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Electoral Systems and Campaign Finance

Abstract and Keywords

Studies that emphasize the importance of legislative electoral systems for campaign finance mostly fit into one of two groups. One literature identifies consequences of electoral systems that foster intraparty competition, including high levels of campaign spending and campaign finance–motivated pork, particularism, and political corruption. The second literature studies “spending effects” (i.e., vote-share gains per unit of expenditure), especially whether they differ between incumbents and challengers. Although both literatures pay some attention to how electoral systems affect campaign financing at the district level, that subject is poorly understood. This chapter emphasizes two topics that merit study: how electoral systems influence spending-votes patterns among incumbents and how electoral coordination may concentrate funds on only M + 1 candidates per district.

Keywords: electoral systems, campaign finance, corruption, spending effects, M + 1 rule, electoral coordination, intraparty competition

Studies that emphasize the importance of legislative electoral systems for campaign finance mostly fit into one of two groups. One literature focuses on how systems like open-list proportional representation (OLPR) and the single nontransferable vote (SNTV)—which fragment the vote at the subparty level and reward candidates who cultivate a personalized base of electoral support—increase the importance of money for electoral success and motivate heavy campaign spending (Cox and Thies 1998, 2000). To help satisfy legislators’ demand for funds, the legislature may supply ample amounts of pork and particularistic policy (Cox and McCubbins 2001; Samuels 2002; Rosenbluth and Thies 2010). Also, the high demand for funds may fuel political corruption (Chang 2005; Pereira, Rennó, and Samuels 2011; Johnson 2015).

The second literature extends the debate among scholars of American politics about whether incumbents and challengers obtain significantly different “spending effects”—that is, vote-share gains per unit of expenditure. This literature focuses on electoral systems that, like OLPR and SNTV, use multimember districts and allow a candidate-level vote (see Cox and Thies 2000, Samuels 2001b, Maddens et al. 2006, Benoit and Marsh 2010, and Johnson 2013, as well as Palda and Palda 1998 and Sudulich, Wall, and Farrell 2013). Spending effects have not been estimated for closed-list proportional representation (CLPR) systems because of data limitations. In countries that use CLPR, parties’ campaign expenditures, if they are publicly disclosed, tend to be specified only at the national level.1 That provides a small number of observations per election—too few to estimate spending effects.

Both literatures are populated mostly by single-country studies; however, nearly every study emphasizes its importance for system-level comparisons (i.e., across electoral systems). At the same time, both literatures pay some attention to how electoral systems affect campaign financing at the candidate or district level. For example, spending-effects studies consider the likelihood of the “Jacobson effect,” which is a negative correlation between incumbents’ spending and their vote shares.2 It is widely believed that this occurs not because incumbents’ spending hurts their standing with voters, but because incumbents spend reactively, in response to their perceived likelihood of defeat. Put differently, while some incumbents run in favorable districts and can win comfortably despite spending little, others spend heavily in an effort to fend off competitive challengers. And, although campaign spending helps in both cases, it does not turn competitive contests into blowout victories. Thus, the cross-incumbent correlation between spending and votes is negative, not positive.

A similar phenomenon may explain spending-votes relationships for challengers. In particular, a strongly positive relationship between spending and votes may reflect not the effectiveness of challengers’ spending but rather a difference in fundraising ability between long-shot challengers, whose nonviability makes them poorly financed, and competitive challengers, whose viability allows them to attract money.

Spending-effects studies attend to these possibilities to properly estimate the effect of spending on votes. However, they still may be missing much about how campaign finance varies with individual prospects and district-level variables, including district magnitude (M). This chapter discusses two such topics. First, it considers the possibility of a campaign spending “M + 1 rule,” which anticipates that campaign finance is (often) concentrated on only M + 1 competitors per district. Then, in section two, it examines how district magnitude may influence, via either demand-side or supply-side forces, patterns of incumbent spending and the likelihood of the Jacobson effect. Subsequently, sections three and four consider the consequences of intraparty competition, first at the candidate level and then at the system level. A final section concludes.

The literature on comparative political finance is much broader than what is reviewed here and includes analyses of campaign finance regulations, campaign finance reforms, and state subsidies for political parties (for an overview, see Scarrow 2007). On those topics there are a few works that emphasize electoral systems, such as Johnson’s (2008) analysis of disclosure regulations and van Biezen’s (2010) illustration that public funding for political parties is less common in countries with majoritarian electoral systems than in countries with proportional representation (PR). On the whole, however, those literatures pay little attention to legislative electoral systems. For that reason, they are not reviewed here.

An M + 1 Rule?

