Individual Campaign Contributions and Candidate Ideology

1. Individual Campaign Contributions and Candidate Ideology Article by Michael J. Ensley Presentation by William Jergins

2. Overview • Theoretical models of Campaign Donations and Ideology • Individual Campaign Donations • Reverse Causality in Campaign Donations and Ideology • The Model • Results • Conclusions

3. Theoretical Models • “At least two critical factors have been identified in assessing whether the presence of campaign contributors lead candidates to adopt divergent policy positions… [Mueller and Stratmann] argue that how money influences voters’ decisions (i.e., whether advertising is informative or persuasive is critical to understanding candidate divergence. • The second major factor concerns the assumptions about the behavior of contributors. Welch (1974, 1980) made a distinction between quid pro quo and ideological models of campaign contributions.”

4. Models based on Contributor Behavior • Quid Pro Quo Models • Where contributions are given to gain influence over policy and favorable policy outcomes • This model has been shown to work well for PAC Contributions • Ideological Models • Candidates positions are taken as given and people contribute to the candidates they see as most favorable ideologically • This has been shown to work well in modeling individual contributions • Ensley tests two types of ideological variables to see which better predicts individual campaign contributions

5. Reverse Causality • “The argument centers on the observation that incumbents possess numerous advantages, such as name recognition, charisma and personal characteristics (e.g., racial or religious background), as well as constituent gratitude for district service and pork barrel projects delivered to the district. These non-policy advantages provide incumbents who possess thes advantages may be able to raise money regardless (or in spite of) their policy positions. In short, the link between policy positions and fundraising may run in the other direction.” -- Ensley • To deal with this problem Ensley Estimated the model using a two stage least squares method

6. The Model • The dependent variable is the natural log of the total amount of contributions in thousands of dollars • One model is estimated for each party • Independent variables • Ideology • A score between 0 and 1, with 1 meaning most conservative and 0 meaning most liberal • Divergence • Is the absolute value of the difference between the two candidates Ideology scores • Closeness • A measure of the closeness of the race with four categories: Safe Democrat/Republican, Democrat/Republican Favored, Leans Democratic/Republican, and No Clear Favorite

7. The Model Continued • Democratic/Republican Incumbent • Dichotomous variables that capture if there is an incumbent from the respective party running in the race • Democratic/Republican Leader • Dichotomous variables that indicate if the candidate is a member of the parties leadership • Democratic/Republican Quality • Dichotomous variables that indicate if the candidate has previously held an office • Democratic/Republican Seniority • Natural log of the number of years served by the incumbent. 0 if the candidate is running for an open seat or if they are the challenger.

8. Results with Ideology only • All variables are in the expected directions and most are statistically significant • The model tells us a Republican two standard deviations more conservative than the average will increase expected donations from $144,000 to $258,000 • Similarly a Democrat two sd more liberal than the average would increase their expected contributions from $85,000 to $150,000

9. Results • We see that most of the control variables are statistically significant and in the desired direction • Divergence (the ideological variable) however is not statistically significant for Democrats and is in the wrong direction for Republicans

10. Results with both Ideology and Divergence • Divergence is still statistically insignificant in the Democratic Model and is significant but in the wrong direction in the Republican Model • Ensley believes the insignificance and false sign of Divergence is, because, while campaign contributions isn’t a simple function of Candidate Divergence as is often assumed, the opponents ideology may be in of itself significant.

11. Conclusions • “The results presented provide strong evidence that candidate ideology is an essential component in explaining fundraising from individual citizens, as shown by Francia et al. (2003, 2005). More importantly, these findings hold even if we control for the relative position of the opponent. Candidate divergence does not appear to have a meaningful effect on fundraising, as the standard model of ideological campaign contributions usually assumes. This is a significant finding because it has implications for candidate positioning strategies. If a candidate can adopt a more extreme policy position and attract campaign contributions without counter mobilizing contributors on behalf of his or her opponent, this suggest that candidate divergence may be an equilibrium strategy…. Further, given that individual citizens are the largest single source of contributions for candidates and the Bipartisan Campaign Reform Act of 2002 raised the contribution limit from individuals… the centrifugal pull of campaign contributors may have become stronger in recent elections.” -- Ensley

12. Economics Joke of the Day • Why don’t Keynesians ever get laid? • There supply doesn’t create it’s own demand.