielded at most $250-300 million over time,
dwarfed by the hundreds of billions of dollars worth of public expenditur
regulatory costs supposedly at stake.
Over the past three decades, Tullock's puzzle has not disappeared. Candi
parties and organizations raised and spent $3 billion in the 2000 national el
However, total federal government spending in 2000 equaled $2 trillion; co
tion and gross investment of the federal government was $590 billion; an
actual and potential costs of compliance with regulations were surely wort
dreds of billions of dollars, as well.
The puzzle comes into sharper focus still when we examine specific int
and policies.4 For example, all defense contracting firms and individuals as
with those firms gave approximately $10.6 million to candidates and parties
and $13.2 million in 2000. The U.S. government spent approximately $134
on defense procurement contracts in fiscal year 2000 (U.S. Census Bureau
Firms, individuals and industry associations of the oil and gas indust
$21.6 million to candidates and party organizations in 1998 and $33.6 mill
2000. The Energy Information Administration (1999) of the U.S. Departm
Energy values subsidies to the energy industry in 1999 at $1.7 billion. In agricul
crop producers and processors contributed $3.3 million to candidates and
4 Estimates of total industry contributions come from the website of the Center for Responsiv
at (http://www.opensecrets.org). They include donations from political action committees
individuals employed in an industry. They include hard money contributions and soft mone
butions (that is, contributions to parties rather than to candidates from corporate treasur
individuals). Because not all of this campaign-related giving can be viewed as a coordinated ef
united special interest, we view these numbers as overestimates.
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. 111
in 2000; U.S. commodity loans and price supports equaled $22.1 billion that
year (U.S. Department of Agriculture website). Dairy producers, who since 1996
have had to have subsidies renewed annually, gave $1.3 million in 2000 and
received price supports worth almost $1 billion in the Farm Security and Rural
Investment Act of 2002. In the case of sugar producers, Stratmann (1991,
p. 615) estimates that a "$3,000 sugar PAC contribution maps into a yes vote
with almost certainty." Without sugar industry contributions, he further esti?
mates, the final vote on the sugar amendment to the 1985 agriculture bill would
have been 203-210, effectively ending the sugar subsidy. With contributions, the
subsidy survived: the final vote was 267-146. A U.S. General Accounting Office
(1993) study values that the annual transfer from consumers to sugar producers
and processors at $1.1 billion a year from 1989 to 1991. In other words, $192,000
worth of contributions in 1985 bought more than $5 billion worth of value for
the sugar industry over a five-year period.
The discrepancy between the value of policy and the amounts contributed
strains basic economic intuitions. Given the value of policy at stake, firms and other
interest groups should give more. The figures above imply astronomically high
rates of return on investments. In a normal market, with such high rates of return,
existing donors should want to increase their contributions. There are, of course,
legal limits on what they can do. However, as noted earlier, the "hard money"
constraints are rarely binding, and even if they were, the loopholes for "indepen?
dent expenditures" and "soft money" are available. Even those firms, associations
and unions that do give could probably double their contributions by paying for
their PACs' operations. In addition, more firms and industries should enter the
political marketplace. If a relatively small investment of approximately $200,000
brings a return of $1 billion, as in the example of the sugar industry, or even
one-thousandth that amount, then investors should want to shift assets out of other
investments and enter the political market. However, recall that 40 percent of
Fortune 500 firms and one-third of industries don't even have a PAC.
Tullock's (1972) observation challenged the basic premise of both economic
analyses of campaign finance and public discourse about reform?that campaign
contributions should be viewed as an investment in political outcomes. Such
market might exist in certain policy niches, but the relatively small amounts give
imply that such a market is not determining the outcome of most public policy.
seems highly unlikely that the 21 million individual donors giving an average o
$115 apiece were calculating the return that they would personally receive on th
investment.
One strain of theorizing in the tradition of regarding campaign contributions
as a political investment does suggest that donors might receive especially high
returns on their investment. In these models, donors are monopoly providers of
campaign funds and legislators compete for contributions (Dal-Bo, 2001; Helpman
and Persson, 2001). Such models predict that the monopoly donors can get a lot for
a little. However, the assumed lack of entry makes these models seem rather
unrealistic. If extraordinary rates of return can be earned through political investThis
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112 Journal of Economic Perspectives
ments, then we would expect firms, individuals and associations to flock to cam?
paign finance. But most firms and people do not give.
The Lack of Connection from Campaign Contributions to Legislative Behavior
Tullock's (1972) puzzle can also be stood on its head. Since most firms and
people do not make political contributions, one can infer that they apparently see
little return to doing so. It is easy enough to see why they might hold this belief. Any
individual contribution will be only a tiny share of the overall contributions
collected by a national-level politician. The contribution may or may not influence
that politician. In turn, the politician, or group of politicians, who receives such
contributions may win or lose the political fight. In short, it is critical for the
argument that campaign finance reflects a market for policy to find evidence that
contributions have substantial effects on legislative decisions and policy outcomes.