It is well understood that electoral systems place a conditional upper bound on the number of viable competitors in a district (Reed 1990; Cox 1997). In particular, when parties fear nominating too many candidates and thus fragmenting their vote and losing winnable seats to their opponents, their collective efforts to coordinate entry often result in there being no more than M + 1 competitors in a district. And, when coordination fails and more than M + 1 competitors enter a race, coordination among voters (in the form of strategic abandonment of trailing candidates) may concentrate votes on only M + 1 competitors (Cox 1999, 160). As Cox (1997) explains, one of the key conditions for strategic voting is the existence of good, publicly available information about candidates’ relative chances. If it is unclear which candidates are among the top M + 1, then strategic abandonment of trailing candidates will not occur—a situation that Cox called a “non-Duvergerian equilibrium.” Cox found that “Duvergerian equilibria” (in which strategic voting concentrates votes on M + 1 competitors) are common in districts with magnitudes up to about five. In M > 5 districts, electoral coordination is challenged by the increasing difficulty of predicting which candidates are likely to be the top M + 1.

Expectations about candidates’ relative prospects can also influence campaign fundraising and yield a mix of “Duvergerian” and “non-Duvergerian” spending patterns in low-magnitude districts, with the former consisting of a marked spending gap between the top M + 1 candidates and all other candidates. To explore this possibility, consider a simple three-period model of a plurality-rule election. First, an entry stage determines how many candidates contest the election and establishes expectations among elites about candidates’ relative prospects. Second, a financing stage occurs in which suppliers of campaign donations, who seek to “make their money count,” donate to viable candidates. To simplify matters, assume that all viable candidates are well funded and that no other candidates are funded such that (1) the number of funded candidates equals the number of viable candidates and (2) there is a stark financial difference between viable and nonviable candidates. The third stage is a campaigning period that ends with the election. During the campaign we allow expectations about candidates’ relative prospects to change, but not dramatically. More specifically, none of the unfunded candidates can emerge as competitive, though to allow strategic voting some viable candidates may come to be seen as trailing the top M + 1 candidates. It follows that (hypothesis 1:) when spending is Duvergerian, votes will also be Duvergerian, and (hypothesis 2:) when spending is non-Duvergerian, votes may be either Duvergerian or non-Duvergerian, depending on whether strategic voting winnows the support for a candidate who was initially considered viable. Put differently, the distribution of spending mirrors the outcome of the entry coordination game, and votes are concentrated on the same or fewer candidates, depending on whether strategic voting occurs.

Of course, under more permissive assumptions many more patterns can emerge, and the connections between expectations, spending, and votes become muddled. For example, if election results can deviate more widely from initial expectations or if some long-shot candidates are able to raise and spend considerable sums of money—perhaps because challenger spending may occasionally have large positive “effects”—then spending patterns may bear little resemblance to electoral results and may rarely be Duvergerian.

With such considerations in mind, we turn to examine some data, first from Canada and then from Ireland.

Evidence from a First-Past-the-Post System: Canada’s 2011 and 2015 Elections

Figure 1 shows Cox’s SF ratio and a similarly constructed “DS ratio” for “close” districts in Canada’s federal election of 2011. Cox’s SF ratio is the ratio of the second loser’s vote to the first loser’s vote, and a bimodal distribution of the ratio serves as aggregate evidence of the two strategic voting equilibria (see Cox 1997, chap. 4). The Duvergerian spending (DS) ratio is similar, except that candidates are ordered and compared according to their spending, not their votes. So, for an M = 1 district, the ratio is spending by the third-highest spender divided by spending by the second-highest spender. “Close” districts are those in which the winner’s margin of victory was less than 10 percent of the vote.

Notice three main things about Figure 1:

  1. 1. The DS ratio has a bimodal distribution (see top-left histogram), which suggests two distinct tendencies. The Duvergerian pattern predominates—in more than 50 percent of close districts, the DS ratio is less than .25. This is striking given Canada’s public financing system, which provides campaign-spending reimbursements to candidates who receive at least 10 percent of the vote.3 Meanwhile, using DS greater than .70 as an indicator, we observe that 20 percent of close districts exhibit a non-Duvergerian spending pattern.

  2. 2. The SF ratio for districts with non-Duvergerian spending patterns is bimodal (top-right histogram), which is anticipated by hypothesis 2.

  3. 3. The SF ratio for districts with DS less than .70 (bottom-right histogram) provides mixed support for hypothesis 1. On the one hand, the distribution is much less bimodal than the histogram above it, as predicted. On the other hand, there is a nontrivial number of close three-way races that include a poorly funded candidate. (The frequency of low-DS/high-SF districts is related to the unprecedented success of the New Democratic Party in the 2011 elections. In nearly every low-DS/high-SF district, a poorly funded New Democratic Party candidate was among the top three vote winners.)

