Money and Politics: The Effects of Campaign Spending Limits on Political Entry and Competition

Abstract

This paper studies the effects of campaign spending limits on the political entry, selection, and behavior of local politicians in Brazil. We analyze a reform that limits campaign spending for mayoral elections. The limits were implemented with a discontinuity that we exploit for causal identification. We find that stricter limits reduce reelection rates and increase political competition by attracting more candidates who are also less wealthy and rely less on self-financing. Despite their effects on electoral outcomes, stricter limits did not lead to significant short-run improvements in policy outcomes, such as in education and health. (JEL D72, O17)

Length of candidate lists and political careers: Quasi-experimental evidence from Brazil

“…Since it is not possible to evaluate the effects of district size and of candidate lists separately, as the maximum list size is a deterministic function of district magnitude close to the discontinuities, we can only evaluate the overall effect of discontinuity on the composition of marginal candidates. According to Lundell (2004) and Shomer (2014), there is no evidence that district magnitude impacts the candidate selection process, so we assume that the effects of district magnitude on the composition of the candidate list and political career are of second order (such as changing turnout (Lyytikäinen and Tukiainen, 2019), corruption (Britto and Fiorin, 2020) and expenditure (Avis et al, 2022)).…”

The petit effect of campaign spending on votes: using political financing reforms to measure spending impacts in multiparty elections

“…11 Since the spend-10 The discontinuity in the 1993 limit function at 80,000 unfortunately cannot be exploited in our analysis of the relationship between campaign spending and votes since only 5.2% of the constituencies have populations below that threshold. See Avis et al (2017) who adopt a Regression Discontinuity (RD) design strategy to analyze the impact of spending limits on candidate entry and electoral competition using a discontinuity in the limit function imposed on candidates standing for municipal elections in Brazil.…”

“…Barber (2016) analyzes how limits on campaign contributions affect the ideologies of office-holding legislators. Avis et al (2017) take advantage of a reform in Brazil that imposed limits on campaign spending for mayoral elections and find that those limits strengthened political competition. Other scholars have examined the impact of campaign finance regulations on voter participation, political efficacy, and lobby formation (see the survey by Stratmann (2005)).…”

Wars of attrition with spending constraints

“…Voters are influenced only by the media coverage, and each candidate's total spending, and so the amount of time on media coverage, is subject to a budget constraint. Though exact forms are different, most countries, including Canada, the United Kingdom, France, Israel, and South Korea, have adopted limits on campaign spending in political competition (Avis et al, 2022), which makes candidates' spending strategies subject to the regulation, and so their budgets.…”