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Electoral Contributions and the Cost of Unpopularity

Author

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  • Thomas Bassetti

    (University of Padova)

  • Filippo Pavesi

    (Department of Economics (University of Verona))

Abstract

When considering contributions to electoral campaigns in the U.S., the data reveals that total contributions within industries tend to vary signifcantly over time. To explain this evidence, we present a model in which interest groups finance politicians that require funding for campaign advertising in exchange for policy favors. Our model predicts that interest groups related to industries that experience a rise (decline) in popularity will reduce (increase) the amount of resources devoted to campaign financing. Intuitively, an industry that suffers from a loss of popularity will face greater costs of obtaining policy favors, since it must provide candidates with greater contributions for campaign advertising, in order to compensate for its decline in reputation. The empirical analysis, based on U.S. House elections between 2000 and 2004, strongly supports this finding.

Suggested Citation

  • Thomas Bassetti & Filippo Pavesi, 2015. "Electoral Contributions and the Cost of Unpopularity," Working Papers 05/2015, University of Verona, Department of Economics.
    • Handle: RePEc:ver:wpaper:05/2015
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    More about this item

    Keywords

    Campaign Finance; Interest Groups; Elections; Popularity;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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