As another heated political season begins, attention is focused on the Super PACs created to funnel unlimited contributions to political candidates, on billionaire political patrons, and on “big money’s” influence on the political process. Especially as more wealth is concentrated into fewer hands.
But what impact does “small money” have on political campaigns, can that money influence policy, and can it influence questions of economic inequality? Filipe Campante, assistant professor of public policy, asks in a recent paper.
According to median-voter theory, an increase in economic inequality — when the mean income rises relative to that of the median voter — will be corrected at the polls by support for more redistribution. But the evidence hasn’t always been supportive of that, Campante writes.
To address that discrepancy Campante, whose work on campaign contributions is part of his broader interest in the constraints that affect politicians beyond the obvious institutional checks and balances, looked at the relationship between wealth, political donations, voting, and the political party’s positions. He developed a model of politics in which individuals could vote and donate money; political parties that developed platforms that could attract the most votes; and contributions that would be used to fund “get-out-the vote” operations, registration drives, and advertisements.
The result showed a cycle of influence that favored wealthier Americans. “An increase in inequality will enhance the advantage of the rich in providing contributions, by shifting resources in their favor, and this will in turn lead the parties to move their platforms closer to the preferred positions of wealthier individuals,” Campante writes. “More inequality will thus have an effect of strengthening the wealth bias in the political system. In the context of redistribution, this will work in the opposite direction of the usual median voter effect.”
Campante then tested his model against empirical data from national political elections in the United States in 2000 and 2006.
“The data suggest not only that the rich contribute disproportionately more than the poor, but also that inequality has a positive impact on contributions amassed by the relatively anti-redistribution (Republican) party, and a negative impact on those gathered by the relatively pro-redistribution (Democratic) party.”
The results are important to the debate on campaign financing in the United States, Campante argues. That debate has focused on limiting very large contributions or on increasing public funding for campaigns. But Campante’s research shows that a bias toward inequality can take place even when donations are no more than a few hundred dollars; probably too small to give the donor any direct influence over an elected officeholder.
“Even when contributions are really small you have this effect,” Campante says. “What this shows is that even if you shut down the big money, the small money is enough to bias the political system.”
The wealthier would continue to have a disproportionate influence until “very stringent limits” were introduced, Campante writes.
Furthermore, Campante says his model could be used to examine issues beyond income redistribution.
“The framework can be used to analyze other implications of this mechanism,” Campante writes. “Any policy choice over which preferences vary systematically with individual wealth or income — say, if wealthier individuals have a stronger preference for protecting the environment, or for financing tertiary over primary education — can also be studied taking into account the role of contributions and the endogeneity of participation.”
— by Robert O'Neill