Does Public Financing Chill Political Speech? Exploiting a Court Injunction as a Natural Experiment

Abstract

In 2011, the Supreme Court struck down the matching provisions in Arizona's campaign finance law on the grounds that they violate free speech by chilling private spending. In this article, we explicitly test the effects of Arizona's matching provisions in two ways. First, we find that privately funded state legislative candidates do not strategically cluster their spending below the threshold that would trigger money to their opponents. Second, we exploit a 2010 Court injunction as a natural experiment. When Arizona's matching provisions were removed, private spending did not increase relative to other states. Contrary to the view of the Court, we find no empirical evidence that campaign finance laws chill private political speech. More generally, our analysis demonstrates the value of exploiting court injunctions as natural experiments to assess the causal effects of laws.