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

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Abstract

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.

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Notes

  1. The large majority of the relevant literature analyzes data from US elections to the House of Representatives or the Senate—see, for example, Glantz et al. (1976), Jacobson (1978), Welch (1981), Abramowitz (1988), Abramowitz (1991), Levitt (1994), Erikson and Palfrey (1998), and Gerber (1998). Some examples of studies based on elections outside the United States are Rekkas (2007) and Milligan and Rekkas (2008) (Canadian federal elections), Pattie et al. (1995) (British general elections), Cox and Thies (2000) (Japanese House elections), Da Silveira and De Mello (2011) (gubernatorial elections in Brazil), Durante and Gutierrez (2014) (Mexican presidential elections), Palda and Palda (1998), Foucault and François (2005), Epstein and Franck (2007), and Farvaque et al. (2020) (French National Assembly elections).

  2. As detailed in the next section, French legislative elections are conducted in two rounds. Most of our empirical results are based on first-round outcomes, but in a section devoted to robustness checks we also analyze second-round ones.

  3. We thereby also address a concern raised by Da Silveira and De Mello (2011), who criticized the Levitt approach arguing that the source of variation in the spending difference across elections is not clear in his case, and that the exogeneity assumption therefore may be questionable.

  4. While Bekkouche et al. (2022) analyze French legislative and UK general elections (over a long period), they adopt at some point our second IV (measured differently) to instrument the spending differences between 1993 and 1997. Like Hall (2016), they rely on a single IV, and unlike us they therefore do not exploit the full range of regulatory reforms in their IV-based strategy.

  5. This section partly draws on information obtained from the French National Assembly’s website: http://www.assemblee-nationale.fr/english.

  6. A first fraction of aid was allocated to parties that fielded candidates in at least 75 constituencies in the most recent elections to the National Assembly. A second fraction was paid to parties whose candidates actually were elected (financing being proportional to the precise number of elected candidates).

  7. Legal entities also were no longer allowed to finance political parties, which resulted in smaller party budgets. Before the financing reforms of 1993 and 1995 were implemented, contributions from legal entities amounted on average to 15% of political parties’ budgets; see François and Sauger (2006).

  8. On January 1, 2002, the French Franc was replaced by the Euro at the conversion rate of 1 Euro = FFr 6.55957.

  9. In both elections, population is defined according to the same census because the first census after 1990 was conducted only in 1999.

  10. The discontinuity in the 1993 limit function at 80,000 unfortunately cannot be exploited in our analysis of the relationship between campaign spending and votes since only 5.2% of the constituencies have populations below that threshold. See Avis et al. (2022) who adopt a regression discontinuity (RD) design strategy to analyze the impact of spending limits on candidate entry and electoral competition using a discontinuity in the limit function imposed on candidates standing for municipal elections in Brazil.

  11. The reimbursement scheme of 1997 is more generous since 50% of the 1997 limit exceeds 10% of the 1993 limit for all population sizes (and, hence, for all constituencies).

  12. http://www.interieur.gouv.fr/Elections/Les-resultats.

  13. Registration is for both rounds of the election. The number of registered voters in the two rounds may differ slightly because of people turning 18 (the minimum voting age in France) or dying between the rounds.

  14. A candidate is defined as a former representative if he/she was elected two or more elections ago. Incumbents therefore are not automatically former representatives since they are elected in the previous election, and not necessarily in an election prior to the previous one.

  15. At the time of the elections of 1993 and 1997, metropolitan France contained 22 regions, 96 departments, and approximately 36,000 municipalities. Each region, department or municipality was headed and managed by an elected local assembly (called councils) and an executive body appointed by its assembly.

  16. Voting patterns differ because candidates in overseas constituencies are affiliated less frequently with national parties, and the political issues that are debated even more typically are local ones. Spending profiles are not the same mainly because some campaign financing rules differ slightly for overseas candidates.

