1. THE EFFECTS OF INCUMBENT
& CHALLENGER CAMPAIGN
SPENDING ON ELECTION RESULTS
THE IMPORTANCE OF CANDIDATE QUALITY AND THE
IMPLICATIONS FOR CAMPAIGN FINANCE REFORM
Presenter: Kasey O’Brien
Faculty Mentor: Anthony Madonna
March 30, 2015

2. “As it is now, there are four parts
to any campaign – the candidate,
the issues of the candidate, the
campaign organizations, and the
money to run the campaign with.
Without money you can forget the
other three.”
-- Former House Speaker Thomas “Tip” O’Neill

3. - Experience working for
the Democratic
Coordinated Campaign in
2014 in the field & finance
department
- Attended multiple
fundraisers on behalf of
Michelle Nunn
Election Results
David Perdue 53.0%
Michelle Nunn 45.1%
$16,063,248
$13,796,681
WHY CAMPAIGN FINANCE?

4. - Buckley v Valeo
- Citizens United v
Federal Election
Commission
- In 2010, groups that
did not disclose their
donors rose from 1
percent to 47 percent
since 2006 elections
- Outside spending of
$304.6 million in 2010
- The “corporate
takeover of American
politics”
THE CAMPAIGN FINANCE DEBATE

5. THE “SCARE OFF” FACTOR
Incumbency advantage: staff & office allowances, the ability to
do favors & constituent casework, gerrymandered districts,
committee positions to raise funds, franking privileges

6. HOW DOES
CAMPAIGN
SPENDING AFFECT
ELECTION
RESULTS?
 AN ADDITIONAL X DOLLAR(S) SPENT
INCREASES VOTE SHARES BY X PERCENT

7. JACOBSON MODEL
- Spending by challengers has substantial impact on
election outcomes whereas spending of incumbents has
little effect
- Challenger must be the acceptable alternative AND the
reason to vote against the incumbent
- Challengers gain over one percent of the vote with every
$10,000 that they spend
- Where does this end?*
- Failure to control for quality of candidate  results in the
ineffectiveness of incumbent spending

8. BRAND NAME CAPITAL
“The more well known politicians may not have to spend very
much to win” – John Lott (1991)
- “The past sunk nontransferable investments incumbents
have made in producing political support, [such as] past
campaign expenditures and past publicity while in office”
- Lower cost of acquiring additional expenditures for more
well-known candidates
- Incumbent demand for spending depends on their brand
name capital – inverse relationship
- Smaller marginal returns for increased spending

9. CANDIDATE QUALITY
“The [challenger’s] personal characteristics.. contribute to
the strength of his or her candidacy” –Green & Krasno (1998)
Indicators of Quality:
1. Attractiveness
2. Skill
1. Occupational Status
2. Campaign Experience
3. Tenure in Public Office

10. “Explaining House elections requires that one highlight not
only the amount the challenger spends but also who the
challenger is and how the incumbent responds.”
- Green & Krasno 1988 p. 901

11. THEORY
1. The effect on vote shares by challenger spending far
outweighs the effects of incumbent spending
• Challengers have large marginal returns as they build a
solid base of support (recognition & recall)
• Little gain for incumbents as they have the benefit of
incumbency advantage
2. Maximum threshold – point where challenger has
reached a high enough level of spending to meet the
incumbent’s brand name capital
• Gains from challenger spending level off; further spending
results in relatively equal effects on vote shares
• Must consider quality and terms served by incumbent

12. THEORY CONTINUED
- High quality challenger = lower maximum threshold
- Additional spending by a low quality challenger will have
higher marginal returns than spending by a high quality
challenger
- Terms served by an incumbent
- Effectiveness at peak during first reelection
- Effects drop off after an incumbent’s fourth term
- Spending effects wane at some point because people are
not that malleable
- Spending beyond threshold = wasteful

13. METHODS
- Focus on midterm House elections
- Construction used by Green & Krasno; divide challengers
into two groups
- Create a similar “points” system for incumbents
- Separate equations for each type of candidate
- Challenger spending:
- Independent variable: challenger campaign expenditures
(CE) and challenger political quality (CQ)
- Dependent variable: challenger’s vote percentage
(increase in vote shares per dollar spent)

15. METHODS
- Incumbent spending:
- Independent variable: incumbent campaign expenditures
(IE)
- Instrumental variable: brand name recognition (CQ)
- Terms served by incumbent
- Spending by incumbent in previous election (indicates
campaigning abilities)
- Quality (“points” system)
- Dependent variable: Incumbent’s vote percentage

16. CONCLUSION
- Each increase in spending is vital for challengers to “play
catch up” to an incumbent’s brand name recognition
- More marginal benefits for challenger spending before
maximum threshold is reached
- Maximum threshold is contingent on quality of the
challenger and of the incumbent
- Incumbents are still advantaged beyond the maximum
threshold
- Further study to determine a mathematical model to
account for the maximum threshold
- Campaign-by-campaign basis

17. IMPLICATIONS FOR
CAMPAIGN FINANCE REFORM
- Jacobson’s argument:
- “Restrictions on campaign spending will have the general
effect of hurting the challengers”
- Increased limits stimulate financing & help challengers
- This could scare away challengers and contribute to
incumbency advantage
- Spending limits cannot be below the maximum threshold
- Cap on incumbent spending would be more beneficial
- Fosters a competitive political race