Figure 2 provides similar data for the 2015 elections. In three ways, the data are similar to 2011: (1) the DS ratio is bimodal; (2) districts that have Duvergerian spending patterns are more likely to have Duvergerian vote patterns, as anticipated; and (3) the bottom-right panel suggests that a nontrivial number of close three-way races included a poorly funded candidate, contra hypothesis 1. The main contrast with figure 1 is in the top-right histogram: in the 2015 data there is no pronounced SF bimodalism among districts with non-Duvergerian spending patterns. There are some reasons the 2015 elections might have exhibited below-normal levels of strategic voting. One is that polls predicted a close three-way race at the national level. A second was related to the Fair Representation Act of 2011, which added thirty seats to parliament and redistricted many other districts. In many districts, therefore, electoral outcomes might have been difficult to foresee.4

Electoral Systems and Campaign FinanceClick to view larger

Figure 1. Distributions of SF ratios and DS ratios, close districts in Canada’s 2011 federal elections.

Source: Author’s calculations. Campaign finance data are from ElectionsCanada.org.

Electoral Systems and Campaign FinanceClick to view larger

Figure 2. Distributions of SF ratios and DS ratios, close districts in Canada’s 2015 federal elections.

Source: Author’s calculations. Campaign finance data are from ElectionsCanada.org.

District Magnitude Variation: Patterns in Irish Elections

Irish Dáil elections are worth examining in this context because district magnitudes vary from three to five. However, Dáil elections are not poised to produce Duvergerian patterns with either votes or spending. For one, the single-transferable vote (STV) electoral system challenges the ability to predict which candidates will be in the running for the last seat because it fragments the first preference vote and because results are contingent upon how votes will transfer among candidates during the count. Also, Ireland’s system of public financing encourages likely losers to spend more than they otherwise might. The subsidy system provides a €8,700 reimbursement of campaign costs—equivalent to between one-third and one-quarter of candidates’ legal limits on spending (which vary with M)—for any candidate who receives at least one-quarter of the district’s vote quota at some stage of the count. Even candidates who rank as low as M + 3 by first-preference votes almost always qualify for the subsidy.

Electoral Systems and Campaign FinanceClick to view larger

Figure 3. Campaign spending by M + 1-ranked spender and M + 2-ranked spender in Dáil elections, by SF ratio and district magnitude (2002 and 2007 elections).

Notes: The figure shows for each electoral district (1) SF ratio, (2) campaign spending in excess of the subsidy (€8700) by the M + 1-ranked spender, and (3) campaign spending in excess of the subsidy (€8700) by the M + 2-ranked spender. Same-district competitors are linked with vertical lines to highlight the spending differences.

Source: Author’s calculation. Campaign finance data are from the Standards in Public Office Commission (http://www.sipo.gov.ie/).

Regardless, figure 3 shows that Duvergerian spending patterns occur, that they are associated with Duvergerian voting patterns, and that both are more common in low-magnitude districts. The figure shows for each electoral district the SF ratio and campaign spending in excess of the subsidy by two candidates: those ranked M + 1 and M + 2 by spending (i.e., the two candidates used in the DS ratio). In this presentation, Duvergerian spending patterns are associated with large spending gaps, shown by long vertical lines. Notice the following about figure 3. First, Duvergerian spending patterns are associated with Duvergerian vote patterns. And, while it is rare for either candidate to spend less than the subsidy amount, the lower spender occasionally did so and those instances are associated with Duvergerian voting patterns. In other words, the data support hypothesis 1. Second, small spending gaps are accompanied by a wide range of SF ratios, as predicted by hypothesis 2. And third, both Duvergerian spending patterns and Duvergerian voting patterns dissipate with M.

Implications and Next Steps

In short, Canadian and Irish elections provide evidence that (1) in small-magnitude districts campaign spending often concentrates on M + 1 candidates and (2) the within-district distributions of spending and votes are consistent with familiar models of strategic entry and strategic voting. That understanding of campaign financing suggests a strong relationship between candidates’ expected performance and the amount of money that they spend on their campaigns. It also raises a question of how to conceptualize and model “spending effects” in a way that accounts for strategic voting, which has the effect of reducing the votes of trailing candidates and increasing votes for candidates in the top M + 1. This question is relevant because spending effects are normally understood as linear (i.e., each unit of expenditure buys the same number of votes) rather than contingent on whether conditions favor strategic voting or not.

The analysis offered here is merely a first step. Future analyses should seek to (1) identify how often spending and votes are concentrated on the same M + 1 competitors; (2) control for candidates’ party affiliations; (3) investigate how often non-Duvergerian spending patterns are the result of coordination failures versus attempts to turn long-shot, nonviable competitors into “real” competitors; and (d) improve upon the expectations-driven model of campaign financing.

Marginality, Spending, and the Jacobson Effect

While the M + 1 rule is a within-district pattern driven by supply, the Jacobson effect is an across-incumbent pattern driven by demand. However, the pattern is contingent on both demand and supply: it requires sufficient demand-side variation (i.e., a nontrivial number of electorally secure incumbents), and the supply of campaign finance must accommodate marginal incumbents’ high demand. In other electoral systems these two conditions may exist infrequently.