  17. We had to drop 11 candidates from the 1997 election because of missing observations on campaign spending (initially, 6208 candidates contested elections in metropolitan France in 1997).

  18. We call all parties other than the five main ones (FN, PC, PS, RPR, and UDF) “small.” In both elections more than 15 small parties participated, representing the full political spectrum from the extreme left to the extreme right.

  19. By comparison, in the US House elections between 1972 and 1990, incumbents spent $293,000 and challengers $136,000 (see Levitt 1994); in the Canadian federal elections of 1997 and 2000, incumbents spent $52,520 and challengers $17,516 (see Milligan and Rekkas 2008). It therefore appears that campaign expenditures in France are less than in the United States, but comparable to Canada.

  20. The reported means are based on all challengers and incumbents, including those who did not receive any money from legal persons. Among the 1232 challengers who did get aid from legal entities (26% of the 4676 challengers running in 1993), the average amount received was FFr 81,556; similarly, among the 400 incumbents who received donations (87% of 462), the average amount was FFr 157,629.

  21. Most legal entities in the data actually are business firms (see François and Sauger 2006), and therefore that source of campaign funding is labeled “firms.”

  22. For a fraction of candidates in our sample, the sum of contributions exceeds campaign spending, which can occur, for instance, if candidates receive unanticipated donations from voters or firms towards the end of the campaign. As explained in the Appendix, we truncated the contributions received by such candidates so that their sum is equal to s.

  23. Leaders of the far right quickly understood the incentive nature of the public reimbursement scheme, and urged FN candidates to self-finance their campaigns and not to rely on help from the party.

  24. In Sect. 6.2, \(\max (0,Limit_{c,97}/2 - s_{jc93}^{personal})\) will be relied on as an instrumental variable to capture the differences in spending across elections; it has the advantage (relative to \(Limit_{c,97}/2 - Limit_{c,93}/10\)) of varying across candidates in the same electoral constituency.

  25. The finding aligns with the cross-country investigations led by Bichay (2020).

  26. Admittedly, the foregoing conclusions are drawn from a regression of \(\Delta s\) on \(\Delta X\) and the campaign finance reform variables. The conclusions nevertheless remain similar when we instead regress \(\Delta (s \times inc)\) and \(\Delta (s \times chal)\) separately on the same set of explanatory variables.

  27. One candidate has a vote share equal to 0 in 1993 and another one does so in 1997; they are removed from the samples, explaining why we have 1643 observations instead of 1644 in the first and second columns, and 1642 observations instead of 1644 in the third.

  28. Note that \(\delta _{jct}\) can be calculated directly from the data using the equality \(\delta _{jct}=\log v_{jct}-\log v_{0ct}\).

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Acknowledgements

We thank the Editor (William F. Shughart II), three anonymous referees, Xavier D’Haultfoeuille, Laurent Davezies, Francis Kramarz, Laurent Linnemer, Christian Ochsner, James Snyder, Alois Stutzer, and seminar participants at CREST, the University of Paris 2 (CRED), the International Association for Applied Econometrics conference in London, the European Economic Association congress in Toulouse, the American Law and Economics Association meeting in Boston, and the CESifo workshop on political economy in Dresden, for helpful comments and suggestions. This paper is a revision of a manuscript which appeared in 2016 as CESifo Working Paper 6232.

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Authors and Affiliations

  1. LEM (UMR 9221), University of Lille, Lille, France

    Abel François

  2. CREST (ENSAE), Paris, France

    Michael Visser

  3. CRED, University of Paris 2, Paris, France

    Michael Visser

  4. CREST, Paris, France

    Lionel Wilner

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  1. Abel François
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Correspondence to Abel François.

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François, A., Visser, M. & Wilner, L. The petit effect of campaign spending on votes: using political financing reforms to measure spending impacts in multiparty elections. Public Choice 192, 29–57 (2022). https://doi.org/10.1007/s11127-022-00970-w

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