How Much Does Campaign Spending Influence the Election? A Freakonomics Quorum

We have long argued (most recently in this Marketplace podcast) that campaign spending isn’t nearly as influential in elections as the conventional wisdom holds.

This week, with the G.O.P. presidential hopefuls in South Carolina spending lots of money (and time and effort) and everyone’s talking about “super PAC” spending, we thought it was a good occasion to air this question out further. We’ve convened a Freakonomics Quorum on the topic, soliciting replies from a few folks with expertise in the realm. Thanks to all of them for participating.


Douglas Holtz-Eakin, the director of domestic and economic policy for the 2008 John McCain presidential campaign, has been chief economist of the President’s Council of Economic Advisers and was the sixth director of the non-partisan Congressional Budget Office.

Beware the Super PAC? 

The political season is upon us (candidates are in South Carolina as I write this) and with it the POMP (Punditry Outrage about Money in Politics) season.  This year POMPous breast-beating focuses on those pesky “Super PACs” that can collect unlimited amounts of cash and weigh in on behalf (but not plan or coordinate with) a candidate. With certitude and POMPosity, Americans are told their electoral system is being sullied by monetary incentives and activities.

I will save my defense of systems driven by economic incentives and activities for another occasion.  Let’s talk about POMP.  To begin, make no mistake about it, there is a lot of money in modern American politics.  And if my first exposure to the fundraising demands of modern, national electoral politics during the McCain presidential campaign is at all representative, the mechanics can be eye-opening. 

I shall never shake the scene at the back of the Straight Talk Express: McCain holding court with the press while simultaneously fielding continuous handoffs of cell phones from aides dialing donors for dollars.  Still, and for the record, the McCain loss was not the result of the vaunted Obama small-dollar internet donor campaign, his cynical “yes-I-will, oops no-I-won’t” policy on public financing, or any other aspect of the financial tsunami that washed over the McCain campaign.  It had more to do with the financial tsunami that hit the country.

Still the POMP crowd insists money is killing the system.  If so, how does money matter?  There is now a reasonably robust empirical finding that pure campaign spending in head-to-head Congressional elections does not tilt the playing field in any significant way.  And there is a corollary that traditional PAC spending (which got funneled largely to incumbents) had comparably small effects.  These results suggest that if money matters, the impact must derive from other channels.  So, in the interest of promoting a more nuanced research agenda (hopefully to be financed by POMPs!), let me suggest a few channels that introspection suggests merit investigation.

Modern politics is about a lot more than the ultimate head-to-head to matchups.  Serious consideration is given to (a) success at the top of the ticket, whether it be the presidential, gubernatorial, or other race; (b) factors that contribute to getting out the vote; (c) endogenous determination of the quality of candidates (a euphemism that encompasses (i) candidate recruitment, (ii) the incumbent/challenger getting the bejeezus beaten out of her/him in the primary, and (iii) and the systematic generation of uncomfortable votes prior to an election); (d) the ability to legally defend and/or challenge the legitimacy of votes; (e) the time, focus and energy cost to the candidate of fundraising activity. 

All of these involve resources; that is, money.  And they are far tougher to link to specific electoral outcomes.  I encourage the Freakonomics community to get to  work. 

My bet is that when all is said and done, it will be POMP versus circumstance.  And the latter will win.  At any moment the country has real challenges, real needs, and real demands for leadership.   And those trump money.

Robert Shrum, a senior fellow at New York University’s Robert F. Wagner Graduate School of Public Service, has been a senior adviser on many Democratic campaigns, including Dick Gephardt (1988), Al Gore (2000), and John Kerry (2004).

In politics there is certainly no linear relationship between amount of money and degree of success. Just ask the well-heeled Republican losers of presidential primaries past — former Texas Governor John Connally, former Texas Senator Phil Gramm, and former Mayor and front-runner Rudolph Giuliani. Or how about Howard Dean, who raised and spent nearly $40 million before crashing and burning in the 2004 Iowa caucuses?