Running Scared in Multimember Districts

In electoral systems that use multimember districts, in which the vote is inevitably fragmented among many candidates, non-Jacobsonian patterns of incumbent spending may occur because too few incumbents feel secure in their re-election prospects. In their analysis of spending effects in Japan’s SNTV system, which was used to fill the lower house of parliament from 1948 through 1993, Cox and Thies (2000) take this idea one step further to hypothesize that the probability of a Jacobson correlation diminishes with district magnitude as the vote becomes more fragmented and the outcome less predictable. Though Cox and Thies limit their attention to the Jacobson effect, their argument also implies that average incumbent spending will be greater in larger-magnitude districts, other things being equal.

Cox and Thies (2000, 41–42) find that Jacobson correlations are indeed less frequent in larger-magnitude SNTV districts, and table 1 suggests a similar tendency among major-party incumbents in recent Irish elections.5 It is perhaps not surprising that there is a mixture of negative and positive spending-votes (SV) correlations among Dáil members. On the one hand, members are likely to perceive different levels of insecurity and spend reactively (cf. Benoit and Marsh 2010, 163). On the other hand, STV may breed widespread insecurity—especially in larger-magnitude districts—because of vote fragmentation and vote transfers.

Table 1. Spending-Vote Share Correlations for Major-Party Dáil Members, 2002 and 2007 Elections

2002

2007

Fianna Fáil

Fine Gael

Labour

Fianna Fáil

Fine Gael

Labour

M = 3 districts

–.06 (18)

.35 (13)

–.09 (7)

–.39 (29)

.65 (12)

–.12 (5)

M = 4 districts

.37 (20)

.25 (15)

–.25 (6)

.05 (19)

–.01 (8)

.25 (7)

M = 5 districts

.49 (29)

.26 (18)

.16 (6)

.05 (20)

–.33 (12)

–.14 (6)

Notes: Cell entries are the Pearson correlations. The number of observations is in parentheses.

Source: Author’s calculations. Campaign finance data are from the Standards in Public Office Commission (http://www.sipo.gov.ie/).

Cox and Thies’s hypothesis has not been investigated further, but to do so requires accounting for the fact that larger-magnitude districts tend to feature more incumbents per district-party. For example, in the data reported in table 1, one-third of the M = 5 districts have more than one Fine Gael incumbent, but the same occurs in only 6 percent of the M = 3 districts. Thus, while the SV correlations for the M = 3 districts are predominantly across-district comparisons of solitary incumbents, the correlations for larger-magnitude districts have an added intradistrict dimension of comparison. That may make reactive spending difficult to detect if, say, strong incumbents do not resemble their weaker, more marginal running mates in terms of fundraising potential (see next subsection). Put differently, the tendency for SV correlations to become positive with district magnitude does not necessarily suggest the disappearance of electorally secure incumbents who spend less than they are able.

Evidence that this concern is warranted appears in table 2, which provides SV correlations for Dáil members who ran without any same-party competitors. (Fianna Fáil is not shown because all of its incumbents ran with at least one same-party competitor.) Note that the correlations are more consistently negative than those in table 1. They are also less favorable to the district magnitude hypothesis.

Table 2. Spending-Vote Share Correlations for Major-Party Dáil Members Who Ran without Same-Party Competitors, 2002 and 2007 Elections

2002

2007

Fine Gael

Labour

Fine Gael

Labour

M = 3 districts

.33 (3)

–.09 (7)

–.05 (5)

–.12 (5)

M = 4 districts

–1.00 (2)

–.17 (5)

.25 (7)

M = 5 districts

–.93 (3)

.06 (3)

Notes: Cell entries are the Pearson correlations. The number of observations is in parentheses.

Source: Author’s calculations. Campaign finance data are from the Standards in Public Office Commission (http://www.sipo.gov.ie/).

Marginal Candidates and the Supply of Campaign Finance

As already suggested, non-Jacobsonian spending-votes patterns may be related not to demand homogenization but to the supply of campaign finance failing to accommodate marginal incumbents’ demand. Four nonmutually exclusive reasons that marginal candidates may not have enough funds to outspend their more electorally secure running mates are (1) their fundraising potential is much less because they are less likely to hold positions of power in the party or legislature; (2) there are many marginal candidates per district, and a limited supply of funds leaves each only modestly funded; (3) where votes pool on party lists, partisan or ideologically motivated campaign contributions may privilege party leaders or popular candidates whose performance helps to “pull” their list; and (4) party-system fragmentation and intraparty competition may hinder fundraising by marginal candidates because they make their races not very relevant to the balance of power in the legislature or government.