Otherwise, if one views campaign contributions in the hope of a reasonable return
on investment, it may well make more sense to avoid putting money into political
contributions.
While the lack of entry raises doubts about the plausibility of such models,
investment theories of political contributions hinge ultimately on two facts that
one may examine empirically. First, what is the rate of return on contributions?
If there is a high rate of return on political investment, one might still be
inclined to favor the view that donors have more of the bargaining power in
their dealings with legislators. Second, who is the marginal contributor to
politics? All of these models assume that legislators are highly reliant on groups
for campaign funds.
An extensive literature exists that attempts to measure the political efficacy of
interest group donations. Almost all research on donors' influence in legislative
politics examines the effects of contributions on roll call votes east by members of
Congress. Dozens of studies have considered the effects of contributions on
legislative votes, across hundreds of pieces of legislation. We surveyed nearly 40
articles in economics and political science that examine the relationship between
PAC contributions and congressional voting behavior. Table 1 summarizes the key
findings reported in these papers and some details about the analyses. Typically,
these papers regress roll call votes?a single vote, a vote count or vote index?on
a number of independent variables, including the PAC contributions received by
the legislator. Some papers study broad issues and include broad measures such as
total corporate PAC contributions and/or total labor PAC contributions. Others
study narrower issues and include more narrowly defined contribution measures;
for example, regressing votes on dairy price supports on contributions from dairy
industry PACs. About one-third of studies use specifications with instrumental
variables.
5 Exceptions are Hall and Wayman (1990), who study effort on be half of groups, and Langbein (1986),
who studies minutes spent with lobbyists. Hansen and Park (1995) study antidumping and countervailing
duty decisions by the International Trade Administration and find that total PAC contributions by
an industry typically have no effect on the industry's chances of obtaining a favorable decision.
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Why is There so Little Money in U.S. Politics? 113
Table 1
Summary of Roll Call Voting Studies
n/r = not reported; n/i = not included.
# Sig PAC Coeffs column: The first number gives the number of coefficients on PAC contribution
variables that are statistically significant at the .05 level (two-tailed test) and have the predicted sign. The
second number gives the total number of PAC contribution variables in the analysis.
aReports that, "PAC contributions were usually among the less important influences on House members'
voting on the two bills" (p. 126).
bReports that, "In none of the five cases examined were campaign contributions an important enough force
to change the legislative outcomes from what they would have been without any contributions" (p. 411).
Setting aside questions for the moment about the right specification, what do
these studies suggest? In the column headed "Number of Significant PAC Coeffi?
cients," the first number gives the number of coefficients on PAC contributions that
are signed correctly and statistically significant at the 5 percent level (two-tailed),
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114 Journal of Economic Perspectives
while the second number gives the total number of PAC contribution variables in
the analysis.6 Overall, PAC contributions show relatively few effects on voting
behavior. In three out of four instances, campaign contributions had no statistically
significant effects on legislation or had the "wrong" sign?suggesting that more
contributions lead to less support. Interpreting this literature is difficult for several
reasons. We are interested in the magnitude of the effect, not just statistical
significance. Unfortunately, it is difficult to discern the relative magnitude and
meaning of the coefficients for most of the analyses in Table 1, because few of these
papers report enough information about the data, like means and standard devi?
ations of the underlying variables, to make such an assessment possible.
In addition, the question of how to estimate the effect of contributions on
votes while adjusting for other relevant factors is a difficult one, and two well-known
specification issues plague most of these studies. First, there is a likely simultaneity
between contributions and votes, which may bias estimates: that is, contributions
may influence votes, but votes may also influence contributions. Investor theories
assume that contributors are strategic. Many models predict that legislators who are
undecided on a specific bill will receive more donations. True simultaneity in the
data arises because some "investor" contributions may come before roll call votes,
and some contributions come after roll call votes, as payment for services rendered.
Second, most analyses lack crucial control variables, such as the strength of the
donor group or interest in the legislative districts. This is a serious problem because
of the tendency for groups to contribute to "friendly" legislators or to pivotal
legislators. Such strategies are well-documented empirically and well-grounded
theoretically; after all, groups may contribute in part to help re-elect their friends,
and legislators from "friendly" districts may be able provide services to the groups
at lower marginal cost (for example, Herndon, 1982; Poole and Romer, 1985; Grier
and Munger, 1986, 1991, 1993; Poole, Romer and Rosenthal, 1987; Evans, 1988).
Such strategizing means that any omitted factor that predicts roll call votes will
necessarily be correlated with an interest group's contributions.
Two corrections for these problems are to use instrumental variables to untangle
the simultaneity between donations and votes and to exploit the panel of roll
call votes on related issues over time to capture better the omitted variables. Some
studies do implement these corrections.
