The Economics of Election Campaign Spending Limits

Spending limits are an important rule in the electoral game. Critics of limits claim that incumbents write these rules to keep down promising challengers. Their arguments are seductive but do not stand on a firm empirical base. The data seem quite eager to support or reject the critics' view, given the proper massaging. This paper suggests that if incumbents profit from spending limits, they will take their profit in a way that leaves no trace in the data. Profit does not come in the form of higher votes for the incumbent, but as richer government spoils for their close supporters. This explanation goes against the traditional view of how limits help incumbents. The explanation also helps to explain why there may never be a winner in the empirical debate on whether incumbents or challengers profit from limits.Campaign spending spending limits, election finance regulation, economics of information