Elections and Political Investment

Elections select officeholders and policies, but they also signal to political actors where to invest their time and money. This paper presents a framework for understanding these effects, in which political investors (e.g., donors, activists) allocate resources where expected political fundamentals favor their party. Investors possess idiosyncratic local knowledge but also public information in the form of recent election results. These signals are complementary: where local knowledge is good, even the narrowest vote-share majorities can align beliefs and concentrate investment. I apply this framework to the changing political geography of the United States between 1940 and 1972, when urban and minority areas came into play for the Democratic Party. A regression discontinuity design based on close presidential elections shows that counties narrowly won by Democrats saw pronounced increases in Democratic local officeholding and voter support in subsequent election periods. This does not reflect direct impacts of presidential elections on local offices, but rather indirect shifts through political investment, including heightened activity in newspaper advertising, phone banking, and civil rights mobilization. Effects are concentrated in urban, Black, and union areas where dense organizational networks enhanced local political knowledge. Together, the findings show how elections organize political actors not only at the ballot box but through the information they convey.