We offer a statistical analysis here that illustrates how these studies work and
what conclusions such corrections lead to. Our dependent variable is the roll call
voting score produced by the Chamber of Commerce of the United States. We
collected this score for the U.S. House from 1978 to 1994. Like many interest
groups, the Chamber of Commerce identifies 12-20 bills in each Congress that are
6 Many papers run a similar model many times, adding different variables to the model to check
robustness. We count these as one regression equation. If the coefficients of interest in these nested
models are signed correctly and statistically significant at the 5 percent level of significance for a
two-tailed test in at least half the models, we count this as finding campaign contributions as statistically
significant. We also consider the specification as "one regression" if there are only small changes to the
specification, such as a different measure of a control variable, such as ideology.
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. 115
important to its interests and calculates the percentage of times that each member
of Congress votes with the group. Scores therefore run from 0 to 100. We conducted
similar analyses for voting scores from five other organizations: the AFLCIO,
the American Security Council, the Consumer Federation of America, the
League of Conservation Voters, and the National Education Association. Since the
basic patterns are similar in all cases, we only report here the results for the
Chamber of Commerce.
We estimate six models, which cover much of the range of specifications found
in the existing literature. Each model uses corporate and labor campaign cont
butions as right-hand-side variables, but the models use three different ways
controlling for district and legislator preferences. The first specification uses party
affiliation of the member and a measure of district preferences based on vot
patterns. The second specification uses political party affiliation of the member
a district-specific fixed effect. The third specification uses a legislator-specific fixed
effect. The last two specifications exploit the panel structure of the data?that is, we
observe most legislators several times in the sample. We believe that using legislator
specific fixed effects provides the most compelling estimates, because this contr
for legislators' own (average) preferences in addition to district preferences. Th
is strong evidence that legislators are strongly influenced by their party and by the
constituencies when casting roll call votes (for example, Poole and Rosenthal, 19
1997; Levitt, 1996; Ansolabehere, Snyder and Stewart, 2001 ).7
In addition, we estimate each specification using both ordinary least squar
and instrumental variables. We follow Chappell (1981, 1982), Welch (1982)
others in choosing instruments. Two types of variables are used: the degree o
electoral competition and measures of members' relative "power" inside the Ho
For electoral competitiveness, the idea is that a close race increases an incumbe
demand for PAC contributions, producing an exogenous shift in contributions
increase in the propensity to "sell" services, including roll call votes. For the "power
of a member, the argument is that groups give more to powerful members beca
their support is especially valuable. The instrumental variables to measure degr
of electoral competition are total campaign spending by the opponent, the ab
lute value of vote-share minus .5 and a dummy variable indicating that the mem
ran unopposed. The variables that measure a member's relative power are
dummy variable indicating that the member is a party leader, a dummy variab
indicating that the member is a committee chair and a dummy variable indicat
that the member was on the Ways and Means or Energy and Commerce commit
(probably the two most powerful committees with respect to business issues)
The first step is to run regressions using contributions from corporate and lab
PACs as the dependent variables and the collection of instrumental variables
the independent variables. The coefficients from these regressions can be use
to generate predicted values of contributions from corporate and labor PACs
7 Two recent papers noted in Table 1?Bronars and Lott (1997) and Stratmann (2002)?attemp
address this problem by employing member-specific fixed effects, but these papers reach oppos
conclusions about the importance of contributions.
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116 Journal of Economic Perspectives
Then in the second stage, these predicted contributions can then be used as
independent variables in the regression with vote patterns as the dependent
variable.
The results are shown in Table 2. The first three columns present the ordinary
least squares estimates, and the second three columns present the instrumental
variables estimates.
Specification 1 is similar to the most common specifications found in the
literature. In this specification, contributions do appear to have significant effects
on votes. Even so, the effects of contributions are quite small compared to other
factors. An additional $60,000 in corporate PAC contributions (approximately one
standard deviation) changes the voting score by at most 2 points on the scale of
0-100; an additional $50,000 in labor PAC contributions changes the voting score
by 6 points. By comparison, changing the party of a district's representative changes
the voting score by more than 30 points. Using instrumental variables in specifica?
tion 4 reduces the estimated effects of contributions substantially and reverses the
sign on corporate donations. Controlling for voters' preferences using district fixed
effects almost completely eliminates the effects of contributions on legislative
voting, in specifications 2 and 5. Also, this specification causes the effect ofa change
in party to increases to 40 points.8 Using legislator fixed effects eliminates the
effects of contributions entirely, again in both sets of estimates. The estimated
coefficients are tiny and statistically insignificant. Evidently, changes in donations to
an individual legislator do not translate into changes in that legislator's roll call
voting behavior.
Overall, our findings parallel that of the broader literature. As regressions like
these make clear, the evidence that campaign contributions lead to a substantial
influence on votes is rather thin. Legislators' votes depend almost entirely on their
own beliefs and the preferences of their voters and their party. Contributions
explain a miniscule fraction of the variation in voting behavior in the U.S. Congress.
Members of Congress care foremost about winning re-election. They must
attend to the constituency that elects them, voters in a district or state and the
constituency that nominates them, the party.
