The Iceberg Theory of Campaign Contributions: Political Threats and Interest Group Behavior

Abstract

We present a model where special interest groups condition contributions on the receiving candidate's support and also her opponent's. This allows interest groups to obtain support from contributions as well as from threats of contributing. Out-of-equilibrium contributions help explain the missing money puzzle. Our framework contradicts standard models in predicting that interest groups give to only one side of a race. We also predict that special interest groups will mainly target lopsided winners, whereas general interest groups will contribute mainly to candidates in close races. We verify these predictions in FEC data for US House elections from 1984-1990

Electoral Contributions and the Cost of Unpopularity

“…In some respect, our work is complementary to this approach since our notion of popularity incorporates the broader concept of an industry's reputation which is not necessarily related to its share of employees, and is measured at the national level instead of exploiting district level variations. Chamon and Kaplan (2013) find that ideological lobbies finance their like-minded partisan candidate when elections are close, and therefore campaigns may affect the electoral outcome. Non-ideological groups instead contribute when elections are lopsided in the intent of "buying" policy favors from the advantaged candidate.…”

“…Chamon and Kaplan () find that ideological lobbies finance their like‐minded partisan candidate when elections are close, and therefore campaigns may affect the electoral outcome. Non‐ideological groups instead contribute when elections are lopsided in the intent of “buying” policy favors from the advantaged candidate.…”

“…The idea is that the benefits of political action arise mainly from an industry's inability to solve problems of collective action or ameliorate market conditions without government intervention. Other recent contributions in this direction include Bombardini and Trebbi (2011), that analyze the relationship between interest group size and contributions, and Chamon and Kaplan (2013), that distinguish between the behavior of ideological versus non-ideological groups. Bombardini and Trebbi (2011) show that larger IGs contribute less funds because they can alternatively offer candidates considerable direct support in the form of votes.…”

Disclosure and Corruption

“…The failure of such actors to spend on politics does not imply that they have not corrupted politicians. Because of threats, a deeply corrupt system could be characterized by surprisingly little spending on political speech (see Chamon and Kaplan 2013).…”

The Price of a Vote: Evidence from France, 1993-2014

“…There is large literature on the determinants of campaign contributions (see e.g Chamon and Kaplan, 2013;Cotton, 2009Cotton, , 2012Petrova et al, 2017)…”