7/29/2019 Campaign Expenditures in Mexico http://slidepdf.com/reader/full/campaign-expenditures-in-mexico 1/16 Electoral outcomes and campaign expenditures: does money matter to win an election? Juan C. Benavides & Vicente A. Rivera - 1 - ELECTORAL OUTCOMES AND CAMPAIGN EXPENDITURES: DOES MONEY MATTER TO WIN AN ELECTION? Abstract This paper examines whether campaign expenditures have consequences for elections outcomes. We analyze elections to Mexican Senate from 2000 and 2006 and determine whether candidates’ vote shares are altered by changes in campaign spending. INTRODUCTION The general objective of this term paper is to explore the relationship between electoral outcomes and campaign expenditures. We also analyze if other factors, such as incumbents influence, gender, and regional performance play an important role in electoral results. The fundamental feature of the political process in a democratic society is that voters have a weak interest to be informed on candidate postures and perspectives. This apathy presented by voters is called in academia “rational ignorance”. Rational ignorance is a term most often found in economics, particularly in public choice theory: “Ignorance about an issue is said to be “rational” when the cost of education oneself about the issue sufficiently to make an informed decision can outweigh any potential benefit one could reasonably expect to gain from that decision, and so it would be irrational to waste time doing so” 1 . Rational Ignorance has negative consequences for the quality of decisions made by large number of people. This is the case of elections, where the probability of one persons vote changing the outcome is very small. Fighting against rational ignorance has been the priority in the election process in countries like Mexico. That is why lobbying activities and campaign expenditures try to fill this void by trying to persuade voters to support particular positions. Some of the incumbents or challengers even try to influence heads of unions and officials by bribing them with gifts, money and favors. The degree of competition is not perfect since some groups or candidates are able to collect much more money. Rational ignorance implies that candidates’ main objective would be to persuade voters to vote for them. Given the power of communications and mass media in society, one may 1 http://en.wikipedia.org/wiki/Rational_ignorance
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Electoral outcomes and campaign expenditures: does money matter to win an election?
Juan C. Benavides & Vicente A. Rivera - 1 -
ELECTORAL OUTCOMES AND CAMPAIGN EXPENDITURES:
DOES MONEY MATTER TO WIN AN ELECTION?
Abstract
This paper examines whether campaign expenditures have consequences for elections
outcomes. We analyze elections to Mexican Senate from 2000 and 2006 and determine whether
candidates’ vote shares are altered by changes in campaign spending.
INTRODUCTION
The general objective of this term paper is to explore the relationship between electoral
outcomes and campaign expenditures. We also analyze if other factors, such as incumbents influence,
gender, and regional performance play an important role in electoral results.
The fundamental feature of the political process in a democratic society is that voters have a
weak interest to be informed on candidate postures and perspectives. This apathy presented by voters
is called in academia “rational ignorance”. Rational ignorance is a term most often found in economics,
particularly in public choice theory: “Ignorance about an issue is said to be “rational” when the cost of
education oneself about the issue sufficiently to make an informed decision can outweigh any potential
benefit one could reasonably expect to gain from that decision, and so it would be irrational to waste
time doing so”1. Rational Ignorance has negative consequences for the quality of decisions made by
large number of people. This is the case of elections, where the probability of one persons vote
changing the outcome is very small.
Fighting against rational ignorance has been the priority in the election process in countries like
Mexico. That is why lobbying activities and campaign expenditures try to fill this void by trying to
persuade voters to support particular positions. Some of the incumbents or challengers even try toinfluence heads of unions and officials by bribing them with gifts, money and favors.
The degree of competition is not perfect since some groups or candidates are able to collect
much more money. Rational ignorance implies that candidates’ main objective would be to persuade
voters to vote for them. Given the power of communications and mass media in society, one may
Electoral outcomes and campaign expenditures: does money matter to win an election?
Juan C. Benavides & Vicente A. Rivera - 3 -
Coate (2001)4 specifically addresses the issue of limiting campaign spending. He shows under
which conditions limits on campaign spending increases or decreases the margin of victory on an
electoral race. His study shows that campaign contributions limits narrow the margin of victory.
Earlier models on campaign spending limits suggest that incumbents have an advantage over
challengers since they have accumulated name recognition and have had more campaign spending in
previous elections (Lott, 1987) 5. Coete assures that campaign spending limits lead to less brand name
development by incumbents and give challengers a competitive advantage. He argues that if
contribution limits effectively raise the competitive advantage of challengers, more challengers will
enter the race.
