Campaign Spending in Proportional Electoral Systems

• Author: Joel W. Johnson
• DOI: 10.1177/0010414012463889
• Published date: 01 August 2013
• Date: 01 August 2013
• Subject Matter: Articles

463889CPS46810.1177/0010414012463
889Comparative Political StudiesJohnson
© The Author(s) 2011
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Article
Comparative Political Studies
46(8) 968 –993
Campaign Spending in
© The Author(s) 2012
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Proportional Electoral
DOI: 10.1177/0010414012463889
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Systems: Incumbents
Versus Challengers
Revisited
Joel W. Johnson1
Abstract
This article (a) argues that campaign spending is no more effective for challeng-
ers than incumbents in congressional elections using candidate-centered forms
of proportional representation (PR), (b) develops a new method to estimate
spending effects in poly-candidate elections, and (c) demonstrates that spend-
ing benefits incumbents as much as challengers in the congressional elections
of three separate countries (Brazil, Ireland, and Finland). This article also offers
a theory of campaign spending effectiveness that emphasizes a candidate’s rela-
tive potential to attract new electoral support as determined by both precam-
paign familiarity and personal, partisan, and ideological attributes. Challengers
and incumbents obtain similar returns to spending under PR because its per-
missiveness encourages challengers who are limited in their abilities to build
electoral support, even when they spend heavily. The theory and findings have
important implications for understanding the effects of campaign finance and
campaign finance regulations.
Keywords
campaign spending, electoral systems, proportional representation, incum-
bents and challengers
1Colorado State University–Pueblo, Pueblo, CO, USA
Corresponding Author:
Joel W. Johnson, Department of Political Science, Colorado State University–Pueblo, 2200
Bonforte Blvd., Pueblo, CO 81001-4901, USA.
Email: joel.johnson@colostate-pueblo.edu

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Johnson
969
Campaign spending matters—it helps candidates win votes. But how much it
matters depends on the candidate running the campaign. For candidates who
begin a campaign already well-known by the electorate, campaign spending
will matter little. For obscure, unknown candidates, however, campaign
finance can make the difference between irrelevance and viability. This was
Jacobson’s (1978, 1985, 1990) explanation for why challengers in U.S.
House elections reap larger returns to spending than incumbents—a finding
that has sparked considerable debate (see Green & Krasno, 1988; Levitt,
1994). A similar debate has surfaced with respect to countries using propor-
tional electoral systems, with some studies finding differences between chal-
lengers and incumbents (Benoit & Marsh, 2010) and other studies finding no
such thing (Benoit & Marsh, 2008; Maddens, Wauters, Noppe, & Fiers, 2006;
Samuels, 2001). These debates have important policy implications. In par-
ticular, when challenger spending is more effective than incumbent spending,
regulations that limit campaign spending will disadvantage challengers and
therefore undermine electoral competitiveness and accountability.
An important implication of Jacobson’s theory of spending effects—
which has gone largely unchallenged—is that nonincumbents who enjoy
high levels of familiarity at the beginning of the campaign stand to receive
low, incumbent-like returns to spending. However, these are not the only
challengers who will find their spending relatively ineffective. Challengers
who offer fringe ideological platforms are unlikely to build much electoral
support even if they spend heavily. Also, candidates who are lacking in
appealing personal attributes (e.g., charisma) may find their campaigns much
more effective at building name recognition than electoral support. This
implies that campaign spending effectiveness is primarily a function of a can-
didate’s potential to attract new supporters, which relates to a candidate’s
precampaign familiarity as well as limitations imposed by the electorate’s
preferences for specific candidate attributes. It further implies that campaign
spending benefits challengers more than incumbents only when most chal-
lengers have significant potential to build electoral support. In elections that
use candidate-centered forms of proportional representation (PR) this is
unlikely. The proportionality and electoral fragmentation that accompany
multimember districts encourage the entry of many already familiar chal-
lengers and politically unattractive challengers, both limited in their abilities
to build electoral support. As a result, under PR the average challenger will
not gain more from spending than the average incumbent.
This article tests this hypothesis for three separate countries—Brazil,
Ireland, and Finland—each chosen for its use of candidate-centered forms of
PR and its campaign finance disclosure regulations. The results show that
campaign spending does not disproportionately benefit challengers in any

