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The allocation of political monies: Economic interest groups

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  • W. Welch

Abstract

We have constructed two models of how economic interest groups allocate their campaign monies between candidates for the same legislative house. The models make contrasting assumptions regarding an interest group's strategy for affecting policy outcomes. One model assumes contributions are given to affect election probabilities while the other assumes that contributions are exchanged for political favors. The validity of these assumptions can best be examined by testing the predictions of the two models. The contribution functions of seven economic interest groups to 1974 candidates for the U.S. House were estimated with Tobit analysis. A beta functional form was used, with expected vote percentage and voting score as independent variables. For all seven groups, the mode of this function was significantly different from fifty percent of the expected vote, supporting the prediction that economic contributors prefer likely winners. This result tends to support the assumption that an economic interest group contributes in order to obtain political favors, not to affect electoral outcomes. Although we cannot exclude the possibility that some mixed strategy is followed, the strategy described by the exchange model appears to have dominated economic interest group giving in the 1974 U.S. House races. Copyright Martinus Nijhoff Publishers bv 1980

Suggested Citation

  • W. Welch, 1980. "The allocation of political monies: Economic interest groups," Public Choice, Springer, vol. 35(1), pages 97-120, January.
  • Handle: RePEc:kap:pubcho:v:35:y:1980:i:1:p:97-120
    DOI: 10.1007/BF00154752
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    References listed on IDEAS

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    Cited by:

    1. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
    2. Michael Munger, 1988. "On the political participation of the firm in the electoral process: An update," Public Choice, Springer, vol. 56(3), pages 295-298, March.
    3. John H. Goddeeris, 1989. "Modeling Interest-Group Campaign Contributions," Public Finance Review, , vol. 17(2), pages 158-184, April.
    4. W. Welch, 1981. "Money and votes: A simultaneous equation model," Public Choice, Springer, vol. 36(2), pages 209-234, January.
    5. Susan A. Edelman, 1992. "Two Politicians, A Pac, And How They Interact: Two Extensive Form Games," Economics and Politics, Wiley Blackwell, vol. 4(3), pages 289-306, November.
    6. Bonica Adam, 2016. "Avenues of influence: on the political expenditures of corporations and their directors and executives," Business and Politics, De Gruyter, vol. 18(4), pages 367-394, December.
    7. José Cruz, 2001. "An empirical application of the median voter model and of the interest group influence model to the Portuguese and Galician municipalities," ERSA conference papers ersa01p25, European Regional Science Association.
    8. de Gorter, Harry & Rausser, Gordon C., 1989. "Endogenizing U.S. milk price supports," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4f58t530, Department of Agricultural & Resource Economics, UC Berkeley.
    9. McKay Amy, 2010. "The Effects of Interest Groups' Ideology on Their PAC and Lobbying Expenditures," Business and Politics, De Gruyter, vol. 12(2), pages 1-23, August.
    10. David Gill & Christine Lipsmeyer, 2005. "Soft money and hard choices: Why political parties might legislate against soft money donations," Public Choice, Springer, vol. 123(3), pages 411-438, June.
    11. Al Wilhite, 1988. "Political parties, campaign contributions and discrimination," Public Choice, Springer, vol. 58(3), pages 259-268, September.
    12. Eric Dunaway & Felix Munoz-Garcia, 2020. "Campaign contributions and policy convergence: asymmetric agents and donations constraints," Public Choice, Springer, vol. 184(3), pages 429-461, September.
    13. Keith Poole & Thomas Romer, 1985. "Patterns of political action committee contributions to the 1980 campaigns for the United States House of Representatives," Public Choice, Springer, vol. 47(1), pages 63-111, January.
    14. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    15. John J. Shon, 2010. "Do Stock Returns Vary With Campaign Contributions? Bush Vs. Gore: The Florida Recount," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 257-281, November.
    16. Manjhi, Ganesh & Mehra, Meeta Keswani, 2017. "Dynamics of the Economics of Special Interest Politics," Working Papers 17/206, National Institute of Public Finance and Policy.

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