Good Money and Bad Money: Do Funding Sources Affect Electoral Outcomes?

• Published date: 01 June 2005
• DOI: 10.1177/106591290505800214
• Author: Brad Alexander
• Date: 01 June 2005
• Subject Matter: Articles

Good Money and Bad Money:
Do Funding Sources Affect Electoral Outcomes?
BRAD ALEXANDER, EMORY UNIVERSITY
There is lively public debate about the normative impact of different kinds of money in elections. However,
there is surprisingly little examination of the practical impact that funding sources have on election outcomes.
Even if we assume that voters do not care directly about campaign finance, there may still be incentives built
into the system to discourage fundraising from some sources and encourage it from others. Therefore, I exam-
ine the actual impact of out-of-state donations, PAC donations, and self-financing on election outcomes in
open seat House elections in the 1996, 1998, 2000 and 2002 cycles. I find that some kinds of fundraising are
correlated with success, while others are correlated with failure, although at a lesser level than district parti-
sanship or total campaign spending. These results offer promise for addressing some measurement issues in
the congressional election field, as well as possible directions for future research.
At least among political elites—primarily interest vast majority of funding from numerous individuals living
groups, elected officials, and media outlets—there is
within the state where they are running. PAC donations
a widespread sense politics is full of "dirty money"
would be almost absent from the mix, and self-financing
that causes politicians to regularly neglect the public inter-
would be limited to a relatively small share of total spend-
est and focus instead on the interests of major donors.1
ing. The House would—in this campaign finance utopia—
Whether through accounts of widespread PAC donations or
be populated not by a large number of millionaires acting
stories about candidates who spend tens of millions in per-
primarily on behalf of interest groups, corporations, and
sonal funds trying to win elections, there is lively public
wealthy pals, but by a more representative sample of the
debate about the normative impact of different kinds of
American public with financial support flowing primarily
money in elections. However, there is surprisingly little
from the citizens they represent.
examination of the practical impact that funding sources
Although public concern over campaign finance is not
have on election outcomes.
particularly high, there may be ways in which the presence
If voters are truly outraged by particular kinds of dona-
or absence of funding from sources mentioned above alters
tions to congressional candidates, one would expect to see
electoral outcomes beyond direct influence on public opin-
their disappointment reflected in election outcomes. If "bad
ion. If candidates who raise money in particular ways are
money" corrodes electoral linkages, we should expect can-
more or less likely to win, it may be because particular types
didates who raise "good money" to benefit electorally from
of fundraising are proxies for other factors (e.g., candidate
doing so. Even if we assume that voters do not care directly
quality) or because fundraising has direct political impacts
about campaign finance, there may still be incentives built
(e.g., grassroots organizational benefits). Candidates who
into the system to discourage fundraising from some
raise money within their home state may enlist supporters
sources and encourage it from others. Therefore, I examine
who can actually vote for them in the process. Self-financ-
the actual impact of funds from three suspect sources on
ing candidates are not forced to fundraise, and may decide
election outcomes in open seat House elections in the 1996,
not to do so, foregoing the electoral benefits fundraising
1998, 2000 and 2002 cycles. Specifically, I focus on out-of-
might bring. Elected officials who rely on PAC funding
state donations, PAC donations, and self-financing. I find
might be isolated from their constituencies or benefit from
that some kinds of fundraising are correlated with success,
PAC support representing organized voters in their district.
while others are correlated with failure, although at a lesser
Research in this area has the potential to contribute to
level than district partisanship or total campaign spending.
our understanding of both legislative behavior and the
dynamics of political campaigns. On the legislative front,
THEORY AND BACKGROUND
merely knowing what kinds of donations are correlated with
political success can help us understand how members
The most theoretically pleasing model candidate for
might allocate their fundraising time, or which potential
those who worry about the impact of money on Congress is
donors might be expected to receive the most informal leg-
relatively simple to describe. This candidate would raise the
islative attention. In terms of campaigns, there are numer-
ous areas where this research might make useful additions.
For example, contribution categories are convenient proxies
1 The phrase "special interests" alone appears in the Lexis media database
for measuring the role of organized voter groups in deter-
125 times in the past six months.
mining outcomes, and knowing which categories correlate
Political Research Quarterly, Vol. 58, No. 2 (June 2005): pp. 353-358
with success might tell us something about the importance
353

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354
POLITICAL RESEARCH QUARTERLY
of special interests in elections. Or, if certain kinds of con-
The explanatory variables in this analysis are the per-
tributions are consistently correlated with political success,
centage of donations received by each candidate, through-
researchers might be able to use such percentages as an
out the cycle, from PACs, in-state donors, and their own
effective measure of underlying factors that have proven dif-
bank account. These data were all obtained online through
ficult to observe, such as candidate quality.
either the Center for Responsive Politics, at www.opense-
crets.org or the Political Moneyline, at www.tray.com. The
RESEARCH DESIGN
figures provided on both sites are tabulated directly from
campaign disclosure reports filed by candidate committees
I generate some preliminary answers to these questions
with the Federal Election Commission. The PAC and self-
by looking at correlations between funding source and elec-
financing figures are simply the percentage of the candi-
tion outcomes. The unit of analysis for this study is all open
...