The fourth possibility can probably be dismissed for Ireland and Japan since majority-party control of the parliament hangs in the balance of each election. However, it is the basis of Johnson’s (2011) argument about spending-votes patterns in Chile. In concert with the country’s party system and electoral geography, Chile’s “binominal” electoral system, which uses D’Hondt to elect two members per district from open lists limited to two names each, makes it so that most vulnerable incumbents are only marginal vis-à-vis their own list mates, who are members of the same coalition.6 That, Johnson argues, limits marginal incumbents’ fundraising, puts them on a level playing field with their list mates, and prevents them from outspending the few incumbents in other districts who are more secure in their electoral prospects. Things might be different if Chile’s executive-dominated budget-making and policymaking systems did not limit legislators’ abilities to provide pork and particularistic policy. However, without those fundraising tools, and squaring up only against members of their own coalition, vulnerable incumbents face real fundraising limits.

Circumstances may be similar in other open-list systems. For example, vulnerable members of Finland’s parliament—who are elected via OLPR in fourteen districts with magnitudes that range from six to thirty-four—face similar obstacles to fundraising, including intraparty competition, an inability to provide particularistic policy because policy authority is centralized in the government (Johnson 2015), and a weak connection between parties’ electoral performance and the government’s policy direction, which is due to the fact that multiparty government coalitions are formed after the elections and include parties of various sizes.7 Also, spending-votes patterns for Eduskunta members are similar to those of Chilean deputies. In particular, while vote shares are positively correlated with campaign spending, they are negatively correlated with members’ own spending. These patterns are shown in table 3. The first two columns provide the estimated sign on a regression estimate of the (within-district) relationship between vote shares and spending, and columns three and four provide estimates using only Eduskunta members’ own spending. That more marginal incumbents tend to spend more of their own money on their campaigns suggests that they are not easily raising enough funds to satisfy their demand, and we should presume that that is at least part of the reason they do not outspend other, more dominant incumbents.

Table 3. Estimated Relationships between Vote Shares and Campaign Spending for Major-Party Incumbents in the Eduskunta Elections of 2003 and 2007

Total spending

Own spending

2003

2007

2003

2007

M = 6

+

M = 7

+

+

+

M = 9

+

+

+

M = 10

+

+

+

M = 12

+

+

+

M = 14

+

M = 17

+

M = 18

+

+

M = 21

+

+

+

M = 33

+

M = 34

+

Notes: Each cell reports the estimated sign (positive or negative) on a beta coefficient in an ordinary least squares regression of incumbents’ total spending or own spending on their vote shares. Each regression includes party dummies to differentiate among the three major parties that are included in the analysis—the Social Democratic Party, the Center Party, and National Coalition Party (Kokoomus). (Other parties are excluded to ensure that the results are not driven by small parties that tend to win only in the largest districts.) If there is more than one district with the same magnitude, the data are pooled and the regression includes dummies for each district-party. The estimated coefficient on the vote share variable thus measures the within-district-party relationship between spending and vote shares.

Source: Author’s calculations. The campaign finance data used in the regressions were compiled by Hyvärinen (2011) and Broberg (2004) and made available by the Finnish Social Science Data (FSD) Archive.

Discussion

Research on how and why electoral systems influence patterns of campaign expenditure has only just begun, and much remains unknown. A better understanding of campaign finance markets and the relationships between electoral margins and spending will improve the estimation of spending effects, advance our understanding of the electoral value of incumbency, and refine our understanding of the relationship between intraparty competition and campaign spending (see also the section “Intraparty Competition: Candidate-Level Effects on Spending).

Extension: Margin-Driven Spending in Closed-List Systems?

To my knowledge, the connection between electoral marginality and campaign spending has not been investigated for parties in closed-list systems. The odds of such a relationship may be slim, given that interparty spending differences are so strongly related to parties’ ideologies and their influence (or their expected postelectoral influence) over policy. Furthermore, any investigation into the question is hindered by two tendencies among CLPR-using countries: generous systems of state funding and financial disclosures that are annual rather than specific to the campaign period.

However, neither of these issues applies in the case of New Zealand, where parties that compete in the list tier of the mixed-member proportional (MMP) system are mostly privately financed and are required to report their campaign-related expenses.8 There are two relevant thresholds for a party to be eligible for a proportional share of seats in the House of Representatives: it must receive at least 5 percent of the list-tier vote or win at least one seat in the nominal tier. Our question is: do parties near the 5 percent threshold—especially those that do not expect to win any constituency seats—spend relatively heavily?

Electoral Systems and Campaign FinanceClick to view larger

Figure 4. Average campaign spending by parties in New Zealand general elections (1996–2014), by parties’ percent of the list vote.

Source: Author’s calculation. Campaign finance data are from the Electoral Commission (http://www.elections.org.nz/).