This finding helps to explain Tullock's (1972) puzzle. Money has little leverage
because it is only a small part of the political calculation that a re-election oriented
legislator makes. And interest group contributors?the "investors" in the political
arena?have little leverage because politicians can raise sufficient funds from
individual contributors. It is true that when economic interest groups give, they
usually appear to act as rational investors (for example, Snyder, 1990, 1992, 1993;
Grier and Munger, 1991; Romer and Snyder, 1994; Kroszner and Stratmann, 1998,
8 One concern with the party coefficient is that it might reflect party money or interest group
contributions to parties. An extensive literature has examined the association between party loyalty in
the legislature, party campaign contributions and expenditures in elections and the sources of party
funds, but found no statistical association among these factors. Ansolabehere and Snyder (2000b)
summarize this literature and conclude that parties target close races to elect their candidates, but they
do not target people of particular ideologies or reward loyalists.
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Why is There so Little Money in U.S. Politics? 117
Table 2
Roll Call Voting in the U.S. House, 1978-1994
Dep. Var. = CCUS Roll Call Voting Score (N = 3400)
Least Squares Instrumental Variables
Mean
Spec. 1 Spec. 2 Spec. 3 Spec. 1 Spec. 2 Spec. 3 [SD]
Corporate Contributions 0.32** 0.07 0.02 -0.30** -0.05 -0.14 6.53
[5.99]
Labor Contributions -1.14** -0.44** -0.13 -0.18 -0.02** 0.41 4.48
[5.39]
Member is Republican 32.6** 40.6** ? 40.5** 44.2** ? 0.39
[0.49]
District Partisanship 58.4** ? ? 59.5** ? ? 0.00
[0.11]
District is in South 10.2** ? ? 14.1** ? ? 0.26
[0.44]
Notes: All specifications include year fixed-effects. Specification 2 includes district fixed-effects. Specifi?
cation 3 includes member fixed-effects.
Standard errors in brackets.
* = significant at the .05 level.
** = significant at the .01 level.
2000; Ansolabehere and Snyder, 1999, 2000a). However, this "investor" money
from organized groups accounts for only a small fraction of overall campaign
funds. Since interest groups can get only a little from their contributions, they
give only a little. As a result, interest group contributions account for at most a
small amount of the variation in voting behavior. In fact, after controlling for
legislator ideology, these contributions have no detectable effects on the be?
havior of legislators.
Nonetheless, as a statement of plain fact, there were $3 billion worth of
campaign contributions over the 1999-2000 election cycle. A majority of Fortune
500 firms do have their own PACs. Twenty-one million individuals did make
contributions. These campaign contributions are more than trivial. If donations are
not a political investment, then what are they?
Campaign Contributions as a Form of Consumption
We favor an alternative perspective on campaign contributions. In our view,
campaign contributing should not be viewed as an investment, but rather as a form
of consumption?or, in the language of politics, participation. Recall that almost
all money in the existing campaign finance system comes ultimately from individ?
uals and in relatively small sums. We therefore expect that the factors that deter?
mine why individuals give are the factors that drive total campaign spending. The
tiny size of the average contribution made by private citizens suggests that little
private benefit could be bought with such donations.
Instead, individuals give because they are ideologically motivated, because they
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118 Journal of Economic Perspectives
are excited by the politics of particular elections, because they are asked by their
friends or colleagues and because they have the resources necessary to engage in
this particular form of participation. In short, people give to politics because of the
consumption value associated with politics, rather than because they receive direct
private benefits. Those who give to politics are also disproportionately likely to
participate in other ways, including attending meetings, writing letters, talking to
others and voting (Rosenstone and Hansen, 1992; Verba, Schlozman and Brady,
1995). We call these donors "consumer contributors." They account for most of the
campaign money in politics.
Political giving should be regarded as a form of consumption not unlike giving
to charities, such as the United Way or public radio. Economic theory predicts
relatively little about such consumption goods, except that like any normal good,
they will grow with income. Indeed, survey researchers in political science and
sociology have documented that income is by far the strongest predictor of giving
to political campaigns and organizations, and it is also the main predictor of
contributing to nonreligious charities. Individuals give relatively little to politics,
much less than to charities.
The notion that campaign contributions mainly reflect consumption a
participation of many individuals suggests that personal income should determ
the amount raised and spent in campaigns. Alternatively, a basic prediction o
models that view campaign contributions as political investments in rent seekin
that total government spending should explain total campaign spending. T
growth of government over the last 60 years, the argument goes, has meant t
government regulations, taxes and subsidies and other policies can have substan
effects on private interests. The threat of regulation or other unfavorable treatmen
may also induce private interests to give to politics. As a result, the more gover
ment spends, the more private interests must contribute (Lott, 2000).
