Money in Politics

I have sort of an odd theory of political fund raising bouncing around in my head, and I want to get it down on the internets before I forget, or I babble it to someone a little more desperate for a thesis topic and they write it and get it published and I get nothing. (The former is more likely...)

There is a fairly strong correlation between who has the most money to spend on campaigns and who wins that election. On average, winners get more money than losers (as compiled here.) Now, that alone doesn't mean a lot, as there are elections that buck the trend, but ok, those with more money win more elections. Just like how basketball players who get paid more win more games.

Wait... what? That's not true. In fact, it is pretty likely the opposite, winning more games leads to being paid more. Do we know that is not true with politics as well, that the candidates more likely to win get more money?

Well, there are a few stories that would make that make sense.

If you are a business or some other actor who has a stake in the rules politicians might enact upon you, it makes sense to spend some money to support (read: bribe) a politician even if you don't particularly like him. However, it does not make sense to bribe one you think has little chance of winning; they are not likely to pay off your investment. Likewise, it then makes sense to bribe both candidates or parties if they seem about equally likely to win, or at least  reasonably likely. That perhaps explains why so many with a lot of skin in the game support both parties, despite the fact they ostensibly will favor different policies.
This also explains why companies don't bother to throw cash at candidates like Ralph Nader. In a general probabilistic sort of way, even if Nader was very unlikely to succeed, if his policies were likely to be sufficiently anti-business (seems likely) it would still be worth a bit to bribe him a little if you thought it at all likely to matter. Turns out one of those probabilities is considered to be zero, and my guess is it was his chances of success.

Sort of an edge case, but this theory also explains why politicians generally are against betting markets for elections, even if they don't involve real money. Theoretically there is little reason to believe that betting on an election makes any difference at all, as terribly few are even close, and really the media probably has infinitely more effect anyway, as people who vote apparently don't care about whether their vote matters, but rather that they are supporting their team. All a betting market would do is inform those who happen to be paying attention as to what experts* think the outcome will be. Since voters can hardly be bothered to pay attention to anything more than a few weeks before the election, who cares? Only those who care enough about the election to spend money bribing potential winners. A betting market might go a long way towards lowering campaign donations to candidates who are less likely to win, taking money out of their pockets.**

Now, I don't think that most money is straight up bribes. I think a fair bit comes from organizations and especially individuals that support the stated beliefs of politicians. However, that isn't itself against the theory, and my little theory actually explains pretty well why people only donate to certain candidates and not every candidate who espouses similar beliefs: they only back the ones they think will win.***

I wouldn't be surprised to find that money does help get elected since at least you need a bit to get started and afford to run for office. However, I suspect most of the causality there is in fact the other way around, and getting more money implies those donating think you have a high chance of victory.



*Or at least those who are willing to put their money where their mouth is, which even at very small values is a powerful mental inducement to be honest.
** Literally. Most states (I think all in fact) allow candidates to keep the remainders of their election funds after the election. Ever wonder why Al Sharpton ran for office so many times despite the fact he had zero chance of success? Here's a hint: he is now a millionaire.
*** Or they push that decision to the party heads by donating to the DNC or RNC.