Data from the 2011 and 2014 elections, presented in figure 4, suggest that the answer is yes. In the figure, parties are differentiated according to whether they won any nominal-tier seats and grouped according to their share of the list-tier vote. (Parties that won more than 12.5 percent of the vote are not shown.) The bar height indicates average “party spending,” which includes both expenditures by the party organization and spending by its affiliated nominal-tier candidates and is presented as a percentage of the combined party/candidate spending limit, which is a function of how many candidates run. Note that parties on the cusp of winning or losing representation—those that won no constituency seats and that were near the 5 percent threshold—spent relatively heavily, much more than parties that easily passed the 5 percent threshold or parties that were eligible for seats on account of winning at least one constituency seat. In other words, the data provide evidence that the phenomenon of margin-fueled spending is not exclusive to candidate-centered electoral systems.9

Intraparty Competition: Candidate-Level Effects on Spending

The intraparty competition that occurs in many electoral systems has been linked to higher levels of spending both at the candidate level and at the system level. The candidate-level link is made by Cox and Thies (1998), who argue that spending per candidate increases with the number of same-party competitors because it means that the party’s vote will be divided among more candidates, each of whom must compete more aggressively for a viable share. The argument mirrors Cox and Thies’s (2000) argument about incumbent spending—that is, that incumbents are less likely to spend lightly in larger-magnitude districts (which have more competitors) because easy victories are less likely.

It may be difficult to measure the intraparty competition effect because there are other reasons that an additional same-party candidate may be associated with greater average spending. One is that both reflect greater interparty competition. For example, if a party attempts to win three seats in a district where it normally wins only two, it may funnel resources into that district to help it succeed. Another possibility is that the additional candidate frustrates electoral forecasting and thus reduces the likelihood that finance will concentrate on M + 1 candidates.10 In other words, an increase in intraparty competition may increase spending through both demand-side effects and supply-side effects.

Yet, supply might be more relevant for the opposite reason: for limiting the (demand-driven) effect of intraparty competition. For spending to increase with the number of same-party competitors, supply must be sufficiently elastic; and yet the likelihood of that occurring may depend on several variables, including the baseline amount of intraparty competition or party-system fragmentation. For example, as the number of same-party competitors increases, we might suppose that supply will fall steadily behind the demand for funds because a supplier’s expected benefit from a campaign contribution declines as the number of competitors per seat increases and each candidate’s probability of winning declines. Thus, there may be a point at which additional intraparty competition would bring less spending per candidate. In other words, we might suppose that the effect of intraparty competition on spending will fade with the number of competitors per district-party (or with district magnitude)—potentially to a point where additional intraparty competition results in less spending per candidate.

Samuels (2001a, 93–94) makes an argument that is similar except that it is rooted in candidates’ incentives to spend. Specifically, he argues that the intraparty competition effect fades with district magnitude because candidates reach a saturation point regarding their electoral uncertainty—that is, in large-magnitude districts, uncertainty is already very high and does not increase further if more same-party competitors decide to run. However, Samuels adds that candidates in large-magnitude districts may condition their spending on the “quality” of their same-party competitors: if more high-quality competitors run, a candidate will choose to spend more money.

The intraparty competition effect should also depend on whether the electoral system has vote pooling at the party level. Where there is vote pooling, as in open-list systems, per-candidate spending may not increase with the number of same-party competitors because parties have an incentive to pad lists with as many candidates as possible, including low-quality candidates who are unlikely to raise and spend much money. By contrast, in systems without vote pooling, like SNTV, parties have strong incentives to nominate only a select number of “quality” candidates because to do otherwise may result in costly “overnomination errors” (Cox and Niou 1994; Johnson and Hoyo 2012). That makes the intraparty competition effect much more likely.

Intraparty Competition: System-Level Effects

When contrasted with CLPR, OLPR is often touted for fostering intraparty democracy and making legislators more responsive to voters than to party leaders. The consequences for campaign spending mirror that additional layer of democracy: campaigns are more expensive under OLPR (and other systems with intraparty competition) because each party’s vote is contested internally by a variety of personal campaigns. More interestingly, spending is greater in elections with intraparty competition because there it is more effective at building electoral support. The reason for this can be stated in general terms: the more candidate centered the election is, the greater the effect of spending on votes because candidates’ success depends on building name recognition and a personal constituency, and for most candidates those are only established with considerable expense. By contrast, where elections focus on political parties and their leaders, persuasion-oriented campaign activities are very limited in their effectiveness because party platforms and the reputations of party leaders are already well known before the campaign and because voters have partisan and ideological preferences that are resistant to change. Going one step further, we may hypothesize that the spending-effects difference between open-list and closed-list systems is positively related to district magnitude. This is because as M increases, the electoral value of a personal reputation falls under CLPR and rises under OLPR (Carey and Shugart 1995).

The literatures on Brazilian, Italian, and Japanese elections are full of evidence that elections with intraparty competition are marked by high levels of spending. Especially noteworthy are the few studies of Japan’s SNTV elections that make cross-system comparisons, like Carlson’s (2006) illustration that the cost of campaigns in Japan declined following the shift from SNTV to a mixed-member electoral system, and Cox and Thies’s (2000) comparison of spending effects in Japan and the United States.

