A Systems Approach To Campaign Finance in U.S. House Elections

Previous research on campaign financing has been hampered by the persistence of the simultaneity problem. In this article the authors attempt to overcome this problem by specifying a comprehensive simultaneous model of congressional elections. Specifically, equations determining challenger political quality, candidate expenditures, and electoral outcomes are theoretically derived and then estimated as a single equation system. Overall, this comprehensive simultaneous model fits the data relatively well. More importantly, the authors find that incumbent expenditures exert a significant impact on electoral outcomes. The marginal impact of incumbent spending is not, however, the same for all incumbents. Specifically, first-term incumbents receive a much larger marginal return on their expenditures than do multiterm incumbents. In fact, the marginal return on spending by first-term incumbents rivals the marginal return on spending by challengers.