To test these predictions, we consider a range of evidence: the politic
contributions of highly paid executives; a time series of campaign spending un
the Federal Election Campaign Act from 1978 to 2000; a time series of candid
and party expenditures in presidential elections from 1884 to 2000; panel dat
campaign spending by gubernatorial candidates from 1976 to 2000; and crosssection
data on spending in House of Representatives elections in recent decad
The FEC data on recent elections offer the best accounting of campaign spendi
The presidential election series offer a very long time series, but the quality of
data is less good. The state data offer the advantage of a panel, with enou
observations to allow us to test competing hypotheses. In general, the eviden
suggests that campaign spending tracks income and electoral competition (that
demand for money), rather than government spending.
The Political Giving of Top Corporate Executives
The political contributions of top corporate executives illustrate the impo
tance of income. We examined the political contributions of 94 top executives fr
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. 119
12 large corporations?some of the wealthiest people in America.9 On average,
these executives gave $3,000 to their own corporations' political action committees
in the 1997-1998 election cycle. They gave an additional $4,500 to candidates,
parties and other committees, for an average total political contribution of $7,500
per executive, far below the $25,000 allowed under the Federal Election Campaign
Act. Dividing by their annual compensation, these executives gave $51 for every
$100,000 of income each year. In other words, top corporate executives gave about
0.05 percent of their annual compensation to political campaigns. This 0.05 per?
cent figure slightly overstates the share of the income of top executives devoted to
politics, because we do not include income from capital gains, dividends and
interest. What is striking about this figure is that it is nearly the same as the overall
share of national income devoted to political campaigns in 2000, 0.04 percent.
As with the public at large, giving to charity is much more important to firms
and executives than is giving to politics. Milyo, Primo and Groseclose (2000)
studied 15 large corporations in 1998. The firms in their sample gave $1,611 million
to charities and just $16 million to political campaigns. The response to the
terrorist attacks of September 11, 2001, also suggests that campaign contributions
might be properly viewed simply as one item in a portfolio of voluntary donations.
Stevens (2001) reports that political contributions dropped significantly in the
month following 9/11, as individuals diverted their funds to various charities.
Time Series Evidence on Campaign Spending
Charitable contributions account for a fairly constant share of national
income?about 2 percent. Does campaign spending grow with income, like other
forms of "consumption giving"?
The growth of campaign spending is shown in Figure 1. Figure la graphs the
trend in real campaign spending under the Federal Election Campaign Act regime
(to the right of the vertical line). The numbers reported encompass all hard and
soft money, as well as public funds. Real campaign spending has indeed grown,
roughly doubling between 1976 and 2000. Since the price of most campaign inputs,
such as labor and advertising prices, grows with the consumer price index, this
higher spending primarily reflects an increase in real campaign outlays. From our
perspective, however, price inflation is not the right baseline against which to
measure the growth in campaign spending. A more appropriate baseline is national
income, shown in Figure lb. Over the period 1976-2000 (shown to the right of the
vertical line in the figure), there is no trend in campaign spending relative to
national income. Ansolabehere, Gerber and Snyder (2001) examine trends in
individual, PAC and party contributions. After deflating each type of money by
GDP, no trends are evident within each category of campaign money.
Reports of the presidential campaign spending by candidates and by political
9 The corporations are AT&T, Boeing, Citigroup, Exxon Mobil, General Electric, General Motors,
Home Depot, IBM, Microsoft, Pfizer, Verizon and Wal-Mart. Data on executives and their compensation
come from the Compustat Executive Compensation Database. Data on contributions came from the
Center for Responsive Politics at (http://www.opensecrets.org).
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120 Journal of Economic Perspectives
Figure 1
The Growth of Campaign Spending
General, President
Congress
President
PAC, Congress
1000-
900-
800
700-
600-
500-
400
300
200
100
8
o
o
o
O O
o U
v> >c
&
O n3
3 ?
3000
2500
2000
1500
1000
500
0
1900 1920 1940 1960 1980 2000
a. Spending Over Time in Real 2000 Dollars
General, President
Congress
Total, President
PAC, Congress
1900 1920 1940 1960 1980 2000
b. Spending Over Time Deflated by GDP
parties' campaign committees are fairly complete from 1912 on, although most
congressional candidates did not file reports until the Federal Elections Campaign
Act of 1974. However, histories of significant political campaigns have reconstructed
the budgets of the earlier presidential campaigns and party committees
going back to 1884; Alexander (1984, p. 7) presents a table with these figures.
Figures la and lb also display a long-run perspective on expenditures in
presidential campaigns by candidates and parties. The long-run perspective parallels
the lessons from more recent decades. Real campaign spending has grown
sharply, although somewhat more irregularly, over the last 120 years. However,
campaign spending as a fraction of national income has shown no growth at all.
The two most dramatic features of Figure lb in the long term are the collapse
in spending during the first decade of the twentieth century and the rough stability
since. Measured relative to national income, presidential campaigns in the 1880s
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Why is There so Little Money in US. Politics? 121
and 1890s spent three times more than the typical presidential campaigns since
then. The 1890s and 1900s ushered in wide-ranging political reforms, including the
secret ballot that made vote buying during elections nearly impossible, civil service
and government spending reforms that limited the powers of political machines
and campaign finance reform. From 1912 to 2000, presidential campaigns have
accounted for approximately the same small fraction of GDP. This pattern suggests
that the private benefits bought through the campaign finance system are at least
not an increasing problem for our economy.