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Comparative Political Studies 46(8)
case. The results for the 2002 and 2006 Chamber of Deputies elections in
Brazil jibe with Samuels’s (2001) analysis of the 1994 elections, which also
found no difference between incumbents and challengers. However, the
results for Ireland’s 2002 and 2007 Dáil elections challenge the findings of
Benoit and Marsh (2008, 2010). The estimates for Finnish Eduskunta elec-
tions (2003 and 2007) are the first of their kind.
All of the estimates are the product of a new approach to estimating the
effects of campaign spending in poly-candidate elections. The main preoccu-
pation in the large literature on spending effects—the present study included—
is a methodological one that stems from a reliance on one-shot observational
data and a research design that estimates spending effects by comparing
spending and votes across candidates. Jacobson (1978) observed that this
approach may suggest a negative spending effect for incumbents even when
all incumbents benefit from spending, simply because vulnerable incumbents
tend to spend more money. The problem is more general and is essentially an
omitted variables problem writ large: the failure or inability to control for any
factor that is related to both electoral performance and spending leads to
biased regression estimates. The instrumental variables approach offers a way
out, but it requires variables that are both highly correlated with campaign
spending and causally unrelated to the electoral performance of individual
candidates—an unlikely combination. The method used here approaches the
problem differently, by matching similar-spending copartisan incumbents or
nonincumbents and estimating spending effects only within those candidate
pairs. In other words, the method refuses to analyze large spending differences—
which tend to stem from fund-raising abilities and electoral expectations (i.e.,
omitted variables)—and focuses only on small spending differences, which are
no less relevant to electoral outcomes (on a per unit basis) but much less likely to
be systematically related to important omitted variables. As a result, the approach
minimizes the potential for simultaneity bias.
The article proceeds as follows. The first section outlines the theory of
campaign spending effectiveness and its consequences for candidate-centered
PR elections. Next, the article introduces its method for estimating spending
effects. The third section discusses the countries and data, and the fourth sec-
tion provides the spending effects estimates for incumbents and challengers
for each country. The final section discusses the implications for campaign
finance policy and avenues for further research.
Who Benefits From Spending?
In his well-known study of campaign spending in U.S. congressional elec-
tions, Jacobson (1978) argues that incumbent spending is less effective than

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Johnson
971
challenger spending because incumbents spend their time in office saturating
their districts with information about their accomplishments. As a result,
campaigning by incumbents
produces, at best, very modest gains in support. Challengers, in con-
trast, typically begin the campaign in obscurity. . . . Their level of
campaign activity—largely, if not entirely, a function of campaign
spending—thus has a strong influence on how well they do at the polls.
(Jacobson, 1990, pp. 334-335)
In this account, spending effectiveness relates to the ability of campaigns
to familiarize an electorate with a candidate. Campaign spending can matter
in other ways—it can, for example, mobilize voters. However, although the
cost of mobilizing a supporter is unlikely to vary much across candidates, it
is clear why the familiarity-building effect of campaigns is disproportion-
ately effective for lesser-known candidates—provided, that is, that voters
evaluate candidates by more than just their party labels. It follows that if chal-
lengers tend to be more obscure than incumbents, the spending effect for the
average challenger (SE ) will exceed the spending effect for the average
c–
incumbent (SEi–).
It is important to note, however, that the difference between SE and SE
c–
i
–
will not be large or meaningful if there are many (a) “already familiar” chal-
lengers, who begin the campaign with incumbent-like levels of familiarity, or
(b) “politically unattractive” challengers, who begin the campaign in obscu-
rity and yet prove unable to attract supporters no matter how much they spend.
Going further, if some obscure challengers do not benefit much from spend-
ing, it implies...