Big money without the right message can become a penny waiting for change. Thus Dean misread the Iowa landscape. While voters were focusing in on one overwhelming question — which candidate had the best chance to beat George W. Bush? — Dean and Dick Gephardt were engaged in a well-financed exchange of petty negative ads. Maybe Dean never could have been a plausible answer to the determinative question in Iowa in any event. But he never seemed to try — and left the field almost entirely open to John Kerry who, Iowans rightly judged, could give Bush a real run for the White House. Similarly, this year no amount of cash could have rescued the malaprop Rick Perry; GOP caucus goers decided, once again rightly, that he couldn’t face up to Barack Obama — or measure up to the requirements of the Oval Office.

Kerry’s come-from-behind win in Iowa also illustrates the other side of the coin: You don’t need the most money, but you do need enough. Kerry took out a mortgage on his home to keep his campaign afloat when he was written off in the fall.

In 1960, Hubert Humphrey’s resources in the West Virginia primary weren’t remotely equal to John Kennedy’s — and Kennedy’s victory there all but sealed the nomination for him. Gephardt, in his first run in 1988, carried Iowa but then couldn’t raise enough money fast enough to compete on Super Tuesday. In 2012 the disparity in super-PAC money let pro-Romney forces dismember Newt Gingrich during December. Gingrich is probably fatally flawed, but it didn’t help that he couldn’t defend himself or go after Romney early on.

Finally, money doesn’t make all the difference — unless it does. Much as Obama did in 2008, Kerry raised prodigious sums, a lot on the internet, during the primaries four years before. The campaign then made a mistake of accepting federal funding in the general election; this meant that Kerry had the same amount of money for a thirteen-week campaign that Bush had for eight — because the Republican convention came more than a month after the Democrats, and Bush could keep spending primary dollars in the meantime. The result was a form of financial disarmament which deterred a swift response to the Swift Boat ads — because that would have drained limited end-of-the-race funds in mid-August. More broadly, as the 2008 Obama experience suggests, s
taying outside federal funding could have let Kerry broaden the list of target states and potentially prevail in a tight contest where a football stadium’s worth of voters in Ohio decided the outcome.

So gold doesn’t always glitter in politics — but you better have some of it, and sometimes, sometimes, having the most can matter the most. 

Jeff Milyo is an economics professor at University of Missouri at Columbia. His research includes campaign finance, state and local health policy, elections, and the media.

The misperception that political spending drives electoral outcomes is reinforced every campaign season by sensational media coverage, post-election debriefs from losing candidates and the exaggerated rhetoric of professional reform advocates.  And this first presidential election cycle post-Citizens United promises to bolster that errant view as sanctimonious posturing by pundits on the evils of money in politics will likely crescendo to a spectacle rivaling only a North Korean grief orgy.

It is true that winning candidates typically spend more on their campaigns than do their opponents, but it is also true that successful candidates possess attributes that are useful for both raising money and winning votes (e.g., charisma, popular policy positions, etc.).  This “reverse causality” means that campaign spending is potentially as much a symptom of electoral success as its cause.

In order to identify the treatment effect of campaign spending on electoral success, researchers exploit natural experiments. For example, imagine re-running a race between two candidates but varying the campaign spending of each; repeat that exercise enough times and you have an experiment that will allow you to observe the causal effect of campaign spending, all else constant.  That’s basically the approach taken by Steve Levitt in his seminal study of repeat meetings of the same Congressional candidates over time.

Levitt finds that changes in campaign spending produce negligible changes in electoral outcomes when candidate characteristics are held constant.  Now that doesn’t mean that candidates don’t need to get their message out to voters.  We’re talking about marginal changes in campaign spending.  Given you are already spending a million dollars running for a House seat, another hundred grand or so won’t make any appreciable difference.

Of course, repeat meetings of candidates don’t happen by chance, so Levitt’s study is susceptible to the criticism that it isn’t the cleanest of experiments.  However, I have poked at those results without being able to overturn them, even though I was highly motivated to do so (Steve is a great friend, but the professional acclaim I might have had from reversing his finding far outweighs the value of one friendship at the margin).

I have examined several other natural experiments and found similar results. For example, large shocks to campaign spending from changes in campaign finance regulations do not produce concomitant impacts on electoral success, nor do candidates with vast personal wealth to spend on their campaigns fare better than other candidates.

