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Financing Direct Democracy: Revisiting the Research on Campaign Spending and Citizen Initiatives

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  • John M. de Figueiredo
  • Chang Ho Ji
  • Thad Kousser

Abstract

The conventional view in the direct democracy literature is that spending against a measure is more effective than spending in favor of a measure, but the empirical results underlying this conclusion have been questioned by recent research. We argue that the conventional finding is driven by the endogenous nature of campaign spending: initiative proponents spend more when their ballot measure is likely to fail. We address this endogeneity by using an instrumental variables approach to analyze a comprehensive dataset of ballot propositions in California from 1976 to 2004. We find that both support and opposition spending on citizen initiatives have strong, statistically significant, and countervailing effects. We confirm this finding by looking at time series data from early polling on a subset of these measures. Both analyses show that spending in favor of citizen initiatives substantially increases their chances of passage, just as opposition spending decreases this likelihood.

Suggested Citation

  • John M. de Figueiredo & Chang Ho Ji & Thad Kousser, 2010. "Financing Direct Democracy: Revisiting the Research on Campaign Spending and Citizen Initiatives," NBER Working Papers 16356, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16356
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    References listed on IDEAS

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    1. Thomas Stratmann, 2006. "Is Spending More Potent For or Against a Proposition? Evidence from Ballot Measures," American Journal of Political Science, John Wiley & Sons, vol. 50(3), pages 788-801, July.
    2. Gerber, Alan, 1998. "Estimating the Effect of Campaign Spending on Senate Election Outcomes Using Instrumental Variables," American Political Science Review, Cambridge University Press, vol. 92(2), pages 401-411, June.
    3. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
    4. Matsusaka, John G., 2004. "For the Many or the Few," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226510811, April.
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    Cited by:

    1. Matsusaka, John G., 2018. "Special Interest Influence under Direct versus Representative Democracy," Working Papers 278, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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