Campaign finance regulations and policy convergence: The role of interest groups and valence

Monika Köppl-Turyna

doi:10.1016/j.ejpoleco.2013.11.001

Abstract

Regulation of campaign finance of political parties and candidates is intended to decrease the political influence of special interest groups and enhance the public interest in electoral outcomes. I investigate empirically the consequences of campaign financing regulations and find that public funding leads parties' platforms to diverge whereas ceilings on individual contributions lead to platform convergence to the median voter outcome. I relate these consequences to differences in valence or intrinsic popularity of parties. I also show that platform divergence is associated with a ban on corporate donations and with requirements of public disclosure of parties' income statements.

Highlights

In the archetypical democracy, public policy is guided by the will of the people and the ”one man, one vote” principle
Regulation of campaign finance of political parties and candidates is intended to decrease the political influence of special interest groups and enhance the public interest in electoral outcomes
I investigate empirically the consequences of campaign financing regulations and find that public funding leads parties platforms to diverge whereas ceilings on individual contributions lead to platform convergence to the median voter outcome

Summary

Introduction

Public policy is guided by the will of the people and the ”one man, one vote” principle. Policies are diverted away from the will of electors toward the interests only of certain groups of the society. Parties need to spend large amounts of money on campaign activities and the incentive to receive financial means from various sources is strong. The main aim of campaign finance regulation is to make parties’ income and expenditure more transparent for both the regulatory authorities and the public, and to decrease the incentive to seek financial sources that could distort the political agenda of parties. Two stylized facts can be observed in campaign financing. Campaign advertisements are paid by groups whose objectives differ from the median voter’s objectives. Campaign advertising contains very little hard information. It is focused on persuasion, possibly by using non credible information (?)

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