However, there is still good cause for skepticism about the intraparty competition hypothesis. For one, there are CLPR-using countries that have very expensive elections, like Israel and Austria. Also, in his impressive and thorough attempt to compare spending across twenty-five democracies, Nassmacher (2009, 138–141) finds no relationship between intraparty competition and the cost of campaigns.11 While this could be because he uses a measure of intraparty competition that is not explicitly linked to electoral formulas, it is also possible that the intraparty competition effect is swamped by other system-level factors, including electorates that vary in size, campaign periods that vary in length, whether legislative elections are concurrent with other elections, the presence or absence of free television time for parties and candidates, different levels of economic development, and different degrees of state regulation of the economy.

From Demand to Supply

Legislatures elected by candidate-centered rules tend to allow members to secure pork and particularistic provisions in public policies, and legislators’ interest in cultivating a personal vote is usually cited as the reason. However, pork, particularism, and the ability to individually influence policy are also useful for legislators who need their own cash to run their own re-election campaign (Ames 2002; Samuels 2002). The reasons are not mysterious: policymaking influence makes legislators naturally attractive to special interests, and policymakers can actively use their influence to solicit campaign contributions. It is possible, then, that legislative particularism is as much a function of legislators’ interest in campaign finance as it is a function of their interest in using pork to win votes (see Cox and McCubbins 2001; Samuels 2002; Rosenbluth and Thies 2010). Either way, it is significant that candidate-centered elections tend to be accompanied by policymaking practices that allow individual members to make a mark on public policies and expenditures. It means that legislators who demand significant amounts of campaign contributions to finance their own campaigns tend to have means by which to secure them.

Although the connection between electoral rules and legislative particularism is strong, it is not a law of politics that policymaking practices must accommodate legislators’ interests in particularism. Other factors also shape policymaking processes, and where particularism is stymied, legislators’ campaign spending may be relatively light. For example, the constitution that Pinochet’s dictatorship established for Chile includes a budget-making process that frustrates pork and particularism, and that in turn hinders legislators’ fundraising. Particularistic incentives may also be frustrated if legislators have overriding incentives to centralize policymaking authority in the government, as they do in some parliamentary systems.12 Consequently, system-level analyses of electoral systems and campaign spending may need to incorporate measures of policymaking particularism that are separate from electoral-system variables.

Campaign Finance and Corruption

Many scholars argue that political corruption is more extensive in countries that use electoral systems that foster intraparty competition because of the high demand for campaign finance (Carey and Shugart 1995 433–434; Chang 2005; Chang and Golden 2007; Pereira, Rennó, and Samuels 2011).13 The core of the argument is that politicians have a high demand for funds that is not easily satisfied through noncorrupt financing, and so they abuse their power in one way or another to get finance, say, by explicitly trading pork or influence for campaign funds or by concocting some more elaborate scheme that funnels public monies to their re-election campaigns. Here, again, the policymaking process is relevant, for if individual legislators have no ability to provide pork or otherwise influence policy, then their abilities to misuse power for campaign financing will be limited (Johnson 2015).14

Other theories that link electoral systems to corruption emphasize not campaign finance but either (1) the probability of electoral defeat for exposed corruption or (2) the incentives to engage in corruption monitoring. Myerson’s (1993) theory is an example of the former. In his model, voters disapprove of corruption, so if a corruption scandal implicates their favorite party, they consider voting for another. Under PR they do so because there is at least one noncorrupt competitor who advocates similar policies, while under FPTP voters have no palatable alternatives for whom to vote because of bipartisanism. Therefore, PR systems are better at (electorally) penalizing corrupt politicians, and that leads to cleaner government.

Persson, Tabellini, and Trebbi (2003); Kunicová and Rose-Ackerman (2005); and Charron (2011) reach the opposite conclusion. Each essentially argues that PR systems allow more corruption than FPTP systems because of the free-rider problem regarding corruption monitoring in multiparty contexts. That is, no party wants to assume the costs of monitoring opponents for corruption when various other parties may also reap the electoral benefits of monitoring success. There is more monitoring and deterrence under FPTP because of the smaller number of competitors and the lack of the free-rider problem.

Among these theories, only Kunicová and Rose-Ackerman (2005) make a distinction among PR systems. Their argument about OLPR versus CLPR turns not on corruption monitoring but on electoral defeats. Specifically, they argue that CLPR harbors more corruption because party leaders are insulated from the electoral damage of corruption scandals by virtue of occupying the highest, safest spots on party lists. Put differently, OLPR-elected legislators behave better because they are more worried about the possibility of electoral defeat.

Corruption-monitoring and electoral-defeat theories of legislative corruption have some disadvantages when compared to theories that focus on intraparty competition and campaign finance. One is that they ignore the possibility of interparty collusion, whereas the campaign finance–related theories allow legislators in all parties to misuse their policy influence for funds (to wage within-party contests). Also, there are reasons to think that the electoral-defeat theories overemphasize the expected costs of corruption. Politicians only engage in corruption when they think they will get away with it, and then to the extent that they worry about getting caught, they are likely to worry more about legal sanctions than the possibility that they might lose their re-election bids.

