How Money Drives US Congressional Elections

Thomas Ferguson, Paul Jorgensen and Jie Chen ()
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Thomas Ferguson: University of Massachusetts, Boston
Paul Jorgensen: University of Texas Rio Grande Valley
Jie Chen: University of Massachusetts, Boston

No 48, Working Papers Series from Institute for New Economic Thinking

Abstract: This paper analyzes whether money influences election outcomes. Using a new and more comprehensive dataset built from government sources, the paper begins by showing that the relations between money and major party votes in all elections for the U.S. Senate and House of Representatives from 1980 to 2014 are well approximated by straight lines. It then considers possible challenges to this linear model of money and elections on statistical grounds, resting on possible endogeneity arising from reciprocal causation between, for example, popularity and votes. Extending the analysis of latent instrumental variables pioneered by Peter Ebbes and recently analyzed by Irene Hueter, the paper tackles this much discussed problem by developing a spatial Bayesian latent instrumental variable model. Taking a leaf from discussions of event analysis in economics and finance, the paper also examines the light thrown on the models usefulness by studying changes in the gambling odds on a Republican takeover of the House in 1994. Both approaches suggest that reciprocal causation may happen to some degree, but that moneys independent influence on elections remains powerful. A concluding section of the paper considers the alleged centerist leanings of American large corporations by comparison with members of the Forbes 400 and evidence that the effect of money in House elections has dropped slightly over time, though it remains extremely strong.

Keywords: political money; regulation; elections; political economy; United States government; campaign finance (search for similar items in EconPapers)
JEL-codes: D71 D72 G38 N22 P16 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2016-08
New Economics Papers: this item is included in nep-pol and nep-sog
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:48

DOI: 10.2139/ssrn.2817705

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