Contribution Limits And Competitiveness: An Analysis Of How State Campaign Finance Laws Affect Challengers And Incumbents

10/01/2002

Executive Summary

For years, academics, political theorists, and campaign finance reformers have debated the causal relationship between campaign contribution limits and the outcome of elections. Some argue that limiting campaign contributions amounts to "incumbent protection;" others contend that limits make challengers more competitive. This study is the first of its kind to comprehensively examine the states with contribution limits and empirically measure changes in competitiveness. Based on an analysis of 30,000 elections in 45 states, this study found that campaign contribution limits slightly favor challengers by reducing the incumbent margin of victory. The chief findings are:

• Placing limits on individual contributions reduces the vote margin in state House races for all candidates first elected after the limits have gone into effect by 7.6%. Incumbents who were first elected prior to the enactment of contribution limits see their races become closer by 3.1% due to contribution limits. Placing contribution limits on PACs, corporations, labor unions and parties also reduces margins of victory.

• The lower the limit, the tighter the election. When controlling for the number of candidates in a race, lowering the contribution limit by $1,000 leads to a decrease in the margin of victory by three percentage points for races involving incumbents, and 2.6 percentage points for all races.

• Because most incumbents win by very large margins, reducing contribution limits by $2,000 in every state would have led to just four percent of successful incumbents losing their reelection bids. So while contribution limits do make elections closer, they do not dramatically reduce incumbent reelection rates.