Do Intiative Backers Waster Their Money? Revisiting the Research on Campaign Spending and Direct Democracy

Abstract

The existing literature on campaign spending in direct democracy campaigns has found a puzzling asymmetry: Spending in favor of propositions appears to have no effect on their fate at the ballot box, while opposition expenditures appear to drive down their vote shares. And yet interest groups continue to spend millions to back their measures. Are they wasting their money, or has the traditional academic approach to estimating its effect obscured its true impact? We show that many analyses of money and direct democracy do not incorporate the lessons of the wider literature on campaign finance. We begin by replicating the asymmetric finding of the conventional model, using data on California ballot measures from 1976-2004. After detailing how our substantive objections to this approach have econometric implications, we take another look at the same data and find that both support and opposition spending on initiatives have strong, statistically significant, and countervailing effects. We confirm this finding by looking at data from early polling on a subset of these measures. Both analyses show that initiative backers are not wasting their money.