A more recent paper by Aparicio-Castillo (2003)6 analyzes campaign contributions to
Assemblies elections from 1980 to 2001. His findings also establish that contribution limits lead to
closer elections.
A resent article by Becker (2005)7 on campaign expenditures doubts about the advantages of
limiting campaign contributions. He argues that interest groups compete in many ways, such as
influencing voters indirectly to favor particular points of view, hence they should also compete through
campaign expenditure. His main argument is that political incumbents have many advantages over
challengers because they get publicity while in office and can use their position to steer legislation
toward projects that help their constituents, hence effective limits on campaign contributions make it
harder for newcomers to challenge incumbents by raising funds to gain the recognition among voters.
Becker suggests that entrenched economic groups like unions play a much more important role incountries with sharp limits on campaign spending; for this reason, it is far more difficult for political
outsiders to enter the political arena to run for important offices.
OTHER RESEARCH OF INTEREST
Research in spending and electoral outcomes has generated what is called the “Spending Electoral
Theory”. Payne (1991) establishes some postulates of this theory:
1) The idea that voters are reflecting their own rational interest when they vote for the candidate
that spends more.
Bronars, Stephen G. and Lott, John R. Jr., “Do Campaign Donations Alter How a Politician Votes? Or, Do Donors Support Candidates Who Value
the Same Things That They Do?” Journal of Law and Economics, 40, 2, October 1997, 317-350.4 Coate, Stephen, “Political Competition with Campaign Contributions and Informative Advertising,” 2001, NBER Working Paper #8693.
5 Lott, John R. “The Effect of Nontransferable Property Rights on the Efficiency of Political Markets,” Journal of Public Economics, 31(2), 1987,
231-46.6 “Competition policy for elections: Do campaign contribution limits matter?” (with Thomas Stratmann) Public Choice, vol. 127, no. 1-2, April
Where Vote inc is the incumbent share of the two-party vote, spending inc is total incumbent
campaign spending. Spending chal is the total challenger campaign spending and x represents a set of variables other than campaign spending that are thought to influence candidate vote totals, such as
challenger quality or constituency partisanship. The particular function of campaign spending is usually
either the spending level itself or the natural logarithm of spending. There has been significant
disagreement on how the basic model should be estimated. The main methodological approaches and
Electoral outcomes and campaign expenditures: does money matter to win an election?
Juan C. Benavides & Vicente A. Rivera - 9 -
The data we are going to analyze show the characteristics of and independent pool of
observations across time. The senatorial dual candidacies represent different individuals, although the
parties are the same. So, we will rely on Ordinary Least Squares (OLS) methodology, together with
dummy variables in order to make all the estimations of the econometric model of interest.
We do not expect any particular sign of the year dummy, so this result will be obtained
empirically. Certainly, the expected sign of lncepmm is positive. We believe that higher levels of
expenditures are associated with better electoral results. It would be interesting to see how the impact
of campaign expenditures has evolved since 2000. We believe that the coefficient on female will have a
negative coefficient, since Mexico has characterized by being a “machista” country, it is extremely
difficult that a woman win an election; moreover, being a woman could produce a negative effect on
voting. We will also asses how this gender effect on voting has evolved in those six years. If a Mexican
state experiment a high unemployment rate, and if the governor is of the same party of the SDC, the
economic fact will affect the electoral performance of the SDC, in which case the sign of the joint
variable of amexunem*govparty would be negative; something different will happen if the population is
not sensitive to economic conditions. So, we are not sure about the sign of this coefficient. Certainly, a
positive coefficient on govparty will indicate that the governor of a particular party has made his job
well, and this will affect positively the electoral results for his own party SDCs. If the governor of the
same party of the SDC did badly in his position, this could lead to a reduction in the vote that SDCcould receive. We expect that participation of a SDC in a coalition will bring it more votes than if it
runs alone, so the expected coefficient could be positive. The signs of pastsen and presparty will
depend on the people’s perception about their current authorities, such as the senators and president of
the republic. The sign of those coefficients have to be determined by the estimation of our model.
4. DATA SOURCES AND CHARACTERISTICS OF THE SAMPLE
This section requires us to give a brief explanation of the political rules that apply in the case of
senate elections in Mexico. There are 32 states in the country, and each state is represented by a couple
of senators that run together to win an election. That is why we have called our observations or
subjects Senatorial Dual Candidacies (SDC). Thus, each of the parties registered to compete in the
elections can present two senate candidates by each state. In our case, we have selected the three most