Does Money Really Buy Elections? A New Marketplace Podcast

Mitt Romney in New Hampshire Jan 7, 2012. (Photo: WEBN-TV)

Mitt Romney won big in New Hampshire, but his opponents are vowing to push on in South Carolina. Which means stepping up their pleas for cash. In an e-mail to supporters, Rick Santorum wrote:

We must show real progress tonight and redouble our efforts … That’s why my campaign launched the “Game On” Moneybomb, and why we need your help right now. As you already know, we are facing serious and well-funded opposition for the nomination.

That’s the kind of language that confirms one of the biggest truisms in politics: money buys elections.

But how true is that truism?

That’s the question Kai Ryssdal and I tackle in our latest Marketplace podcast. (Download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript.)

In a paper that tried to isolate the effect of spending in campaigns, here’s what Steve Levitt found:

LEVITT: When a candidate doubled their spending, holding everything else constant, they only got an extra one percent of the popular vote. It’s the same if you cut your spending in half, you only lose one percent of the popular vote. So we’re talking about really large swings in campaign spending with almost trivial changes in the vote.

What Levitt’s study suggests is that money doesn’t necessarily cause a candidate to win — but, rather, that the kind of candidate who’s attractive to voters also ends up attracting a lot of money. So winning an election and raising money do go together, just as rain and umbrellas go together. But umbrellas don’t cause the rain. And it doesn’t seem as if money really causes  electoral victories either, at least not nearly to the extent that the conventional wisdom says. For every well-funded candidate who seems to confirm that money buys elections (paging Michael Bloomberg), you can find counterexamples like Meg Whitman, Linda McMahon, Steve Forbes, and Tom Golisano.

And take a look at the Iowa caucuses last week. Rick Perry was the top spender, buying $4.3 million worth of ads — which got him only 10 percent of the vote. Santorum, meanwhile, spent only $30,000 on ads (the least of any candidate) and practically tied Romney — who spent  $1.5 million this time around on Iowa ads, versus $10 million in 2008.

In this podcast, you’ll also hear from one former big-spending presidential candidate who’s now convinced that money isn’t what matters most: Rudy Giuliani.

GIULIANI: I tell candidates, it’s always better to be the candidate with the most money, but you can win without it.

Here’s where you can listen to Marketplace on a station near you.

Audio Transcript

Kai RYSSDAL: And so it’s done, the New Hampshire primary. Mitt Romney had it wrapped up pretty early last night. So all the who got how many votes and what does it all means in the grand political scheme of things, has been done to death by now. So we’re not gonna.


RYSSDAL: We’re going to do the story our way - campaign finance a la Freakonomics. Our once-every-couple-of-weeks chat with Stephen Dubner, the co-author of the books and the blog of the same name. It’s all about the hidden side of everything. Hey Dubner, welcome back.

Stephen DUBNER: Hey, Kai, thanks for having me. So we’re all wildly surprised that Mitt Romney won big last night, aren’t we?

RYSSDAL: Yes, yes. Wildly surprised.

DUBNER: And it’s just as obvious why Romney’s been winning, right? At least if we listen to his rivals. Here’s Newt Gingrich, who came in a distant fourth place last night:

RYSSDAL: All right.

GINGRICH CLIP: Now we have to go back and, uh, figure out how you run in an environment where you clearly have two guys who are gonna say things that aren’t honest and who are going to spend millions of dollars doing so.

DUBNER: And here’s Rick Santorum, who finished fifth in New Hampshire:

SANTORUM CLIP: I’m a little behind the curve in the sense that Gov. Romney has been spending a lot of money.

RYSSDAL: Well, it’s not like they’re wrong right, Dubner? I mean, Romney does have deep pockets. Just today, right? His campaign said they’ve raised almost $24 million in the last three months, in the last quarter.

DUBNER: That’s right, and so that makes more than $50 million for 2011.  And in previous campaigns that he’s run for senator, governor and president, Romney’s spent $54 million of his own money. But you know who else put a lot of money into their campaigns? Let me give you a few, uh, lovely names: Steve Forbes ... Linda McMahon … Meg Whitman. And you know what? None of them won anything, did they?

RYSSDAL: O.K., so this is the hidden side of everything part, is that where we’re going here?

DUBNER: This is the hidden side of everything. Here’s what I want to tell you today, Kai: Money does not buy elections. At least nowhere near what we’ve always been told. Here’s Steve Levitt, my Freakonomics co-author. He once conducted a study of congressional elections, where he tried to isolate the effect of campaign spending from all the other factors:

Steve LEVITT: When a candidate doubled their spending, holding everything else constant, they only got an extra one percent of the popular vote. It’s the same if you cut your spending in half, you only lose one percent of the popular vote. So we’re talking about really, really large swings in campaign spending with almost trivial changes in the vote.

