Table of Contents

The Elgar Companion to Public Choice, Second Edition

The Elgar Companion to Public Choice, Second Edition

Edited by William F. Shughart II, Laura Razzolini and Michael Reksulak

The Companion lays out a comprehensive history of the field and, in five additional parts, it explores public choice contributions to the study of the origins of the state, the organization of political activity, the analysis of decision-making in non-market institutions, the examination of tribal governance and to modeling and predicting the behavior of international organizations and transnational terrorism.

Chapter 20: Campaign finance

Thomas Stratmann

Subjects: economics and finance, austrian economics, public choice theory, politics and public policy, public choice


The role of money in politics has always been a controversial topic and continues to be so. Recent history has seen a rapid increase in campaign contributions and campaign expenditures. In 1996, the race for the White House cost President Bill Clinton and Republican challenger Senator Robert Dole $80 million altogether. Just four years later, candidates George W. Bush and Albert Gore spent $307 million campaigning for the presidency, and in 2004 the expenditures of incumbent Bush and his Democratic opponent, Senator John Kerry, summed to more than $550 million. In the 2008 election, expenditures by Democrat Barack Obama and Republican John McCain exceeded $1.1 billion. The growth in spending is less dramatic, but still worthy of notice, in races for the US Congress. Candidates running for seats in the US Senate and the US House of Representatives spent $283 million in 1989–90, $670 million in 2003–04, and $1.48 billion in 2009–10 on their campaigns. These are nominal figures, but even measured in inflation-adjusted dollars, spending in congressional elections has tripled over the past 20-year period. As well as noting that spending has increased, it can be seen that patterns of campaign contributions and campaign spending differ sharply between incumbents and challengers. The 407 US House incumbents running for reelection in 2008 collected, on average, $1.4 million in campaign contributions in the 2007–08 election cycle.

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