State Gubernatorial Elections from 1976 to 2000
Using the time series data, it is impossible to distinguish whether presidential
campaign spending is more affected by income growth, as in our thesis that
campaign contributions are a form of consumption, or by the growth of govern?
ment spending growth, as in the thesis that campaign spending is a political
investment. The correlation between real per capita GDP and real per capita
federal spending is 0.98, and even the long historical series contains just 23 obser?
vations. However, state elections allow us to untangle the effects of income, gov?
ernment spending and electoral competition.
We have compiled a fairly complete panel of spending in gubernatorial
elections from 1976 to 2000. Data on campaign contributions, campaign expendi?
tures and election results come from the Gubernatorial Campaign Expenditures
Database, compiled by Thad Beyle and Jennifer M. Jensen, and from America Votes
(various years). To our knowledge, this is the most comprehensive data set that
exists on aggregate gubernatorial campaign spending. We also used data on
personal income from the Bureau of Economic Analysis ((http://www.bea.
doc.gov/bea/regional/data.htm)) and state government expenditure data from
the Compendium of State Government Finances produced by the U.S. Census
Bureau.
It is difficult to compare campaign spending levels across states, because state
operate under different regulatory regimes. Some states have no limits on contr
bution or expenditure levels (Alaska, Pennsylvania, Utah), while others have rela?
tively strict limits that have been in place for many years. Some states allow dire
corporate and labor contributions (Illinois, New Mexico), while others do no
Some states have generous public funding mechanisms (Michigan, New Jersey).
Instead of comparing across states, we can exploit the panel structure of the dat
and compare changes in spending and other variables over time within states.
Table 3 presents a statistical analysis of the panel of campaign spending on
gubernatorial races from 1976 to 2000. The dependent variable is total spending
per capita in gubernatorial elections. The independent variables shown in the tab
are personal income per capita, government spending per capita and three mea
sures of general and primary election competition. Closeness in General Electio
is defined as 1 - vG, where vG is the winning candidate's vote share in the genera
election. Average Closeness in First Primary is the average of 1 - vD and 1 - vR
where vD is the winning candidate's vote share in the first Democratic primary
election and vR is the winning candidate's vote share in the first Republica
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122 Journal of Economic Perspectives
Table 3
Campaign Spending in Gubernatorial Races, 1976-2000
Dep. Var. = Log of Total Spending By All Candidates, Per Capita
Log of Personal Income, Per Capita 1.17*
(.50)
Log of State Government Spending, Per Capita ?.09
(?32)
Log of Population ?.31
(.36)
Closeness in General Election 2.92**
(.39)
Democrat is Incumbent ?.29
(.07)
Republican is Incumbent ?.14
(.08)
Average Closeness in 1st Primary .92**
(-21)
Average Closeness in 2nd Primary 1.09**
(.46)
R-square Within State .41
# Observations 326
Notes: Ordinary least squares estimates
Standard errors in parentheses.
* = significant at the .05 level.
** = significant at the .01 level.
primary election. Average Clo
winning candidate's vote sh
population figures are in loga
elasticities. The regression incl
ences in state campaign laws a
Personal income and the el
spending on state gubernatori
is approximately equal to 1, co
income spent on campaigns is
between income and governme
taken into account, governm
campaign spending. Using t
growth of per capita income a
per capita campaign spendin
predicted levels of campaign s
of population growth.
Electoral competition has a st
gubernatorial elections were, o
10 If we analyze the data in total cont
variable on population is highly signif
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. 123
Table 4
Average Total Contributions By Type of District
Notes: Number of observations in parentheses.
Low Income = Per-Capita Income < $13,000.
Middle Income = $13,000 < Per-Capita Income < $19,000.
High Income = Per-Capita Income > $19,000.
1990s, and there were fewer seats for which incumbents stood for election during
the 1990s. Thus, the trend in electoral competition cannot explain the growth in
campaign spending. Rather, the reduced level of competition in races for state
governor during the 1990s would have predicted a lower level of spending in these
campaigns.
Cross-Sectional Analysis of Congressional Elections
Looking across elections to the House of Representatives and to the Senate
from 1992 to 2000 teaches a similar lesson about the importance of income and the
competitiveness of elections.
During the 1990s, the average House election cost $810,000 (Democratic and
Republican candidate spending combined), but spending varied considerably
across districts. Per capita income in congressional districts ranges from a low of
$7,000 to a high of $41,000, with an average of $15,000. During the 1990s, total
campaign spending averaged about $700,000 in low-income districts, defined as per
capita income below $13,000 (43 percent of all House seats); campaign spending
averaged $850,000 in middle-income districts, with per capita income between
$13,000 and $19,000 (45 percent of the cases); and it averaged about $1,000,000 in
high-income districts, with per capita income above $19,000 (12 percent of the
cases). These figures are displayed on the bottom margin of Table 4, which presents
total campaign spending in the typical House race for each of the three income
categories and each of four categories of vote margin.
