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

This paper explores the relation between campaign spending and votes, in France, relying on political financing reforms as a quasi-natural experiment to assess if and how spending affects votes, for both incumbent and challenger candidates in multiparty legislative elections. The French reforms were adopted in the mid-1990s, modifying the fundraising rules in three important ways: (1) spending limits were reduced, (2) legal entities no longer were allowed to fund candidates, and (3) the maximal amount of candidates' personal campaign spending reimbursed by the State was raised. We study observations on two consecutive legislative elections, one before and one after the reforms. The difference in campaign expenses across elections turns out to be strongly affected by the reforms: candidates from the extreme parties (far left and far right) increased their expenditures substantially, while the candidates fielded by moderate parties reduced them considerably. Focusing on politicians running in both elections, we estimate the impact of spending using first-difference panel data methods and TSLS. Our instrumental variables for the difference in spending are constructed from the regulatory reforms. We find that spending by incumbents did not have statistically significant effects on their vote shares. Spending by challengers is statistically significant but the impact nevertheless is economically small.