RYSSDAL: All right, here’s the thing: Steve Levitt, very nice guy, knowledgeable economist...sadly though, I don’t believe him. Cause if you look, it’s always the guy with the most money who wins.

DUBNER: You’re right; it is almost always the guy with the most money who wins. That is what we know as correlation without cause. So let me explain: When it’s raining out, everybody’s got an umbrella, we know that. Those things are correlated. But you know what, the umbrellas don’t cause the rain, we know that too. Here’s the thing: Winning an election and raising money do go together, but it doesn’t seem as though money actually causes the winning either. It’s just that the kind of candidate who’s attractive to voters also ends up, along the way, attracting a lot of money and the losing candidate, nobody wants to give money to that guy.

RYSSDAL: Right, it makes sense, but what happens when you tell politicians this? I mean, this isn’t a message they don’t want to hear, right?

DUBNER: Yeah. No politician’s going to step forward and say, “Please don’t send me your money; I do not want it; I will not use it.” You know, look, campaign fundraising has become an arms race and as in any arms race, the first casualty is logic, right? But let’s look past new Hampshire and back to Iowa last week. Here’s some good evidence for these politicians. Rick Perry spent $4.3 million on advertising there -- nearly triple what Romney spent -- and got only 10 percent of the vote. Rick Santorum, on the other hand, spent only $30,000 for ads in Iowa, and he lost to Romney by just eight votes. So, so much for the money argument.

RYSSDAL: All right, so far this is a lot of you talking about politicians and money -- did you actually talk to any politicians about money?

DUBNER: Well, you think they’re going to come out and say, “Nah, I don’t need the money.” I did find one former politician. At least he says he’s former. You remember Rudy Giuliani, I gather yeah?

RYSSDAL: I do: twice the mayor of New York City and for like five minutes in 2008, the front-runner.

DUBNER: That’s right. Well, I asked him if money buys elections:

Rudy GIULIANI: So campaign spending doesn’t mean anything, because you can spend it incorrectly. I have lost an election by spending it wrong. I won an election, my first election that I won, I won when I was outspent $16 million to $2 million, in a Republican primary. We can see recently in Mike Bloomberg’s election. Mike Bloomberg spent $100 million dollars! And he won by 4 percent!

DUBNER: So I asked Giuliani what advice he would give to candidates:

GIULIANI: I tell candidates, it’s always better to be the candidate with the most money, but you can win without it.

RYSSDAL: So to finish the sentence, it’s better to be the candidate with the most money because that means you’re the most popular, right? People like you the best.

DUBNER: That’s exactly right. It’s like saying it’s better to be the radio show host with the most money, but really, what you want to be is the most popular.

RYSSDAL: Sometimes that goes together, I don’t know.

DUBNER: Sometimes it does.

RYSSDAL: Stephen Dubner, is the website. He’s back in a couple of weeks. Dubner, we’ll see ya.

DUBNER: Thanks, Kai.

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.



  1. Eric M. Jones. says:

    Hidden due to low comment rating. Click here to see.

    Disliked! Like or Dislike: Thumb up 8 Thumb down 31
  2. John says:

    Does money buy elections? Ok, maybe that’s inconclusive. How about policy? Does money buy that? That seems like the more relevant question.

    Well-loved. Like or Dislike: Thumb up 52 Thumb down 2
  3. Craig says:

    The study in question seems to be done on Cognressional elections, furthermore on elections for the House of Representatives. You are applying those results to a national election. The differences between the two types of elections in terms of media and communication with voters could have a signficant effect on the usefulness of money in an election.

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  4. aepxc says:

    Can we say that money is necessary but not sufficient? Spending a lot will not guarantee and election win, but spending a only little (e.g. people love you and give lots of money to your campaign, but you just give that money to charity) will very likely prevent you from being elected.

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    • Dan says:

      I think that is a fabulous idea. Canidates raise money and instead of spending it telling what great people they are they simply go out and be great people by helping charities out.

      oh and I agree with that other thing you said.

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  5. Marcus Lynn says:

    Money matters more than 1% of the vote the study claims. The biggest impact of money is scaring off quality opponents. This is why most incumbents in Congress rarely face a serious challenge–but when their seat cones open we often see a rather competitive race. Money helps INCUMBENTS enormously.

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  6. Quinton says:

    What about the Super PAC phenomenon? Candidates no longer have to moderate their message because someone else can do the dirty work. It’s been speculated that’s one of the reasons Rick Perry got so little out of the money he spent in Iowa, all his declared advertising (“Rick Perry approves this message”) was positive, while he didn’t have the Super PAC to throw the mud (the way Mitt Romney may or may not have). Sounds like a nice Phd dissertation for some Poly Sci grad student

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  7. Marcus Lynn says:

    Also…Regression analysis is vulnerable to missing data issues. Also it only takes 2-3 rich but stupid candidates to weaken the statistical findings.

