Campaign Finance Reform

George Mason University, Fairfax VA

Investigators

Abstract

Campaign finance reform is a vigorously debated issue in virtually every U.S. election, both congressional and presidential. Some claim large amounts of campaign spending turn political races into fund-raising contests biased in favor of incumbents, while others argue that unrestricted spending may be the only way for challengers to even the playing field. To date, scant evidence exists regarding the effects of campaign finance restrictions on election outcomes. Whether stricter regulations amount to incumbency protection laws, or whether they help challengers to compete remain an unanswered empirical question. Although federal campaign finance laws have changed very little until the recent 2002 legislation, state campaign finance laws exhibit sufficient variation across states and over time. Changes in state-level regulations implemented over the past twenty years have the potential to provide insight into the effects of campaign finance regulation on vote shares and the closeness of elections, and also provide a natural testing ground for theoretical campaign finance models. Despite this, no systematic study of the effects of state-level campaign finance rules on electoral outcomes has been undertaken. This research project represents the first systematic study that comprehensively examines the effects of state-level campaign finance rules over the past twenty years. This study examines the effect of state campaign contribution law changes the competitiveness of state House elections between 1980 and 2002. This research project addresses the fact that changes in laws are not exogenous, and thus uses an instrumental variable technique to address the potential endogeneity of campaign contribution law changes. Thereby it identifies a causal effect of contribution limits and provides answers to long-standing questions as to how campaign finance laws affect