Competitiveness of the House race has even stronger effects on total spending
than district income. The typical House election in the 1990s was decided by
17 percentage points, but many races were determined by much smaller margins.
During the 1990s, total spending averaged $1,300,000 in House elections decided
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124 Journal of Economic Perspectives
by fewer than 5 percentage points; $980,000 in House elections decided by 5 to
15 percentage points; $570,000 in elections decided by 15 to 30 percentage points;
and $396,000 in elections decided by more than 30 percentage points.
To measure these effects and control for other factors, we set up a regression
with total spending on the congressional race as the dependent variable. The
explanatory variables were district income and extent of electoral competition,
along with year, party and incumbency. Holding constant the competitiveness of
the race, an additional $1,000 dollars of per capita income in a district translates
into an additional $20,000 of total campaign spending.11 Holding constant district
income, a 1 percentage point reduction in the electoral margin between the
candidates corresponds to an increase in combined total spending of $20,000.
The Marginal Dollar
One final piece of evidence pointing toward the central importance of the
small consumer contributor in politics is how candidates' fundraising changes as
their demand for money grows.
Individual donors grow in importance as demand for campaign cash increases.
In safe House seats, those decided by a margin of 30 percentage points or more,
48 percent of campaign funds came from individuals and 46 percent from PACs. In
close House races, those decided by fewer than 5 percentage points, 60 percent of
campaign funds came from individuals and 31 percent came from PACs. Most of
the difference in the share from individuals is accounted for by contributions in
amounts less than $500. On the margin, then, candidates raise disproportionately
more from individuals than from interest groups.
A more dramatic pattern holds in U.S. Senate elections. The average U.S.
Senate candidate receives approximately $1 million to $2 million from interest
groups, and this amount varies somewhat with state size. Total PAC contributions
to California Senate elections (Democrat and Republican candidates combined)
averaged $2 million during the 1990s. Total PAC contributions to Wyoming and
North Dakota Senate elections averaged $950,000 during the 1990s. However,
California Senate elections are much more expensive than are elections in Wyo?
ming and North Dakota, mainly because California is both wealthier and more
populous than Wyoming and North Dakota. The typical U.S. Senate election in
California during the 1990s cost $24 million, while the typical U.S. Senate election
in small states cost $2 million total in the 1990s. The difference is accounted for
almost entirely by individual contributors. Snyder (1993) and Ansolabehere and
Snyder (1999) present more comprehensive and detailed analyses of House and
Senate elections.
This finding suggests that small individual donors contribute not only the
average dollar in politics, but the marginal dollar as well. When increased deman
for campaign funds induces candidates to raise additional funds, they turn not t
political action committees or even large individual donors, but to small individu
11 To correct for the skew in both district income and total spending, we convert spending and income
into logarithmic scales. The elasticity of total spending in terms of per capita income is 0.43.
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Why is There so Little Money in U.S. Politics? 125
donors, who give an average of about $100. This fact runs contrary to the funda?
mental assumption of all investor models of politics?that politicians rely principally
on interest groups and large individual donors for their campaign funds. Any
theory of political giving, then, must place the small individual contributor, whose
motivations reflect the consumption value of being involved in politics rather than
the potential return on the investment, at the center of the campaign finance
system.
A Research Agenda on Campaign Contributions
Much of the academic research and public discussion of campaign contribu?
tions appears to be starting from some misguided assumptions. Campaign spend?
ing, measured as a share of GDP, does not appear to be increasing. Most of the
campaign money does not come from interest group PACs, but rather from
individual donors. Most donors give substantially less than the current hard money
limits. It doesn't seem accurate to view campaign contributions as a way of investing
in political outcomes. Instead, aggregate campaign spending in the United States,
we conjecture, mainly reflects the consumption value that individuals receive from
giving to campaigns. In addition, individual contributors provide the average and
the marginal dollar to political campaigns. Because politicians can readily raise
campaign funds from individuals, rent-seeking donors lack the leverage to extract
large private benefits from legislation.
These arguments suggest a reorientation of future research on campaign
finance. Different issues arise for individual and for interest group campaign
contributions.
On the subject of individual campaign contributions, the idea of a campaign
contribution as a form of consumption needs more empirical and theoretical
development. As with other forms of voluntary public-spirited activities such as
giving to charities or voting, the theoretical underpinnings of small campaign
donations are not well understood. It is unclear what specific empirical predictions
distinguish consumption from rent seeking or what evidence will prove compelling.
Consumption might take many forms, including expression, citizen duty and social
life. Do fundraising strategies of PACs look like those ofcharitable organizations or
like those of venture capitalists? Charities hold events, bring in speakers with as
much celebrity status as possible and conduct mass-mail drives. If campaign con?
tributions are a form of expression, then we might expect certain types of people
to give to like types of candidates and organizations. Does this pattern hold? Are
contributors more interested in politics on a personal level than other citizens? Is
politics an important part of their social life?