These findings may be surprising at first blush, but the intuition isn’t that hard to grasp.  After all, how many people do you know who ever change their minds on something important like their political beliefs (well, other than liberal Republicans who find themselves running for national office)?  People just aren’t that malleable; and for that reason, campaign spending is far less important in determining election outcomes than many people believe (or fear).

Bryan H

My issue is not how money influences the election itself, but what happens after the election. How is Company A supported by Politician B once they are in office?

Max L

This is exactly what I came here to comment. This article by Stratmann provides a review of some of the literature (skip to p.143 for a discussion of how donations affect policy):

Bu$y B

There is so much talk on the left about citizens united that I'd love to see a study about pre and post citizens united, see if there is any difference at all. I suspect not.

Michael Peters

You mean a study of only 1 election cycle? Yeah, you won't have any problems with sample size there...

Bu$y B

The claims are that after the citizens united decision, "the floodgates will open', releasing a flood of corporate cash. Immediately. So yeah, a study of this presidential election versus the last. I'm a labor activist and union steward yet I'm not blind to the fact that 4 out of the top 10 contributors last election were unions. After reading Freakonomics I've become skeptical of the effects of $ on elections, which among my colleagues is thought to be obvious.


So if money does not influence election outcomes, why not ban all political contributions and have that money be put to use somewhere where it actually does make a difference?


Because of that pesky free speech thing...


One question that doesn't get near enough attention is - why does so much money flow into elections? What is this money buying? It flows in such large amounts because there is so much to buy. It is merely an expression of how large and powerful the federal government (for one) has grown. As it continues to grow an infiltrate every corner of our lives, there is certainly much to be purchased. Money will always find its way into elections. For those wishing to reduce the money flowing to them, go to the source - the government itself - and reduce the amount of power and influence for sale.


I suspect this is similar to the "can money buy happiness" question that has appeared on these pages before; the findings in that case were that money can't buy happiness, but lack of money can cause sadness.

The experts seem focused solely on the question of whether the best-financed candidate wins disproportionately, but they are ignoring the question of whether a poorly financed candidate can do well at all. For example, if Alice and Bob are both running in a party primary for a seat in the state house of representatives, and Alice has $50,000 and Bob has only $3,000, does Bob stand a chance? What is the minimum amount of money necessary to viably compete for a local election? Or a state-wide office? Or a US House seat? While you might be able to run for school board with a few hundred dollars, I doubt you can run for a congressional seat without either independent wealth or financial backing from people who will want access later on.



I think your point is moot here. It's not that the BIG money influences elections (since many of the same donors contribute to all sides) as much that it isinfluencing the policy later of the would be candidate's that assume office...these donations, I speculate, are all largely conditional on the premise that you get what you pay for and theses candidates are all bought and paid is a reality of campaigning...and should an elected official seek re-election he will have to call on the donors again to come to his aid...if he inacts policies that march to a different drum then his money contributors then the money will all but dry is this influence that has corrupted the system and stolen the voice away from the average American.

dave gershner

Obama has raised more money than all the pubs running for prez combined. Google it. Fact.
Even more interesting President Obama has raised twice as much money as romney from the
millionaires at Bain Capital.
Wonder what they know?
Most important, are we better off? At least 50% better off than under bush, likely 500%, but
the DJIA is up over 50% since President Obama took office.
Historic, unprecedented and a vast creation of wealth. Do you really believe with that record
Obama can lose?


U6 is also at 16%, which would seem to indicate we're actually about 100% worse off.


While it may not have a linear relationship to the outcome of an election in the short run (election cycle) there is a lot of evidence that spending has a significant impact on much in an election.

There was a recent AP story about how the ads were more effective than the candidate actually getting out and meeting with voters individually. This is based largely on exit polls though, so who knows the accuracy. (Available at )

While money may not be very effective at getting a voter to cross party lines, it likely has much more impact when it comes to ensuring that the candidate is recognized in the campaign, which can go a long way when the candidate is not already a political figure to the audience they are appealing to.