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  8. b goldstein says:

    I have a ton of questions about this article:

    The 1% number, does it mean candidate a goes up from 49.4% to 50.4% or A goes to 49.9% and B goest to 50.1%

    Is this true in primaries of multiple candidates — whereas if there are seven candidates splitting the votea 1% is more significant.

    Does this apply throughout the candidacy or is there a point which is more important (i.e. making the candidate a household name)?

    If I raise 1k and my opponant raises 128k does that mean that he will be 7% higher (statistically)?

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  9. Ben says:

    You are truly fascinating and clever guys, but sometimes it seems like you try too hard to come up with novel or counterintuitive results and in the process fly right past obvious facts. In this case, in making their claim that fundraising ability is not a significant factor in winning elections, Dubner/Levitt completely ignore the initial “Invisible Primary” phase of the campaign when election day is still far off and would-be candidates need to convince donors to give them money so they can mount a campaign in the first place. No money, no campaign, no electoral victory — how’s that for a causal model? And unless you think those early donors are representative of the voting public as a whole, what does that say about our democratic process? (I also agree with many of the points already made by previous commenters.)

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  10. Jon says:

    You can’t get elected if nobody knows who you are. Money buys ad time which gets name recognition. That’s where the significance of money is most important, and the threshold of spending on the national stage is very very high. Without money, a no-name candidate has almost no chance of getting elected.

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  11. Brian Dirk says:

    Could it be said that Fundraising for the primaries is a sort of prediction market for the early elections? Obviously the later elections are swayed by the results of earlier elections – who would vote for someone who hasn’t won or got close on earlier elections? But it would be interesting to hear if these fundraisers work like a prediction market.

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  12. Seth says:

    I thought this was well-known. How much money is spent is not as important as how much money is raised and the source of that money. It makes sense that a candidate able to raise a lot of money from smaller donations from lots of people is a good indicator that candidate will get a lot of votes.

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  13. Will says:

    Mr. Dubner,
    You fall to some of the common fallacies I generally entrust you to spot.
    1) Primaries are not elections. Mobilizing primary voters is an entirely different task compared with mobilizing a general electorate. In recent history, about 95% of congressional ELECTION winners outspent their opponents – and 2-3% of the upsets see a small difference on dollars spent by both sides.
    I don’t believe there has been a significant study on the effect of primary spending in presidential races in recent history. And as Craig pointed out before me, your statistics are representative of House races. But if we want to apply a general principle, primary voters are generally consistent voters (i.e. they turn out every year), are at generally somewhat supportive of each of the primary candidates, but holds stronger views than the average citizen. The general electorate has independents and opposition party voters that can be swayed. Money is needed to reach out to these potential voters. Primary voters seek out information themselves, so spending is less effective.

    2) Your coauthor’s statistic seems extremely flawed.
    a) Percentage of the popular vote does not account for voter turnout. But the more one spends, generally, there greater the voter turnout is. That is the true measure of the efficacy of spending (save shooting the moon by driving up voter turnout by the opposition (with inflammatory ads/views or other poor decisions).
    b) Candidate spending is like an arms race – the more one spends, the more his opponent will. Why? High spending elections are generally hotly contested elections (why spend the money if you’re going to win anyway? You can always save it for later). Both candidates high spending results in high voter turnout on BOTH sides, and thus a smaller margin of victory (voter share).
    c) There is a well documented phenomenon of diminishing returns in campaign spending (i.e. the more you spend, the less effect it has). Should a campaign cut their spending in half, it by no means would result in a reciprocal loss of voter share.

    3) Your observation that attractive candidates also attract donations is true, but you are missing a key element: campaign donations are often seen as an investment. You are investing in the candidates victory. But investments have risks – in this case the candidate losing. If you see that your candidate has already raised lots of money, it is a safer investment (with less return, as always). If your candidate is not fundraising well, it is seen as a risk, like investing in a less competitive company (one that seems doomed in the near future will see a sell off). So large donations can buy an election by making the opposition appear to be a losing investment to the many smaller potential opposition donors, making competition unlikely if not impossible.

    There is a reason that campaign spending has proliferated so much in the past few decades. It works! The correlation may not prove 100% causation, but it certainly suggests a significant amount, more than I believe you give credit for.

    Mr. Ryssdal, your convictions are accurate. Best of luck in the world after Market

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    • Jarjar says:

      The neat thing about the paper is that Levitt controlled for opponent spending when he crunched the numbers. (though I’ve no idea how he got enough data to do this). Turns out it’s not really an arms race and the bang you get for your buck isn’t changed by how much money your opponent is blowing through.