A second set of issues is that individual campaign contributions may still have
significant effects on legislative decisions, but their influence might be more akin
to the importance given to certain demographic groups within the electorate. To
raise sufficient funds, candidates might skew policies in ways preferred by individual
donors. Since campaign contributions are so closely linked to income, campaign
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126 Journal of Economic Perspectives
contributions might act like weighted votes. Contributors who are disproportionately
wealthy might have different policy preferences than the median voter.
Whether this has significant effects on policy is unknown. Fleshing this out requires
careful study of how policy responds to the preferences of contributors and the
overall level of contributions.
From the standpoint of interest group giving, the question is not why do
corporations, unions and other interest groups give so little, but why do they give
at all? Why do they form PACs? Why do they behave so strategically? We think there
are five possible answers, each deserving of further exploration.
One possible answer is that interest groups give a little and get a little.
Although aggregate campaign expenditures primarily reflect consumption, it may
be that a subset of donors, mainly corporate and industry PACs, behave as if they
expected favors in return. These contributors may in fact receive a reasonable rate
of return?say 20 percent?but their investments do not account for most of
campaign contributions, nor do they explain much government activity.
A second answer is that money buys access, rather than policy directly. Legis?
lators and their staffers are busy people. Campaign contributions are one way to
improve the chances of getting to see the legislator about matters of concern to the
group. One estimate is that one hour of a legislator's time costs around $10,000
(Langbein, 1986). There is some evidence that campaign contributions are tied to
lobbying activities (Sabato, 1984). Groups that give large amounts to political
campaigns also emphasize lobbying (Ansolabehere, Snyder and Tripathi, 2002).
The Lobby Reform Act of 1995 provides for disclosure of expenditures on executive
and legislative lobbying. In 1997-1998, interest groups spent $3 billion on lobbying,
about 10 times the $300 million that they spent on PAC contributions (Ansolabe?
here, Snyder and Tripathi, 2002). Clearly, many interest groups are showing by
their behavior that lobbying is more important than campaign contributions. Of
course, access itself does not guarantee influence, but only the opportunity to
provide information that might influence legislators.12
A third explanation is that interest groups seek to affect elections?that is, to
elect legislators that are sympathetic to their views and defeat legislators known to
be hostile?rather than to change the views of existing legislators. Helping to elect
friends might have much larger marginal effects on legislation than trying to buy
support from those already in Congress. Our analysis of roll call voting above
reveals that who is in the legislature, a Republican or a Democrat, has an enormous
effect on support for a range of policies of importance to groups. Why doesn't this
connection lead groups to contribute untold billions of dollars to friendly candi?
dates? There are several reasons. Statistical analyses estimate that the marginal
effect of an additional $100,000 of campaign spending is quite small, probably no
more than 1 percentage point in the vote in the typical House race, even in the
observed ranges (for example, Jacobson, 1980; Levitt, 1994). In addition, collective
12 There is surprisingly little evidence that lobbying influences policies. One analysis finds that budget
items earmarked for academia are responsive to lobbying by universities located in areas with representation
on the House Appropriations Committee (de Figueiredo and Silverman, 2002).
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Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder Jr. 127
action problems abound, leading to underinvestment in activities that may benefit,
say, a certain industry as a whole.
A fourth possibility is that PACs coordinate individual donations and help
overcome collective action problems that might otherwise plague individual con?
tributors. Marx and Matthews (2000) present an interesting model that might be
applicable.
A final possibility is that even interest groups give for consumption. PAC
contributions are solicited at events attended by prominent national politicians?
people of celebrity status. Organizations' executives and managers may value being
part of the Washington establishment.
Whatever the reasons that groups give, one central fact remains. Individuals
are the main source of money in U.S. campaigns, and their presence mutes the
political leverage of interest groups. If individuals were less willing to contribute
than they are, then interest group money could be more pivotal for elections and
policymaking. In a way, then, 20 million individuals in the United States protect
themselves and their fellow citizens from special interest power with their donations
of about $100 dollars each.
? Professor Ansolabehere thanks the Carnegie Corporation for their generous financial support
under the Carnegie Scholars Program.
References
Alexander, Herbert E. 1984. Financing Politics.
Washington, D.C: CQ Press.
Ansolabehere, Stephen and James M. Snyder
Jr. 1999. "Money and Institutional Power." Texas
Law Review. June, 77, pp. 1673-704.
Ansolabehere, Stephen and James M. Snyder
Jr. 2000a. "Money and Office," in Continuity and
Change in Congressional Elections. David Brady and
John Cogan, eds. Stanford, Calif.: Stanford Uni?
versity Press, pp. 65-86.
Ansolabehere, Stephen and James M. Snyder
Jr. 2000b. "Soft Money, Hard Money, Strong
Parties." Columbia Law Review. 100:3, pp. 598-
619.
Ansolabehere, Stephen, Alan Gerber and
James M. Snyder Jr. 2001. "Corruption and the
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