The second worrisome thing about these comments is that they seem to be supporting the Super PAC spending to a very high degree. While the spending might not be the deciding factor in an election, it's hard to argue it has NO impact, particularly once you reach places like the national stage.

The truly worrisome thing is how little public accountability there is with the money. We essentially have a situation where foreign entities and individuals can bankroll a candidate. As others have pointed out, perhaps the worst part of the Super PAC spending isn't the impact on the elections themselves, but the post election loyalties and debts owed by the victor.



You're missing the point by asking whether the money directly affects voters. That's not the point at all! As with ANY form of advertising, there is most definitely some Nash equilibrium for the campaign spending strategy that is far, far lower than the actual amount of money spent by either candidate.

Despite this, campaigns have been getting increasingly and dramatically more expensive, ignoring this Nash equilibrium, and that means they're requiring more commitments of money from more corporations or unions with deeper pockets, and therefore candidates must make political commitments to more and more special interests.

So the question is not whether elections are being bought, but whether the politicians are.


Thank you Robert Shrum for the needlessly-lengthy explanation that the law of diminishing marginal returns also applies to money in politics.

Michael Lewis

Mainstream media corporations are the ultimate super pacs and they are exempt from campaign laws.

From 1791 to 1886 1st Amendment freedoms of speech, press and assembly were the sole rights of flesh and blood citizens.

From 1886 to 1973 flesh and blood citizens and media corporations enjoyed equal freedoms of speech and the press.

From 1974 to present only the commercial media enjoy unrestricted freedom of speech and the press. Following reports of serious financial abuses in the 1972 Presidential campaign, Congress amended the FECA in 1974 to set limits on contributions by individuals, political parties and PACs.

2 USC 431 (9) (B) (i) The term "expenditure" does not include any news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication, unless such facilities are owned or controlled by any political party, political committee, or candidate;

And what is the difference between slanted news stories or editorial opinions and political ads anyway?

The media’s crocodile tears about the evils of money in politics is so hypocritical. Distributing political ads to the masses is the biggest expense of political campaigns. If the media were to carry political ads, as a public service, it would greatly reduce the need for money in politics! But corporate media are the recipient of billions of dollars in campaign ads.

The 1st Amendment is not a loophole in campaign laws. Campaign laws are corruption of the 1st Amendment.

Amendment 1
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people to peaceably assemble, and to petition the Government for a redress of grievances.

To restore equal protection under law the press exemption must be extended to citizens and citizens groups!



Every one of these responses missed one big issue related to money in politics. Politics in this country, at the national level, requires a large investment just to get started. Yes, once you're already in the race, more money does not necessarily help (though it certainly doesn't hurt). But you need that initial investment to get going. You either must have that money yourself, or spend time convincing people to give it to you, neither of which is workable for the vast majority of the American public. And that initial investment is *big*.


I'm going to talk not about campaign finances, but the presidential election process in general. It seems to me (as an outsider) that the system of primaries decreases political choice and increases polarization. For example, it seems no Republican candidate can admit to global climate change being a problem. No centrist politician could become president, even if they would be very popular, because neither party will elect them as candidate.

So here is my proposal. We keep primaries, but they change drastically in nature. All the presidential hopefuls (from both parties and independents) appear on the primary ballot. Voters get to vote for one of them. There is some threshold for how many votes you need to get nation wide. If a candidate accumulates that many votes in the primaries, they get to be on the presidential election ballot. My feeling is that the threshold should be set so that typically one gets 2-3 candidates from each major party plus 0-2 independents.

In the actual presidential election, voters rank the candidates in order of preference. The winner is chosen by a Condorcet algorithm (

These methods favour compromise candidates - broadly speaking, electing who the most people are least unhappy with. They also eliminate the spoiler effect of a third party candidate splitting the vote - such as Ross Perot or Ralph Nader - while still giving those candidates a fair run. Also having (e.g.) three Democrat candidates on the ballot instead of one does not reduce the chance of a Democrat president being elected - the party faithful will simply rank the three candidates as their top three preferences.

There would be more choice than available in the current bipolar system. E.g. one could get a fundamentalist Christian with Democratic spending priorities, or an environmentalist fiscal conservative.