Campaign Finance Regulations Fail to Curb Public Corruption

NCPA May 3, 2013

The influence of money in elections has led to campaign finance regulations that seek to prevent corruption or the appearance of corruption. Though the Supreme Court has upheld the use of these regulations, the effects of state reforms on reducing public corruption is largely untested. A new study by Adriana Cordis and Jeff Milyo of the Mercatus Center conducts the first systematic evaluation of the effects of campaign finance laws and finds little evidence that the regulations achieve their purpose.

• Despite the widely held view that money plays a dominant role in American elections, there is little relationship between campaign spending and electoral success.
• The new study examines campaign finance regulations at the state level and tracks corruption through prosecutorial filings and convictions of official corruption.

The study relies on data from the National Conference of State Legislatures, state government websites and the Federal Election Commission to categorize state campaign finance regulations into one of five categories. Finance regulation regimes either have: (1) no contribution limits, (2) limits on corporate contributions to candidates, (3) limits on corporate and individual contributions to candidates, (4) contribution limits and public funding of gubernatorial elections, or (5) contribution limits and public funding of gubernatorial and state elections.

• The study controls for the influence of state population, education attainment, Hispanic ethnicity, real per capita income, poverty status race, union membership, state unemployment rate, state expenditures per capita, state government employment and term limits.
• The results show that that moving from a regulation regime of 1 to a 5 (from above) would only result in about one more corruption conviction over a three-year period, a small increase.
• The study also shows that public financing, gubernatorial and legislative public financing, and corporate and individual contribution limits have little effect on public corruption.

The study runs multiple regression models and varies the number of control variables or assumptions for each model, but overall cannot produce any significant results. It concludes that there is no strong link between campaign finance regulations and a reduction in public corruption.

Source: Adriana Cordis and Jeff Milyo, "Do State Campaign Finance Reforms Reduce Public Corruption?" Mercatus Center, April 2013.