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  14. twobeef says:

    Let’s say I have a local election where both candidates only have $5,000 each to spend on ads. A major donor decides he needs something from government here, so he donates $40,000 to the campaign. By your equation of “doubling campaign dollars equals +1% vote,” and I’m assuming that each 1% gained for one candidate is a 1% loss for an opponent, you’ve just gained a six point swing in a favorable direction. And if you’re trying to start a major business here, you may have just won an election for your guy with kickbacks on the way.

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  15. Jarjar says:

    Hard to argue with Levitt’s article. The big shocker is that his sample of rematch elections is representative of all congressional elections. I’d have thought that the only candidates willing to try again after losing to the same person from last election would be who don’t know when to hang up their hat. But looks like they’re just like any other politician.

    One caveat to keep in mind for anybody reading this who thinks they can make a successful bid for a house seat on $50. The paper may say that an extra $100 grand only gets you somewhere between 0.1% and 1.0%, but you still need a nice bank roll for these numbers apply to you.

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  16. John Mulholland says:

    I think it would be fascinating to look at how the Utah Caucus system makes money much less relevant, especially as we have removed several incumbents.

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  17. John Mulholland says:

    It might also be interesting to study the correlation of media attention with campaign success. For example in 08 Leno broke the strike before a primary and featured Huckabee.

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  18. Steve Rosen says:

    In Nov. 2011, I won a Board of Ed seat beating a well known name in my community despite being outspent 6-1.

    So, to answer your question, I say; “No, money does not really buy elections.”

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  19. rehajm says:

    A few weeks ago on this site Ian Ayers seemed to be justifying wealth redistribution because of the excess influence money buys in politics…

    “Indeed, part of Brandeis’s concern was not income equality for its own sake but rather the consequences of income inequality on democracy…”

    This article seems to cast some significant on his justification.

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  20. Chris says:

    I believe money helps greatly…. but the most important is the support a candidate receives from the media. We can’t argue the fact that some way, seems to be out of thin air, that Santorum received huge media support in Iowa before he ever saw any big increase in his polling numbers. When his media presence increased (free advertising) his poll numbers sky rocketed. Our society and its thinking is managed by our media… if a favorite broadcaster/news anchor mentions something remotely possible the masses of the American public take it as 100% fact. Wake up!!! There is more to this than we want to believe… do some research for yourself and stop taking quotes from uneducated or biased sources.

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  21. Erica says:

    I was disappointed that this report didn’t include any discussion of third party candidates and the effects of money on their campaigns. My inkling is that the first few dollars matter a lot more than the last million, so that the initial donations create that “momentum” that converts “money leads causes popularity” into “popularity causes donations.” In other words, I wish you had looked at regression and the timing of donations vs. popularity.

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  22. Stacy says:

    I thought every body new that good looks and charm won elections.

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  23. Bolster says:

    My question is methodological. The study authors were “holding other variance constant,” ie, taking covariates of some sort. If they happened to take a covariate that was a good proxy for money, that could suck all the variance out of the “money” variable and make it look weak, when it in fact isn’t. I’d need to see what was held constant before I had faith in the 1% finding.

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  24. Your Hero says:

    The paper this article is based around seems to be about 20 years old and is based primarily on data from the ’70s and ’80s.

    Today our biased media and the political ads are so overwhelmingly negative it creates a very divisive and hostile atmosphere where the majority of people(who seem evermore disinterested in politics) vote AGAINST a candidate rather than for one.

    I’m sure it’s always been like that to some extent, but I would be interested to see more recent and relevant data.

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  25. JZ says:

    That segment was a weak presentation. “Money” (a term that for the most part = variety of powerful interests) + the savy to be seen as genuine while serving business interests (backed by the military) over the public interest = the norm. Check out the free movies “The Power Principle” and “Lifting the Veil: Barack Obama & the Failure of Capitalist Democracy” at for great content on American power politic$

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  26. Millie says:

    I’m wondering if the fact that the elections looked at were rematches could have skewed the findings, even if the kind of politicians that participate in rematches are no different from politicians in general. That is, once a voter has been convinced to vote for one candidate and votes for them in the first election, it might be much harder to change their mind for the second election (unless the winning candidate turned out either phenomenally good or phenomenally bad) than it would be if they’d never voted in a race between those two candidates before.

    If you could somehow access two alternate universes where the same candidates ran against each other in the same district, but in one universe the Democrat spent way more money and in the other the Republican spent way more money (and in both universes, the two candidates had never run against each other before), then if you did a study based on that instead of on rematch elections, the observed influence of money might be greater. It also might be the same as it is in the real study, but it’s possible the rematch aspect was a confounding factor – and one that might be difficult if not impossible to control for, seeing as how we can’t actually access alternate universes.

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  27. Joan Carl says:

    Nobody seems to remember that money buys ads
    as well as people. The people believe the ads which
    are full of lies and deceits.

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