Higher campaign spending caps make elections less competitive

January 5, 2021
Delegates wave shirts and other objects as they try to have the chance to address the audience during the annual party conference in the southern coastal town of Brighton, England. (AP Photo/Lefteris Pitarakis)

Delegates wave shirts and other objects as they try to have the chance to address the audience during the annual party conference in the southern coastal town of Brighton, England. (AP Photo/Lefteris Pitarakis)

Raising spending limits on political campaigns has cut down on electoral competition and amplified the advantages of incumbents in the U.K., according to new research, a dynamic that could also impact elections in democracies around the world.

In an article published Dec. 21 in the American Political Science Review, author Alexander Fouirnaies, an assistant professor at the Harris School of Public Policy at the University of Chicago, found evidence that “loosening,” or raising, campaign spending caps drives up the costs of running electoral races, creating financial barriers that some candidates and would-be office-seekers likely can’t overcome.

The study, which draws on more than 130 years of data on U.K. parliamentary elections, offers unique empirical insights into the effects that spending caps have on campaigns in the country — and how expectations about money in politics could ultimately be influencing political representation in similar nations across the globe.

“Campaign spending seems to shape elections quite a lot,” Fouirnaies told The Academic Times, noting that spending regulations constrain candidates’ maneuvering room during races and even their decisions to enter races to begin with.

“Even though you can imagine a situation where the incumbent actually did not need to spend very much money or any money at all [in a race], they could still deter challengers, simply because of the threat of spending,” he said. The findings “could potentially suggest that we’ve been underestimating the importance of money in politics, because we haven’t taken into account this backdrop of threats.”

In the article, “How Do Campaign Spending Limits Affect Elections? Evidence from the United Kingdom 1885-2019,” Fouirnaies analyzed data into how over 70,000 candidates for the country’s House of Commons handled campaign spending under government-imposed limits. The data included information about how much money each candidate spent, how each allocated that spending across different categories of activity and which spending limits they faced in their respective contests.

During the period for which Fouirnaies had data, periodic changes in the government’s spending-limit formula often imposed different limits for races in urban and rural constituencies, for example. These limits “were made in a way where you saw a big change in some constituencies, but basically no change in others — and that’s the kind of setting I’m trying to explore,” he said.

In order to isolate the effects of changes in spending on these races, Fouirnaies utilized the variation between constituencies created by reforms of the spending-limit formula, which impacted some but not all of the areas, to compare spending levels and allocation decisions before and after the changes went into effect.

“Every comparison is made within the same constituency or with the same candidate, [and] now you can compare them at two different points in time where you see a big change in the spending limit in one setting, but no change in the other setting. And that’s the basic design in the paper,” he continued.

Fouirnaies’ analysis showed several key impacts of loosening campaign spending caps on British elections. Higher spending limits typically make campaigns more expensive, he found, mainly by driving up advertising outlays. While candidates from all parties boost their spending on average following increases in the spending cap, candidates from the Conservative Party do so at a higher rate than their rivals in the Labour Party.

The Conservatives’ spending advantage translates into a higher share of total spending and a higher vote share for candidates from the center-right party, while their center-left counterparts in Labour “appear to be systematically disadvantaged when the level of permitted spending is increased.”

The loosened restrictions also cut down on the candidate pool in a given race. According to Fouirnaies, hiking spending limits by GBP 10,000 (about $13,600) caused on average about one in 20 candidates to drop out of the running, leading money and votes to concentrate on a smaller slate of office-seekers.

Allowing more spending by parliamentary campaigns also amplifies the financial and electoral advantages of incumbents. Besides finding that incumbents increased their campaign outlays relative to challengers, he also discovered that when spending limits were relaxed by GBP 10,000, incumbents saw their vote share jump by approximately 0.75% on average.

To determine whether loosening campaign spending caps would have similar effects in other nations, researchers would need to analyze parallel data from those other places, Fouirnaies noted, much of which isn’t available in countries that haven’t kept the relevant records.

Even so, some of the dynamics observed in British elections are likely to hold for elections in other democracies, he said. For one, loosening restrictions on campaign spending is likely to ramp up costs, which some candidates can bear better than others. Higher limits favor candidates best positioned to raise contributions, a trend Fouirnaies said would probably apply to many democratic electoral settings.

Regardless of where these dynamics hold, he said, it isn’t obvious from his empirical findings whether raising or even eliminating campaign spending caps are ultimately good or bad from the typical voter’s point of view. 

Higher spending limits may help “high-ability” candidates exploit their fundraising skills to compete in and win elections they might not otherwise have been able to, Fouirnaies continued, citing the 2008 campaign of former U.S. President Barack Obama as a potential example. 

And on the other hand, allowing more money to enter the electoral process may simply be a boon to candidates who are cozier with powerful donors, a possibility that could disadvantage the voting public.

The paper “How Do Campaign Spending Limits Affect Elections? Evidence from the United Kingdom 1885–2019,” published Dec. 21 in the American Political Science Review, was authored by Alexander Fouirnaies, University of Chicago.

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