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.

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  1. 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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  2. 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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  3. 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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  4. 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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  5. 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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  6. Stacy says:

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

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  7. 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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  8. 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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