However, the debate about which electoral systems most motivate political corruption is unlikely to be settled with quantitative analyses of system-level corruption indices—at least not anytime soon. The empirical impediments are too numerous and severe. Corruption measures are inherently imprecise; existing measures do not focus on legislative corruption; there is a rather small number of consolidated democracies available for analysis; and many things besides electoral systems may contribute to political corruption at the system level, including dominant parties that are difficult to exclude from government and consociational power-sharing arrangements. Other research designs may provide more value.

Conclusion

Comparative electoral systems is a mature field of study (Shugart 2005), except insofar as electoral systems matter for campaign finance. However, that gap is being filled. The literature has started to identify the importance of electoral systems for campaign finance, the effectiveness of campaign spending in elections, and political finance regimes.

Much of the early interest has been focused on either spending effects or the consequences of intraparty competition, and both literatures have important implications for the regulation of campaign finance and the quality of democratic governance. To advance both topics, however, we must have a better understanding of other ways that electoral systems shape patterns of expenditure within and across districts. Research on that topic is also poised to improve our understanding of electoral coordination and the supply side of campaign finance markets.

There is much work to be done at the system level too. However, there is already considerable evidence about one thing—that campaign financing is an important part of the link between electoral systems and public policies (e.g., Cox and McCubbins 2001; Rosenbluth and Thies 2010). And yet, much of the growing literature on the economic consequences of electoral systems (see Carey and Hix 2013 for a review) treats campaign finance as exogenous. That, then, is another area of electoral systems research that is poised to pay greater attention to campaign finance.

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                                                                                    Notes:

                                                                                    (1) See Johnson (2008). Also, for information about campaign finance disclosure regulations and practices, see International Institute for Democracy and Electoral Assistance (http://www.idea.int) and Money, Politics, and Transparency (http://moneypoliticstransparency.org/).

                                                                                    (2) Gary Jacobson (1980, 1990) first found such a pattern among members of the US House.

                                                                                    (3) Put differently, there might be more low DS ratios if not for the subsidy. The reimbursement covers 60 percent of campaign expenses and all of the candidate’s personal expenses up to 60 percent of the legal limit on candidate spending. Although the system gives all candidates who are within reach of 10 percent of the votes added reason to spend, many candidates still spend close to nothing. For more, see Elections Canada, “Reimbursements to Candidates,” http://www.elections.ca/content.aspx?section=fin&dir=can/rem&document=index&lang=e.

                                                                                    (4) Another possibility is that voters who supported trailing candidates saw the two viable alternatives as equally bad. See Blais (2002).

                                                                                    (5) The Irish campaign spending data reported herein include incumbents’ reported use of office resources—on which, see Benoit and Marsh (2008).

                                                                                    (6) Chile abandoned the binominal system in a 2015 reform.

                                                                                    (7) That range of magnitudes was used in the 2003 and 2007 elections. The Eduskunta also includes a single member elected from the Åland Islands.

                                                                                    (8) Parties that compete in the list tier are eligible for state-funded broadcasting, but their campaigns are otherwise financed privately.

                                                                                    (9) Two notes. First, the pattern is nearly identical if we use dollar figures rather than percent of the spending limit. Second, there is also a Jacobson effect among nominal-tier incumbents (i.e., incumbents who run for re-election in the single-member constituencies that they won in the previous election). In the 2011 elections the spending-votes correlation is –.38 (N = 54). In 2014 the correlation is –.20 (N = 54). The strength of the correlations is impressive given the country’s limits on campaign spending, which if meaningful would bias SV correlations toward zero.

                                                                                    (10) Another possibility extends the coordination idea within parties. Suppose that (1) there may be expectations that a party will win N seats, (2) there are also expectations that a particular N + 1 candidates will be the top N + 1 vote winners in the party, and (3) therefore, campaign finance concentrates on N + 1 candidates. In such cases, an additional same-party competitor might unravel expectations about candidates’ prospects, in turn leading to greater average spending within the party slate.

                                                                                    (11) In a simple bivariate analysis, Nassmacher (2009, 131) finds that spending increases with electoral proportionality. That implies that spending tends to be lower in FPTP systems than in PR systems.

                                                                                    (12) See Johnson’s (2014) discussion of Finland.

                                                                                    (13) Chang and Golden (2007) also make a candidate-level argument that is linked to district magnitude.

                                                                                    (14) Political corruption is also contingent on the effectiveness of anti-corruption institutions such as the judicial system and state auditors. That point is important because legislatures often control the resources that are available to state prosecutors, the legal penalties for corruption, and other resources that influence the effectiveness of the state’s anticorruption institutions. For that reason, some scholars have argued that candidate-centered electoral systems facilitate the persistence of corruption in a way that goes beyond campaign financing: by making it relatively difficult to enact anti-corruption reforms (Taylor 2009; Johnson 2014).