Why Do Political Action Committees Give Money to Candidates? Campaign Contributions, Policy Choices, and Election Outcomes by Christopher Magee Department of Economics Bard College Working Paper 292 December 1999 INTRODUCTION Rational political action committees (PACs) will give campaign contributions to candidates for two main reasons. Either the contributions are intended to influence the actions taken by winning candidates once they are in office, or they are intended to affect the outcome of the election. Grossman and Helpman (1996) refer to the former reason as an influence motive and the latter as an electoral motive for campaign contributions. Stated more blandly, a PAC can manipulate government policies either by buying policies directly from legislators or by buying elections. In the latter case, the PAC attempts to sway the election in favor of the candidate whose views are most in line with that of the PAC. This paper attempts to answer the question: do political action committees give money to candidates to influence the positions they adopt or to influence the outcome of the election? Five major policy issues in the 1996 congressional elections are examined: the North American Free Trade Agreement, the Family and Medical Leave Act, a ban on partial birth abortions, cuts in the B-2 bomber program, and gun control. The results suggest that interested political action committees give campaign contributions to challengers primarily in order to affect the outcome of the election. Campaign contributions to challengers significantly affect the election outcome, but they do not affect the policy positions adopted by challengers on any of the five issues. The results about contributions to incumbents are less clear-cut. Contributions received by incumbents do not raise their chances of winning the election, and on only one of the six issues examined do they significantly raise the probability the incumbent will adopt a policy stance favorable to the interest group. Contributions do, however, flow more readily to incumbents who are able, by virtue of a leadership position in Congress or because they are members of relevant committees, to provide important services to interest groups. The paper adds to the existing literature in a number of ways. First, it is the only empirical paper to estimate the effect of campaign contributions on both incumbent and challenger policy positions before they are elected to office. Many studies examine the impact of campaign contributions on legislators in office, but there is clearly a sample selection issue involved in each of these studies since many viable candidates are excluded from the sample by virtue of having lost the election. Because it includes both candidates, this study can also answer related questions of interest. Do interest groups consider the policy positions adopted by both candidates in the election in determining the campaign donations they will give to each one? What effect do candidates' personal characteristics, as opposed to the characteristics of the congressional district, have on the policy positions they adopt? http://www.levy.org/docs/wrkpap/papers/292.html
