Campaign spending limits, incumbent spending, and election outcomes

Abstract

We study the impact of campaign spending limits for candidates in Canadian federal elections. We first demonstrate that spending limits are binding mostly for incumbent candidates. We then use this information to produce endogeneity-corrected estimates for the impact of incumbent spending on electoral vote shares. Furthermore, we examine the impact of spending limits on broader measures of electoral outcomes, finding that larger limits lead to less close elections, fewer candidates, and lower voter turnout.Milligan is also affiliated with the NBER. We thank two anonymous referees, the editor, and participants at the CEA conference, the WEA conference, and the UBC empirical lunch seminar for comments. Funding from SSHRC is gratefully acknowledged.

Asymmetric contests with liquidity constraints

“…Moreover, Gross et al (2002) conclude that spending limits reduce the spending of the incumbent and the challenger in gubernatorial elections from 1978 to 1997 in the United States. Using data from 1997 to 2000, Milligan and Rekkas (2008) find that higher spending caps lead to less close races in Canadian federal elections.…”

Incumbency advantages in the Canadian Parliament

“…After all, the reason that the candidate is in fact the incumbent suggests that perhaps he or she is the best (highest ability) candidate. Researchers have documented an incumbency advantage for Canadian parliamentary elections in the past, but these estimates have generally been secondary to other goals (e.g., see Eagles 2004; Milligan and Rekkas 2008) and have studied only the incumbency effect on vote shares. In these works, the incumbency effect is estimated based on a dummy variable approach across the entire sample of candidates in the particular election year(s).…”

“…As such, identification comes from the assumption that all other variables that could affect vote shares have been controlled for. Milligan and Rekkas (2008) investigate the impact of campaign spending on vote shares. Their control for incumbency effects demonstrates that incumbents gain an average of at least 9.46% of the vote share.…”

Negative campaigning in a probabilistic voting model

“…Cox and Munger (1989), Endersby et al (2002), and Herrera et al (2008) consider the effects of campaign spending on voter participation. Sahuguet and Persico (2006), Milligan and Rekkas (2008), Cotton (2009), and Pastine and Pastine (2012) analyze the effect of campaign spending limits.…”